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The Rise and Fall of Indian Spirits

By David Barnes

When it comes to Alcohol, we always want the imported Whiskeys or Gins, but very few of us know how great the Indian Alcohol scene is in India. One of the most commonly viewed alcohols has got to be Old Monk without a doubt. This rum requires no introduction and has been famous throughout India. But apart from the famous Indian Alcohol, there are way too many Indian brands that have now entered the Indian Market and these brand have taken the market by storm.

Let’s go in-depth about India’s Spirit Journey.

Introduction

India is one of the world’s top spirits producers and users. India is regarded popularly as a whiskey market, one of the greatest volume spirit markets. Although mainly determined by whiskey development, other subsegments such as brandy, rum, vodka, and gin have also posted solid levels in recent years. The vast population rising disposable incomes and changing lifestyles will keep the demand for spirits high in the foreseeable future.

In more than a decade from the beginning of 2001, the Indian spirits sector grew into one of the world’s fastest-growing markets. In 2019, however, the industry suffered major obstacles behind reduced growth.

Whiskey controls an extremely large margin in the Indian spirit business. In 2018, whiskey was roughly 60 per cent by volume in the total Indian liquor market. Whiskey was over 73 per cent of the spirits sold in the country in terms of value. Other drinks, such as rum, brandy, and white spirits, have a share of 14%, 21% and 3% in India and a share in the value of 10, 12% and 5%. Indian customers still favour relatively cheap rum and whiskey, although customers choose a superior quality for white spirits.

The spirits business of India is divided into Indian Made Foreign Liquor and Indian Made Indian Liquor. Almost 72% of the market is in the IMFL category. One of the most important consuming states in India is that of Karnataka, Maharashtra, West Bengal, Odisha, Telangana, Delhi, Haryana, Punjab etc. The most common selling channel is liqueur shops in India because it uses mostly outside activities and supermarkets and centres exclusively in India’s Tier-I and Tier-II cities.

The Economic Crash

Another bad influence on spirit consumption in the country was the decline in the economy in 2019. Through all of 2019, India has had many headwinds, persistent financial services crisis, silent consumer demand and cyclical industrial slowdown.

March 2020 epidemic, and India’s GDP year 2019-20 dropped by 4.2 per cent, which is the lowest growth in a decade. There were various announcements by the Indian government to provide liquidity for the economy, lessen the impact, and improve recovery speed. In future years, a young demographic base, increasing revenues and a developing middle class would continue to increase alcohol use in this nation, increasing desire for luxury food and drinking experiences and increasing societal acceptability of spirits.

Spirit Potential of the Indian Market

Given the low consumption per capita of the Indian spirit sector and the positive demographics and expectations of the increasingly younger population, spirit firms have enormous potential. India is one of the biggest consumer marketplaces in the world, with 1.3 billion inhabitants. It is also one of the youngest in terms of population with around 50% below the age of 25 and around 65% below the age of 35.

Another major element of the Indian spirits sector is the desire for premiumisation. In reality, future expansion in the Indian liquor sector will be reflected by a continuing consumer upward trend, which is driven by growing wealth, global prospects, urbanisation, gradual lifestyles. Consumers go upward towards premium categories in the country with more Indians visiting overseas, more expectations, a favourable climate for imported booze and more disposable money.

Covid-19 to Indian Spirits

The current Covid-19 epidemic led to India becoming one of the most affected countries. The sales of spirits in the country have seen a dramatic blow. In the country’s lockdown from 25 March to 3 May, liquor production, distribution and retailing reached full stoppages, leading to a 17 per cent decrease in country net sales for the year ending in June. Bars, pubs and restaurants – has been progressively reopening off-trade since May. Several states also adopted extra taxes and excise charges during the lockdown, which affected the retail spirits pricing throughout the country.

The epidemic has led to a shift in Indians’ alcohol use. Indian spirits are trying to adjust their sales to the trend. In the context of concerns about revenue losses and price increases for your favourite brands, spirits customers are switching liquors from economical, hip-flask packs to full-size bottles. Shuttered bars and social-related limitations also have an impact on demand for large bottles and customers purchase smaller packages for domestic usage.

Conclusion

The Indian market gives its native spirit makers a lot of possibilities. But the spirit producers of India face a variety of obstacles.

In a highly regulated business, the Indian Spirits sector operates under governmental rules that influence industry volumes on certain markets. Prohibiting excessive intergovernmental tariffs oblige the makers of Indian spirits to establish their own manufacture or contracts in each State. The production, bottling, stock, sale or retail of alcoholic goods require licences. Also, wholesale and retail distribution is closely controlled. In countries where the state government controls retailing, each participant can sell a quota, limiting the possibility to raise the market share for his/her items. These rules restrict spirit manufacturers in India from their operations.

With that said, India’s liquor industry is bound to flourish once again shortly. 

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