The Indian alcohol market has witnessed steady growth over the years owing to increased spending capacity and rising disposable incomes. India is currently one of the largest producers and consumers of alcohol globally. Alcoholic beverages such as beer, spirits and wines are an integral part of Indian social and religious ceremonies. The rising working population and changing lifestyles have bolstered the consumption of premium and super-premium brands in metro cities. Moreover, favorable government policies and easy availability have boosted the domestic production of alcoholic beverages.
The India Alcohol Market is estimated to be valued at US$ 57,116.16 Mn in 2024 and is expected to exhibit a CAGR of 5.6% over the forecast period 2024 to 2031.
Key Takeaways
Key players operating in the India Alcohol Market are Brand Energy & Infrastructure Services, Layher Holding GmbH & Co. KG, Safway Group Holding LLC, ULMA Construction, PERI GmbH, Altrad Group, MJ-Gerüst GmbH, Waco Kwikform Limited, Turbo Scaffolding, Simplified Scaffolding Pty Ltd., Hunan World Scaffolding Co., Ltd., Tianjin Wellmade Scaffold Co., Ltd., Apollo Scaffold Services Ltd., Pilosio S.p.A., Instant Upright. The growing demand from young population and changing consumer preferences towards western-style alcohol is fueling the market growth. Moreover, expansion of organized retail and easing of FDI policies has encouraged global players to increase footprint in the country.
Rising disposable incomes and improvement in lifestyles have significantly increased the spending capacity of individuals on alcohol. The rising number of high-end pubs, bars and nightclubs especially in metro cities has propelled the demand for premium brands. Furthermore, socializing over drinks has become a popular trend among urban population which is driving the consumption of alcoholic beverages. Evolving trade agreements and facilitation of imports has allowed global brewers and distillers to cater to diverse consumer base in India. Introduction of new flavors and innovative packaging by market players is also attracting younger demographic.
Market drivers
The growing young working population between 21-40 years age group is the key driver of the Indian alcohol market. This demographic segment indulges regularly in social drinking owing to rising expendable incomes, westernization and changing consumer habits. Urbanization is another major factor fueling the growth of organized retail which stocks wide variety of alcoholic brands. Rising number of alcohol lovers touring globally has augmented their preference for international premium brands. Aggressive marketing campaigns by manufacturers particularly in metro cities and rising number of pubs/bars/clubs catering to young consumers are positively impacting the consumption levels.
The current geopolitical situation is impacting the growth of the India alcohol market. Rising geo-political tensions between India and neighboring countries have disrupted trade and supply chains. Border issues and conflicts have increased taxes and duties on transnational movements of goods including alcohol. This has inflated input costs for Indian alcohol producers and distributors, reducing their profit margins. It has also made importing foreign alcohol brands difficult. The restrictions on cross-border trade and travel due to the geo-political climate have negatively impacted the supply of imported alcohol and preference for international brands in India. Indian alcohol companies now need to focus on boosting domestic production and sourcing raw materials locally to achieve cost optimization and insulate their businesses from external shocks arising from geopolitical risks. They should also explore new export markets in other regions to reduce reliance on imports and neighboring countries. At the same time, leveraging free trade agreements with partner nations can help companies procure affordable raw materials from alternative geographies.
In terms of value, Northern India remains the most concentrated region for the India alcohol market, accounting for over 30% revenue share. This is because states like Punjab, Haryana and Himachal Pradesh have a strong culture of alcohol consumption. Southern India, led by the markets of Andhra Pradesh, Karnataka and Tamil Nadu, is the second largest regional market. Western India, home to prosperous cities of Mumbai and Ahmedabad, also contributes significantly. Meanwhile, Eastern India has emerged as the fastest growing regional market for India alcohol over the past few years. States of West Bengal, Odisha and Jharkhand are witnessing rising disposable incomes and experimentation with premium alcohol brands, driving double-digit growth. Industry players need to prioritize these high potential eastern markets and adapt offerings to local preferences to capitalize on the opportunities.
Rising income levels have resulted in increased spending on leisure and luxuries in Southern India, making this region the largest and most valuable market for India alcohol products. The Southern region, comprising the states of Telangana, Karnataka, Tamil Nadu and Andhra Pradesh, accounts for over 35% of the country's total alcohol market value due to higher consumption levels. Changing demographics and rapid urbanization are driving premiumization in Southern liquor consumption. Young working professionals in emerging cities like Bengaluru, Hyderabad and Chennai have greater exposure to globalized lifestyles and are fueling demand for international spirit brands and craft beers. Alcohol companies need to focus on these affluent urban pockets and position premium product portfolios featuring innovative flavors to tap into Southern India's growth potential.
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