Spirits up: Premium alcohol sales to grow up to 25Percent year-on-year in Q3

Companies like Radico Khaitan, Diageo India, and DeVANS Modern Breweries (makers of Godfather beer and Gianchand whisky) are gearing up for robust growth this quarter spurred by rising consumer spending. Sequentially too, this quarter is expected to be strong as the earlier part of the year saw slow sales marred by dry days and the general elections countrywide.

Amar Sinha, chief operating officer at Radico Khaitan, told Mint that the market for premium and above brands is very strong right now. The 'consume better' or premiumisation trend that came about during covid has stayed on and the market for premium products is growing at high single digits year-on-year, with some prestige categories growing even higher.

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"In the October-December period, our premium and high-end brands will grow at 15% with sales driven by including Jaisalmer craft gin, Royal Ranthambore whisky, Magic Moments vodka and others. Generally, during this time of year, the demand comes from across the country and not just the northern states. We are also selling special edition packs," he said.

BIO offerings

Festival and wedding demand accounts for about 40-45% of the revenue of most alcoholic beverage companies. For spirits major Diageo India, the story will be similar, led by super deluxe whisky and tequila. “We are seeing positive consumer sentiment for luxury and bottled-in-origin (BIO) offerings especially in the premium, super deluxe whisky and tequila category across states like Haryana, Punjab and Chandigarh and overall buoyancy in states like Uttar Pradesh which have higher retail quotas this quarter. We are optimistic that we will see an uptick in premiumisation in the coming months with increasing retail purchases and consumer interest, the onset of festivities and return of a strong wedding season," said Ashish Parikh, chief operating officer of Diageo India.

BIO spirits are imported into the country. Parikh is referring to UP being a state government regulated market where it decides how much to allocate and distribute in terms of alcohol.

The alco-bev industry is expected to show an 8-10% revenue growth in FY25, driven by steady demand and a shift towards premium products, according to Icra, a credit rating agency affiliated with Moody's which assesses creditworthiness of companies. The profit margins from operations are expected to stay stable at 12-13% as well, aided by lower packaging costs despite rising grain prices.

Festival high spirits

Earlier in the year, the spirits industry saw a 9% year-on-year revenue increase in Q1 FY25, with a 5-7% rise in prices and 2-4% volume growth. The beer sector performed better, with a 12% revenue boost due to a 3-5% volume increase and 7-9% higher prices. Icra’s sample set included companies like Mohan Meakin Ltd, Radico Khaitan Ltd, Som Distilleries & Breweries Ltd, Tilaknagar Industries Ltd, United Breweries Ltd and United Spirits Ltd, among others.

Sanjit Padhi, CEO of the International Spirits and Wines Association of India (ISWAI), which represents the interests of international alcohol companies in India, said a festival boost has also been seen in Telangana, where ₹1,057 crore was collected during the 10-day festival period (October this year), marking a 20% growth in liquor sales compared to the previous period.

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Kolkata city alone recorded sales of nearly ₹1,500 crore this festival season—a 20% increase over last year—while sales for the entire state of West Bengal in the non-festival months averaged ₹1,400 crore. "Karnataka’s revised tax policy is also a positive development for the alcohol industry. The reduction in taxes will make premium brands more accessible and affordable for consumers," he told Mint.

New launches

For DeVANS, the makers of Godfather beer, the year has seen robust growth with sales of beer increasing about 65% by volume during the first six months of the year. However, there have been major disruptions during the later part of September and in early October due to change of excise portal software in a few north Indian states. This has resulted in a huge fall in current sales.

The company had forayed into premium lager beers in September, expanding its range of ‘Six Fields’ premium beers and is banking on those issues to even out before the festival demand kicks in completely to scale up volumes of its new brands. “Things are now looking up and coupled with the withdrawal of the monsoons, we are now expecting bumper sales during the festival season," said Prem Dewan, chairperson of the company.

Ahead of the festival season, a lot of companies have also announced special editions as well as new product lines. Last week, Tilaknagar Industries launched Mansion House Gold Barrel whisky, and single malt brand Indri launched its Diwali collector’s edition for this year, produced by Siddhartha Sharma-founded Piccadily Agro Industries Ltd.

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“Usually, holiday seasons are very exciting for us because we observe trends showing a general uptick in a lot of our ready-to-drink spirits. Overall, we expect a 20-25% growth, led by markets like Kerala and Karnataka, as there is a lot of demand for parties and other events. In general, the holiday season, especially during the festival season, is peak time for us, so there is a notable increase in demand," said Ajay Shetty, CEO and founder of Salud Beverages Pvt. Ltd.

Similarly, small-batch spirits maker Fullarton Distilleries' —the makers of Pumori gin and Woodburns whisky—are expecting the momentum of the premium consumption to stay. On the back of that, the company has launched in several new states ahead of the festival season, including Haryana, while earlier it was mainly present in Goa and Maharashtra. Rajiv Thadani, the company's founder, expects a 30% growth this festival season not just from organic sales but also because of the new states it is now selling in.