Beer battles election blues, gin toasts summer gains

Industry experts note that election-related restrictions have disrupted production and supply chains. Further complicating matters, some states like Telangana have implemented unexpected new regulations, such as bans on factories operating three shifts—a move experts said could reduce pan-India beer supplies by 4-5% during this peak season. 

Also Read: As India braces for a hot summer, beer makers have much to cheer

 

Resilient outlook

“There are definitely disruptions due to elections, not only on the supply front but also on the production side," said Prem Dewan, chairman and managing director of DeVans Modern Breweries Ltd, which produces popular labels like Godfather. 

He elaborated that production has been affected across all states due to reduced working hours enforced by the Election Commission. Additionally, some states have prohibited the import and export of liquor and beer. 

Dewan said that the company had anticipated such disruptions and increased its production capacity last year, which has helped minimize the impact. “The only state we are suffering in now is Arunachal Pradesh due to the export ban imposed in that state. We as such hope to increase our sales substantially during this summer season."

According to industry estimates, beer volumes fell a little less than 15% year-on-year last year to around 350 million cases as unseasonal rains marred sales during the summer months. Despite beer’s global popularity, its consumption in India remains modest compared to its population, selling around 400 million cases in FY24.

This year (FY25), the industry still anticipates strong growth despite the obstacles, with sales potentially increasing 13-14% over last summer. Growth could have been higher, even 25%, but for the elections playing spoilsport, experts said.

Last month, Mint reported that United Breweries Ltd (UBL), the maker of Kingfisher and Heineken beers, expected potential supply chain disruptions due to restrictions amid the elections but still anticipated a strong summer season for business, forecasting high single-digit growth over last summer.

“Navigating regulatory landscapes remains a challenge, particularly with high taxation and export constraints in key states," noted Kartikeya Sharma, president of AB InBev India.

He also highlighted the socio-economic potential of the beer industry to generate employment, emphasizing its nature as a local and natural product. “We are encouraging state governments to embrace the momentum induced by the summer so the industry can grow."

AB InBev India is known for producing popular beers such as Budweiser and Corona Extra.

Gin capitalizes on beer's dilemma

However, there's a silver lining for tipplers looking for alternatives like gin or vodka. The shortfall in beer might turn into a boon for other categories.

More Here: Ditched by the rich, vodka needs a new spirit

Radico Khaitan's managing director Abhishek Khaitan said that premium gins are expected to see at least a 50% growth in the industry this year. "Gin, while still a small part of the entire white spirits category, will see a noticeable jump due to more cocktail drinking occasions. This summer will help both gin and vodka grow," he noted.

The story is similar for other brands in the spirits sector. Greater Than gin, for example, has ramped up supplies and expanded into new states, anticipating continued growth. 

"Summer sales are significantly up from last year in all our major markets. While it is still early to project, we expect a 60% increase in the summer season owing to the weather as well as our new launches. We recently launched 'Punk' pink gin—our first summer limited edition gin—which is available in Goa and parts of Karnataka," said Anand Virmani, CEO and cofounder of Nao Spirits. 

He said the company sold 1 million bottles of gin in FY24 and that expanding into new states has significantly boosted volumes.

Garam Masala, a new brand importing gin from the UK, and its importer Tandon Enterprises are also preparing to launch their ready-to-drink alcoholic beverages this season, anticipating strong sales. 

Meanwhile, for makers of Samsara Gin and its parent company Tilaknagar, which also produces Blue Lagoon gin, sales are expected to remain steady with some temporary positive impact resulting from pent-up demand after the election-induced slowdown, according to a spokesperson of the company.

The share of brands priced above ₹500 per 750ml bottle stood at 20%, up one percentage point from 2022. The ₹1,000-plus price segment, although dominated by imported products, saw a sharp rise in the share of Indian products from 18% in FY22 to 20% in FY23, indicating faster growth for Indian products compared to imported ones.

Related Read: EU spirits industry seeks significant cut in tariff in FTA with India