India's liquor makers are having a party. And it's not going to end soon

Alcohol sales are likely to rise 8-10% to ₹5.3 lakh crore in fiscal 2025-26, according to Crisil Ratings. The makers of alcoholic beverages—like whisky, rum, vodka, beer, and wine—are also expected to earn better profits this year, it said.

The overall volume of liquor sold is likely to grow 5-6% in FY26, according to the study based on 25 major liquor companies that make up about 12% of the organized market in India. 

Spirits such as whisky and rum bring in nearly 70% of the industry’s revenue, while the rest comes from beer, wine, and country liquor, according to Crisil. A young drinking-age population, more people living in cities and rising incomes are driving consumption, especially towards premium brands.

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Crisil estimates the blended operating margins to rise by 0.6 to 0.8 percentage points, marking the second straight year of rising profitability for the sector. It’s driven by customers choosing higher-end products and companies able to manage their costs better. 

“Even without big price hikes, better sales and more people buying premium brands will keep the industry growing," said Jayashree Nandakumar, director at Crisil Ratings. Premium and luxury liquor (priced above ₹1,000 for 750 ml) will grow about 15% this year and make up around 40% of total spirits sales, up from about 33% two years ago, she said.

Rising costs

Costs may go up slightly. The price of alcohol used in spirits (called extra neutral alcohol or ENA) may rise 2-3%, and barley used for beer could get 3-4% more expensive, said the report.

Glass bottle prices will also remain steady due to strong demand. But thanks to higher sales and better prices from premium brands, companies should be able to handle the cost pressure.

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Profits will likely rise by 0.8 to 1 percentage points for spirits and 0.5 to 0.7 points for beer makers this year, said Sajesh KV, associate director at Crisil Ratings. 

Demand steady

The steady rise in liquor demand has prompted manufacturers to ramp up their production capacity by 15-20% over the past two years. With current capacity utilisation at around 70-75%, companies have sufficient room to cater to growing demand without needing to invest heavily in new infrastructure. As a result, no major debt-funded capital expenditure is expected in the current fiscal, Crisil said.

According to the report, the financial health of these companies looks strong. Their ability to repay interest remains high, and they are not borrowing much, keeping their debt levels low.

“There is positive sentiment among liquor makers as they see trade opportunities opening up with India signing a free-trade agreement (FTA) with the UK," said Abhash Kumar, a trade expert and assistant professor of economics at Delhi University. “Talks are also moving in the right direction for FTAs with the European Union and the United States, which could further support exports and premiumisation in the sector."

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The Agricultural & Processed Food Products Export Development Authority (APEDA) aims to boost India's alcoholic beverage exports to $1 billion in the coming years. This target aligns with the global trend of premiumization and the growing appreciation for Indian spirits. 

India’s presence in the global spirits market remains modest, but the country has made notable strides in recent years, particularly with the growing international recognition of its single malt whisky brands. According to data from APEDA, India’s exports of alcoholic beverages rose to $375.09 million in FY24, up from around $325 million in FY23, riding on steady demand growth in markets such as the UAE, Singapore, the Netherlands, and parts of Africa.