Spirits market loses its zing in FY25
With sales improving in the December quarter, most companies had expected gradual recovery, which was belied by a tepid 0.5% January-March sales performance. Volume sales of whiskey, which accounts for roughly two-thirds of the market, saw a muted 1.5% increase in volume last fiscal while brandy and vodka sales were flat, according to latest excise department data. Brandy grew less than 1% while gin sales increased 3.6% on a lower base.
"We are seeing some moderation especially in Gen Z consumers, who choose quality over quantity, and in time to come, we should start looking at value growth as a better measure instead of volume," said Alok Gupta, MD at Allied Blenders & Distillers.
Despite being the world's most populous nation with more than 1.4 billion inhabitants, India's drinking consumer base is estimated at around 300 million-of whom nearly half rely on cheap, unbranded liquor. In categories including whiskey, rum and brandy, consumption in the mass-premium segment declined, which impacted the overall market demand.
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"The previous year's first two quarters were bad, and there is a low base. So the growth in the next two quarters would be healthy. And there were many issues, relating to specific states, with regard to the industry, that is also normalising," said Amar Sinha, chief operating officer at
Radico Khaitan
.
There were temporary disruptions in Telangana, a key state, which slowed down sales growth for most companies while Delhi excise policy reversal has led to low distribution by national brands.
"A softer third quarter sales was impacted due to the implementation of new Customs clearance procedures affecting sales of imported spirits, and a temporary production interruption in a major state, which is now resolved," Pernod Ricard chief financial officer Helene de Tissot told analysts last month after posting a 1% sales growth in India.
However, there have been favourable policy changes too. Karnataka, for instance, reduced state duties by 10-15% across various alcoholic beverages while Andhra Pradesh opened the retail alcohol market to private players.
Globally too, liquor sales fell 1% by volume in 2024, according to alcohol market researcher IWSR, which attributed this to large markets such as China and India failing to live up to growth projections. The world's top 20 markets fell short of growth estimates by 1-2% in 2024, equating to more than 300 million nine-litre cases.
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