liquor sales india: Indians drank more, gave liquor companies the high of a decade last year

Sales of beer and spirits such as whisky, vodka and gin expanded 17-18% by volume in the last calendar year, its fastest expansion in more than a decade due to a low base and increased in-home consumption, according to the latest data by IWSR Drinks Market Analysis.

The performance also indicates a sharp recovery for an industry that was among the worst hit by the pandemic. In 2020, the overall spirits market fell 20% while the beer industry saw the sharpest dip of 39%. The UK-based research agency expects the Indian spirits segment to grow 4.4% in the next five years and 9.3% for beer, compared to flat growth in spirits and a 3.7% decline for beer over the past five years.

Companies, however, said they are not chasing volume growth anymore and want Indians to drink fewer but higher-priced drinks.

“With revenge outing, consumption back, continued growth on on-trade after a temporary slowdown, we are seeing premiumization in the category continue, and actually the higher price segments are growing faster than the others,” said Hina Nagarajan, managing director at USL. “We encourage moderation and don’t want to drink volume. And what has particularly accelerated during Covid is the trend of people wanting to not necessarily buy a lot of volumes but buy better and more reputed and highly differentiated brands.”

Sales have been recovering now.

“After two years in which the key April-June season has been impaired by lockdowns, beer sales are bouncing back swiftly as bars and restaurants revive and consumers seek refreshment in the record-high temperatures,” said IWSR analyst Jason Holway.

While two of the leading categories, brandy and rum, may have to wait until 2026 to regain previous peaks, the largest category, whisky, should surpass 2019 as soon as the end of 2022, said IWSR.

The pandemic outbreak hit beer and spirits makers as bars, restaurants and pubs across the country operated with low footfalls and restricted travel over the past two years. As the market reopened gradually and sales recovered, most companies including Diageo, Pernod Ricard and Ab InBev focussed only on the high margin premium portfolio to generate a higher profit in India, a market where the government controls retail prices.

“We prefer to sell fewer cases but higher quality and higher value products to consumers. We are not seeing our industry so much affected by trading down. We don’t want people to drink too much and we are against excessive consumption,” Thibault Cuny, managing director, Pernod Ricard South Asia, told ET recently.

India remains very much a brown spirits’ market with more than 97% of consumption accounted for by the triumvirate of whisky, brandy and rum. Despite being marginal, clear spirits registered stronger volume growth: vodka bounced back, along with white rum, both adding around 17.5% in 2021; and gin, helped by the explosion of interest in Indian craft gin, added more than 50%.

For beer, the timing of the 2020 lockdown during the peak summer season – April and May – could not have been worse and it was repeated in 2021. IWSR said it has not prevented a recovery in demand and an on-trade pick-up, but consumption remains some distance from its 2019 peak – it may be a year or two before full buoyancy returns.