Only two states, West Bengal and Odisha, allow alcohol home delivery, but media sources say six states may launch a pilot project after assessing it.
According to reports, Swiggy, BigBasket, Blinkit, and Zomato may soon deliver beer, wine, and liqueurs. Industry executives informed the media that New Delhi, Karnataka, Haryana, Punjab, Tamil Nadu, Kerela, and Goa are considering experimental projects. The media reported that executives indicated authorities are weighing the move’s merits and downsides.
Maharashtra, Jharkhand, Chhattisgarh, and Assam allowed liquor delivery during Covid-19 lockdowns with limits. Retail executives in West Bengal and Odisha reported a 20-30% sales rise from online delivery.
Expansion’s Driver: Consumer Interest and State Evaluations in Alcohol Home Delivery
With the help of the social media network LocalCircles, ISAWI surveyed 33,000 people in eight different cities in May 2021 about spirits delivery. Customers in Hyderabad, Bengaluru, Delhi, and Chennai expressed an interest in home delivery services, with 81% citing safety, brand availability, and convenience as reasons to back up their response.
In order to weigh the pros and cons of online alcohol delivery, state officials are currently surveying e-commerce platforms and spirits producers.
Industry Support: Upside of Alcohol Home Delivery
Breweries and the industry as a whole have been quite supportive. Beverage and wine producers have indicated a lot of interest in home delivery of their products, according to industry experts. This includes United Breweries’ Kingfisher brand and Budweiser owner AB InBev. Because beer consumption is very consistent with food purchasing patterns, this trend is very attractive, especially to city dwellers.
Industry Challenges: Obstacles of Online Alcohol Delivery
Due to various political backlashes, perception issues, and pressure from physical retail bodies, delivery platforms continue to face obstacles when trying to execute online alcohol delivery plans.
According to HipBar creator Prasanna Natarajan, who spoke to a media house, the company’s services were halted due to “certain local lobby pressures” after they had begun operations in Karnataka in 2021. A complaint had even been launched at the Supreme Court by the company.
He went on to say that the regulations governing business in various areas vary substantially, making it difficult to establish businesses throughout large portions of the country. There’s concern about the potential consequences of underage buyers or instances of domestic violence resulting from careless drinking. Natarajan had informed the media that there is a fear that duties will be avoided and that the government will lose the three rupees in levies it receives for every rupee a manufacturer generates. This is because the government stands to lose this revenue.
There are, without a doubt, challenges to face. Businesses and consumers alike are excited about this pilot initiative that is taking place across multiple states in India. If this initiative is fruitful, it may serve as a model for similar endeavours in other sectors.
India holds a dominant position in the global whisky market, representing nearly half of its share. Surpassing France, India has emerged as the largest consumer of Scotch whisky globally. Noteworthy is the fact that seven out of the top ten whisky brands globally, in terms of volume, originate from India, including well-known names like Officer’s Choice, Royal Stag, and McDowell’s, enjoying substantial popularity domestically. Alongside these, established international labels such as Glenlivet and Talisker compete for shelf space with local contenders like Indri, Amrut, and Radico Khaitan’s Rampur.
Despite the prevalence of affordable molasses-based spirits referred to as “whisky” locally, the focus shifts to the remarkable growth and recognition of Indian single malts. These premium offerings, produced with local barley, distilled, and matured within the country, have made significant strides in the global market, garnering praise from a widening circle of whisky connoisseurs.
Vinod Giri, Director General of the Confederation of Indian Alcoholic Beverage Companies, notes a significant shift wherein Indian malt whiskies now command nearly half of the market share for premium single malt whiskies in the country, poised to surpass competitors in the coming year. Globally renowned, Indian whiskies consistently receive acclaim as some of the world’s finest spirits, with malt whiskies being exported to over 60 countries within a relatively short timeframe.
The evolution of Indian whiskies, often overlooked globally, has been noteworthy in recent decades. Initially overshadowed by Western counterparts, Indian whiskies have gained international recognition for their innovative approaches and exceptional craftsmanship. The roots of Indian whisky production trace back to the colonial era when British distillation techniques were introduced to the Indian subcontinent. Distilleries established in the mid-19th century, such as Mohan Meakin founded in 1855, played a pivotal role in shaping the trajectory of Indian whiskey.
Indian six-rowed barley, offering a distinct flavor compared to Scottish two-rowed barley, and an accelerated maturation process in India’s warm climate, up to five times faster than in Scotland, contribute to the uniqueness of Indian whiskies. This results in a three-year-old whisky in India achieving a maturation effect equivalent to a Scotch whisky aged 9–15 years.
India’s demand for hard liquor, with spirits and ready-to-drink beverages constituting 40% of the country’s alcoholic beverage market by volume, is driven by a growing economy. India, already the fifth-largest alcohol market globally, accounted for a third of the industry’s global growth in 2021-22. Premium drink consumption, including Scottish single malts, doubled between 2020 and 2022, and India has become the largest export market for Scotch, despite a hefty 150% import duty.
Size of Whiskey Market in India From Financial Year 2015 to 2021, With an Estimate for 2025
This rising demand, coupled with import costs, has led to the emergence of Indian premium products. Pioneering distilleries, through experimentation with grains, aging techniques, and flavor profiles, are at the forefront, with the global whiskey community eagerly anticipating the next innovations from India. The surge in Indian premium whiskies spans all price categories, outpacing Scotch whiskies in growth rates.
Data from the International Wine & Spirit Research indicate that 93% of all whisky traded in India falls into the “value” segment, leaving room for the development of higher-end segments. Jason Holway, a market analyst at IWSR, attributes this growth to strong consumption and growing premiumization in India, driven by higher middle-class disposable incomes, the lifting of pandemic restrictions, and improved quality, variety, and availability in retail.
The introduction of the first Indian single malt, Amrut, in 2004 marked a significant turning point. Competitors like Paul John from Goa and Indri from Haryana have entered the scene, gaining international recognition and awards. Indian single malts, often priced higher than imported Scotch, are gaining traction globally.
Three key factors propel this boom: India’s overall economic growth, the prosperity of the educated middle class, and the increasing social acceptance of alcohol. Additionally, a growing confidence in homegrown products aligns with India’s “self-reliance” policy, restricting imported liquor sales in certain outlets. Responding to escalating demand, distilleries like Paul John plan to expand production capacity, while global giants like Diageo have entered the Indian single malt market with Godawan. As the industry gears up for heightened competition, the future of Indian whiskies appears promising. Recognizing the significance of the Indian whisky market, Holway emphasizes its crucial role in the global well-being of the whisky category.
India’s liquor industry has been experiencing unprecedented growth in recent years, making it one of the fastest-growing beverage markets globally. According to the Indian Council for Research on International Economic Relations (ICRIER), the market size of the Indian liquor industry was estimated to be 52.5 billion USD (approximately Rs. 4 lakh crore) in 2020. The market is expected to grow at a CAGR of 6.8% between 2020 to 2023. India accounts for the third largest market for alcoholic beverages in the world. The per capita alcohol consumption in India is nearly 5.5 litres which is pretty low compared to the global average of 6.2 litres. This growth can be attributed to various factors such as increasing urbanization, rising disposable income, and changing consumer preferences.
However, in the last two years, this industry has gone through a lot of ups and downs. During COVID, it witnessed complete lockdowns, high taxes and other levies, post-covid increased sales, and changes in distribution patterns following COVID restrictions, new product mixes, and so on. Despite its massive consumption, India also exports its alcoholic beverages to the world.
In this blog, we will delve deeper into the liquor industry in India, exploring its growth trajectory, challenges, government policies, market trends, and consumer behavior. Join us as we discover the dynamic and evolving landscape of the liquor industry in India.
How is India’s Alcohol Consumption Pattern Changing?
The Indian Alcohol Market
The alcohol market in India is primarily divided into four categories:
Indian-made Foreign Liquor (IMFL): This term is used by the governments to designate the types of liquors that are domestically manufactured apart from the indigenous alcoholic beverages like feni, arrack, etc. IMFL category includes drinks like Rum, brandy, whiskey, vodka, gin, etc.
Beer: This segment comprises all sorts of beer, strong or mild. United breweries dominate the market with its Kingfisher beer.
Wine: It has three main types- red wine, white wine, and rose wine. India is also a huge market for wine that is both imported and produced in the country itself. Wine customers are mostly from the middle-class urban population. Maharashtra and Karnataka have the largest vineyards in India.
Indian-made Indian liquor (IMIL) or Country Liquor: These are regional drinks that are locally produced. For instance, Feni is the most popular local drink which is produced in parts of Goa. Feni is made of cashew or coconut. Similarly, Mahua is prevalent in parts of Bihar, Bengal, and Jharkhand. Almost every state in India has its regional drinks consumed by its local population.
Alcoholic Beverage Consumption in India (2020-2024)
The rate of consumption of alcohol has been growing in India for the last three decades. After the pandemic, the swift bounce back of alcohol shows the vast customer base inside the country. Because of India’s high population growth rate, every year produces 13 million drinking-age adults of which at least 3-5 million eventually end up consuming alcohol in some way or another which shows an increase in the rate of consumption of it at a huge pace.
With such a high-growth trajectory, consumption patterns are significantly changing with surprising trends emerging every year in the alcohol industry. World statistics show that India is the largest consumer of whiskey. Additionally, India is the 9th largest alcohol consumer in the world from the perspective of consumption volume.
According to the National Family Health Survey-5 (NFHS-5) 2019-21, alcohol consumption among both men and women is higher in rural India than in urban India. Overall, 1% of women aged between 15-49, drink alcohol, compared to 22% of men in the same age group.
This breaks up into 1.6%(rural) and 0.6%(urban) among women, and 19.9% and 16.5% respectively among men. Arunachal Pradesh, Telangana, and Sikkim have the highest drinking men population, standing at 52.6%, 45.4%, and 39.9% respectively. On the other hand, Lakshadweep, Gujarat, Jammu and Kashmir have the lowest percentage of 0.4%, 5.8%, and 8.7% respectively. Among women, Arunachal Pradesh, Sikkim, and Assam have the highest drinking percentage of 24.2%, 16.2%, and 7.3% respectively. Whereas, the percentage in Kerala and Jammu and Kashmir stands at 0.2% each.
Arunachal Pradesh tops the rank and has the highest percentage of both men (53%) and women (24%) drinking alcohol. Among women, Arunachal Pradesh is followed by Sikkim (16%) and among men, it is followed by Telangana (43%). Alcohol consumption is more common in scheduled tribes than in any other caste/tribe groups; this is true for both women (6%) and men (33%).
Besides Arunachal Pradesh and Telangana, alcohol consumption among men is higher (40%) in the upper Brahmaputra region of Assam, districts in Jharkhand and Bastar region of Chhattisgarh, and the Chhota Nagpur region of Jharkhand and Odisha.
Alcohol in ancient India was a homegrown staple. India was the civilization that discovered and mastered the science of the distillation of alcohol. The evidence of distillation setups was excavated by archaeologists from the sites of the Harappan civilization. The ability to process alcohol in our metabolism must have been adopted by humanity when they started eating fermented fruits.
The Chalcolithic era marked the first evidence of the presence of alcoholic beverages in India during the Indus valley civilization. Sura was the favorite drink of that era, a beverage brewed from rice meal, wheat, sugarcane, grapes, and many other fruits. It was very popular among the population of Kshatriya warriors and peasants.
According to Hindu Ayurvedic texts, consumption of alcohol has been regarded as beneficial and acts as a remedy for a few health concerns if consumed in moderation but could be detrimental if consumed in excess, ultimately becoming the cause of intoxication and alcoholic diseases. The Ayurveda texts even have specific details on when can the alcohol be consumed and how to prevent someone from getting intoxicated. It also states that if a person is suffering from illness, anger, loneliness, starvation, or paranoia, they should abstain from consuming alcohol; its consumption will only worsen their condition.
In ancient India, the consumption of alcohol was limited to the orthodox section of society. Whereas the early Vedic period also states that drinking alcohol was also prevalent among the priestly class.
As per the great Hindu Epics, Ramayana and Mahabharat, the consumption of alcohol is considered bad. People who consumed alcohol and meat are from the evil section and the good ones did not consume alcohol and were vegetarians.
When Jainism started flourishing in 563 BC, the consumption of alcohol was considered a bad habit. According to the teachings of Mahavira (founder of Jainism), complete abstinence from alcohol is regarded as a moral value that every person should adhere to furnish their life with peace and prosperity.
The Rig Veda also takes about intoxicants such as soma (a soma plant-based drink) and prahamana. The soma plant has hallucinogenic properties and was consumed traditionally due to its healing properties. It was a common belief that the one who drinks soma will never age and will be unaffected by fire, poison, or any sort of weapon attack.
Indian Startups in Liquor Industry
Alcoholic Beverage Companies in India
Various new Indian startups have entered the market to tap into the growth opportunities in this industry with lots of new ideas and interesting new liquor products. Many of the startups already made their identity even through this pandemic situation and are even ready to have wings in this industry.
Some made-in-India brands have started to focus on authenticity, craftsmanship, and creativity to produce something unique and ground-breaking to create their niche in the market. In this regard, two categories have emerged within the premium and semi-premium segments i.e., India-made conventional craft liquor and high-quality native liquor.
On behalf of this, the Indian alcohol industry is witnessing a wave of homegrown premium-level brands coming up in different categories and doing much better than their imported counterparts. These brands with refreshing ideas and different appeals with their specially curated products are going to change the face of the industry in upcoming times.
Here are some popular startups that are making waves in the liquor industry in India:
Nao Spirits – Nao Spirits is a Delhi-based startup that has made a name for itself by producing artisanal gins and other spirits. Its flagship brand, Greater Than, is made using Indian botanicals and has won several awards for its unique flavor profile.
Jimmy’s Cocktails – Jimmy’s Cocktails is a Mumbai-based startup that offers a range of ready-to-drink cocktails, including margaritas, mojitos, and cosmopolitans. The company uses only natural ingredients and has won praise for its convenient and high-quality products.
RockClimber – RockClimber is a Bangalore-based startup that produces a range of alcoholic and non-alcoholic beverages made using locally sourced ingredients. Its products include craft beer, cider, and mead, and the company has won several awards for its innovative flavors and packaging.
Salud – Salud is a Mumbai-based startup that produces premium quality tequila made from blue agave plants grown in the highlands of Jalisco, Mexico. The company’s focus on sustainability and ethical sourcing has won it a loyal following among environmentally conscious consumers.
Spiritedly – It is another interesting startup that has developed a range of low-alcohol and non-alcoholic beverages, catering to health-conscious consumers who want to enjoy the social aspect of drinking without the intoxicating effects.
These startups are bringing innovation and disruption to a sector that has traditionally been dominated by a handful of large players. As the Indian market continues to evolve, it will be interesting to see how these startups fare and how they contribute to the growth of the liquor industry in India.
The liquor industry in India faces several challenges, ranging from regulatory hurdles and high taxes to shifting consumer preferences and evolving market dynamics. Here are some of the major challenges faced by the liquor industry in India:
Regulatory Hurdles – The liquor industry in India is heavily regulated, with a complex web of laws and regulations governing production, distribution, and sale. This can make it difficult for companies to navigate the system and can lead to delays and bureaucratic red tape.
High Taxes – The liquor industry in India is subject to high taxes, which can drive up the cost of production and reduce profit margins. In addition, taxes can vary widely from state to state, making it difficult for companies to plan and budget effectively.
Changing Consumer Preferences – As India’s economy grows and consumer tastes evolve, companies in the liquor industry must adapt to changing trends and preferences. For example, there is a growing demand for premium and craft spirits, as well as low-alcohol and non-alcoholic beverages.
Distribution Challenges – The distribution system in India is highly fragmented and can be difficult to navigate, particularly for small and medium-sized companies. This can make it challenging to get products to market and can limit the reach of companies in the industry.
Competition – The liquor industry in India is highly competitive, with several large players dominating the market. This can make it difficult for new and innovative companies to gain a foothold and compete effectively.
Despite these challenges, the liquor industry in India continues to grow and evolve, with several startups and established companies finding success in this dynamic and fast-growing sector.
The Maurya period was the first when a mechanism was made to control and tax the sale of liquor. Public drinking was only allowed during festivals and public occasions, otherwise, there were designated areas for drinking. It can be thus said that even today civilization follows a similar kind of structure to maintain a restraint over drinkers.
If we investigate today’s time, laws over the consumption of alcohol in India are a state subject. Hence, the laws differ from state to state. Also, alcohol does not fall under the newly applied GST rule and therefore the revenue generated from it goes directly to the state government. However, old taxes and fees such as Excise duty on production, State VAT on sale, and other fees such as gallonage and license continue to be applied. It is only because of these charges that the liquor industry in India is seeing a desperate increase in its incentives. For instance, liquor is banned in Gujarat, but Uttar Pradesh has collected the highest revenue from the excise tax on the production of liquor. Puducherry, a UT has its primary income from alcohol trading, but Goa has the least taxes.
About 70% of what customer pays for drinks goes to the state governments. The cost of bringing an alcohol brand to the market is even higher than its cost of production. This is all done to regulate the consumption of alcohol considering the health of consumers, yet the government keeps on getting more money from the industry as the percentage of drinkers keeps increasing year after year. Growth in the urban population and increasing purchasing power propel the market growth of alcohol.
For the past three decades, India’s rate of alcohol use has increased. The rate of its consumption has also increased significantly due to India’s rapid population expansion. With a wealth of fresh concepts and intriguing new alcoholic beverages, numerous new Indian startups have joined the market to grasp on the potential opportunities in this sector.
The period COVID-19 pandemic saw a lot of ups and downs over the past two years, causing this industry to experience complete lockdowns, high taxes and other levies, post-COVID increased sales, changes in distribution patterns as a result of COVID restrictions, new product combinations, and so on. India not only consumes alcohol in large quantities but it also exports it to other countries.
FAQs
Why alcohol is not covered under GST?
Alcoholic products are one of the highest revenue generators for the state governments in India. Alcohol is not covered under GST in order to ensure that the state governments can have a certain level of financial independence.
Which taxes and fees are applied to liquor in India?
Liquor for human consumption in India does not come under GST, but taxes and fees such as Excise duty on production, State VAT (Value Added Tax) on sale, and other fees such as gallonage and license continue to be applied to liquor in India.
Which are some popular alcoholic beverage startups in India?
Some of the popular alcoholic beverage startups in India are:
Jimmy’s Cocktails
Nao Spirits
RockClimber
Salud
Spiritedly
Which state in India has the highest alcohol consumption?
According to the National Family Health Survey-5 (NFHS-5) 2019-21, Arunachal Pradesh has the highest percentage of both men (53%) and women (24%) who drink alcohol.
What are the major challenges faced by the alcohol industry in India?
The alcohol industry in India faces several challenges, including regulatory hurdles, high taxes, changing consumer preferences, distribution challenges, and intense competition.
What are some of the recent regulatory changes in the alcohol industry in India?
Recent regulatory changes in the alcohol industry in India include simplifying regulations and reducing taxes in some states. For example, in 2020, the government of Rajasthan reduced the excise duty on liquor by 10%.
What are some of the emerging trends in the liquor industry in India?
Some of the emerging trends in the liquor industry in India include a growing demand for premium and craft spirits, low-alcohol and non-alcoholic beverages, and locally sourced and sustainable products. Technology-driven innovation is also playing a major role in the industry.
What is the future of alcohol industry in India?
The future of the alcohol industry in India is promising, with changing consumer preferences, technology-driven innovation, regulatory reforms, and a growing tourism industry driving growth and development in the sector. Companies that can adapt to these trends and stay ahead of the competition are likely to thrive in this dynamic and fast-growing industry.
Nadeesh Kareemdathil
