With its immense population, surging incomes, and expanding global outlook, India is rapidly becoming a hotspot of opportunity for beverage alcohol brands in the foreseeable future.
According to the latest data from IWSR, India, along with Mexico and Brazil, is poised to stand out as a key market for total beverage alcohol (TBA) volume growth over the next five years, surpassing both the US and China.
A significant revelation is that India single-handedly contributed to one-third of the world’s TBA volume growth between 2021 and 2022. This growth was fueled by a remarkable recovery in the beer category and a strong surge in spirits consumption, with consumers trading up within the whisky segment and showing increasing interest in domestic brandy, rum, vodka, and gin.
While India’s prospects are undoubtedly promising, it is essential to note that it will still take some time before it can match China’s scale in the industry.
Jason Holway, a market analyst at IWSR, pointed out some key drivers of India’s growth. The country is witnessing robust consumption patterns and a flourishing premiumisation trend, aided by rising middle-class disposable incomes, the easing of pandemic restrictions, and an improved quality, variety, and accessibility of alcoholic beverages in the retail sector.
“Momentum is trending positively across drinks categories, with brown spirits performing particularly well. Consumers are trading up, notably in sparkling wine, whisky and agave-based spirits. As more brands come into the growing Indian drinks market, consumers are enjoying trying new categories,” he says.
Interestingly, one category that particularly stands out in India’s premiumisation trend is imported bottled Scotch. Over the past two decades, sales volumes have surged an astounding 20 times, and between 2020 and 2022 alone, volumes nearly doubled. The popularity of single malt whisky is also on the rise, with the main thrust coming from premium and super-premium expressions.
One key driver for the growth is seen from on-trade. Surveying Indian alcohol consumers in February 2023, IWSR data revealed that two-thirds of them anticipated consuming the same or more alcohol in on-premise establishments over the following four weeks. Moreover, a significant majority (84%) planned to dine at restaurants, with a notable 60% prioritizing quality over cost-cutting measures, affirming the growing demand for premium offerings.
In contrast, China‘s potential for spirit growth might face some hurdles, including renewed government restrictions on conspicuous consumption and less engagement from the younger legal drinking age (LDA) demographic. However, premiumisation is evolving in China, as locally produced premium wine brands garner more recognition and consumers upgrade from low-quality baijiu to pricier options due to new minimum standards affecting low-end products.
While single malt whisky continues to show promise in China, price sensitivity and waning enthusiasm for high-age-statement Scotch and Japanese expressions could pose challenges. Nevertheless, beer remains on a premiumisation trajectory, driven by a surge in craft beer consumption.
Shirley Zhu, the research director at IWSR, suggested that China’s post-Covid-19 recovery is not a swift bounce back. “China is not experiencing a quick bounce back post Covid-19, as consumers are still building up confidence to spend again,” Zhu says. “When it does take place, it could help to counteract the impact of potential headwinds in the short term.
Amidst the ever-changing landscape of consumer attitudes and behavior in the post-pandemic world, businesses must acclimate themselves to these nuances to thrive in the global beverage alcohol market. “In the meantime, premiumisation is still happening, with consumers drinking better, but it’s more nuanced now. Businesses need to familiarise themselves with this new environment, and with changes to consumer attitudes and behaviour, in the post-Covid world,” she added.