The Indian alcobev industry experienced strong growth in 2023, which has been attributed to a substantial surge in alcohol consumption across the country. However, this expansion occurred amidst regulatory strictness and persistently high input price inflation. Indri whisky was adjudged the world’s best single malt, solidifying the nation’s position in the global spirits market.

Alcohol sales expanded, marking an important step towards reclaiming pre-Covid levels. During the pandemic, consumption plummeted from 306.5 billion litres in 2019 to 272 billion litres. However, according to data from the International Spirits and Wines Association of India (ISWAI) report, amidst recovery efforts, the country anticipates a continued surge, projecting a climb to 313 billion litres by 2025 .

Alcohol consumption surged across demographics, with an increasing number of individuals, both men and women, entering the drinking age. This upward trend can be attributed to multiple factors, including higher income levels, heightened awareness encouraging personal choices, and the rapid pace of urbanisation.

Interestingly, the rise isn’t confined to urban centres; the National Family Health Survey highlighted that alcohol consumption among both genders has seen a greater increase in rural regions compared to urban areas.

Even as consumption fuelled sales, the industry battled rising inflation as well, especially for Extra Neutral Alcohol (ENA) and other input materials. According to an ISWAI report, over the past year, the ENA price has increased 9 per cent.

The premiumisation trend soared, as value-based consumption rose. Many industry players focused on catering to this burgeoning segment with new launches, recognising its potential to yield higher margins and bolster profitability. Notably, Diageo India exited low-priced alcohol markets due to lower margins and inadequate volumes. This shift underscores the growing dominance of premium preferences, reshaping the market dynamics significantly.

The year also saw the ascent of Indian single malt whiskies. Indri whisky, crafted by Piccadily Distilleries in Haryana, was adjudged the world’s best single malt. Concurrently, Pernod Ricard introduced Longitude77, its inaugural offering in the single malt category.

The “Delhi liquor scam” saw the Delhi Excise Policy 2021-22 being scrapped, following alleged irregularities. The policy involved privatising liquor sales, allowing discounts, and letting vendors set prices independently. Lieutenant Governor VK Saxena recommended a CBI probe over alleged violations and procedural lapses.

Aam Aadmi Party (AAP) leader Manish Sisodia was implicated for allegedly providing undue benefits to licensees in exchange for kickbacks, allegedly used in elections. The CBI filed an FIR, raided multiple locations, including Sisodia’s residence, and accused officials and liquor industry figures of involvement in irregularities.

On the regulatory and taxation front, Karnataka hiked additional excise duty on Indian Made Foreign Liquor (IMFL) by 20 per cent on all 18 slabs, after the Congress came to power in the state. Additionally, the duty on beer was hiked from 175 per cent to 185 per cent.

The G20 Summit under India’s presidency, and the visit of the UK Prime Minister Rishi Sunak put the spotlight on India’s proposed free trade agreement (FTA) with the UK. As the trade agreement draws close to completion, bottled Scotch is anticipated to have a minimum import price (MIP) and lower import taxes are expected for both bottled and cask whiskey. Under the proposed FTA, import duty on bottled Scotch above the MIP threshold might be lowered from 150 to 100 per cent, while duties on casks might be halved to 75 per cent.

On the bourses, liquor companies were on a spirited bull run. In the last one year, Radico Khaitan’s stock price has gained by 60 per cent, Tilaknagar Industries by 106 per cent, Som Distilleries by 146 per cent and Sula Vineyards by 50.91 per cent.