What worked in favour of Liquor Industry in 2018

The Indian liquor Industry is the world’s third largest and fastest growing. In the year gone by, the liquor industry faced several challenges; some of which were a hangover from 2017. During 2017, the Indian Supreme Court placed a ban on the sale of liquor within 500 meters of the highway; this along with the rollout of the GST in 2017 and the lingering impact of demonetization caused some distress to the Indian liquor Industry the year before last. By the end of 2017, however, the impact of many such ‘Black Swan’ events began dissipating and the prospects for the liquor industry in 2018 were upbeat once more.

While examining what worked in favor of the liquor Industry in 2018, it becomes obvious that perhaps no greater single fact contributed to the success of the industry, post the “Black Swan” events of 2017, than the appetite of the middle-class Indian consumer. Indian consumers are growing wealthier which is driving more of them to examine the finer things in life including fine liquors and craft beers.

The Growing Size of the Indian Middle Class

Urban young Indians are growing increasingly affluent which is translating into them adopting a lifestyle that incorporates good food, drinks, and the company of friends. An additional impetus to the domestic liquor industry in India in 2018 came from the millions of young Indians who came of legal drinking age in 2018. India already has nearly 50% of its population below the age of 25 meaning that 19 million Indians came of legal drinking age last year. To put this in perspective, 5 times as many people in India came of legal drinking age in 2018 than there are people in all of Ireland, a country whose citizens are renowned for their copious consumption of liquor.

Urban Indians are Becoming Connoisseurs 

In 2018, young consumers of urban parts of India were seen adopting traits that made them connoisseurs. Young Indians were much more likely to experiment with different varieties of liquor and their openness to different kinds of liquor had an impact on the demand for liquor in 2018. Rather than passing on the chance to drink liquor carrying an unfamiliar label, Indians were more likely to be open and to experiment with drinking liquor they had never had before, particularly when the label and bottle containing the liquor were attractive. The Indian consumer in 2018 had a more mature outlook than did consumers in prior years.

The openness to new experiences has also meant that more Indians last year have consumed craft beers and global liquor brands. Furthering demand for such high-quality liquors was higher disposable incomes and easier access to such liquors at new bars and pubs, an increasing number of which are being opened in tier 2 cities across India. A part of becoming a connoisseur of liquor is drinking with the intent to savor liquor. This trend was more common last year than in any year prior. Fuelling this trend were young Indians, many in their mid 20’s and in successful careers who enjoy sampling liquor and good food in the company of friends.

This article is written by Romesh Pandita, Chairman and MD, Alcobrew Distilleries