Ashish Kulshrestha | The Clear Picture
India, it appears, is finally warming up to alcohol consumption after being regarded as a taboo for decades altogether with millions entering the legal drinking age, states reducing the age limit and distillers enhancing manufacturing capacities to meet the growing demand.
According to United Spirits’ Q4FY21 investor presentation, nearly 17 million people were added to the legal drinking age population per annum between 2016-2021. This, while India being demographically one of the youngest with around 50% of its population below the age of 25 and around 65% below the age of 35, reports alcohol industry observer agency IWRS. It adds that the majority of alcohol volume is consumed by people between the ages of 18 and 40.
Coupled with the growing consumption of alcohol by the younger generation on the back of rising disposable income is driving the growth of this industry. The pandemic too significantly contributed to the rising consumption and at-home consumption of liquor in the country.
This trend further got a push with the Delhi government reducing the alcohol consumption age to 18 years from the current 21 years and more state governments are likely to follow the suit to shore up their revenues, battered by the COVID-19 pandemic.
The Indian National Bar Association states that the legal drinking age in India and the laws which regulate the sale and consumption of alcohol vary significantly. While it is banned in states like Gujarat, Bihar, Mizoram, Manipur and Lakshadweep, remaining states allow alcohol consumption between 18-25 years of age.
Buoyed by this, several distillers such as United Spirits, United Breweries, Globus Spirits are expanding their manufacturing capacities of Indian and Indian Made Foreign Liquor (IMFL). For instance, UB Group carried out capacity expansion at its breweries in Telangana, Karnataka & Rajasthan with the Telangana Brewery (UBGD) post expansion becoming the largest brewery in India with capacity of 3 mio HL/annum. Globus is currently adding 140 KLPD of capacity in West Bengal at an estimated cost of Rs 1,100 Mn. The total capacity at WB will stand at ~280 KLDP post this expansion.
This is likely to significantly contribute to the growth of India's alcoholic beverage industry, the third largest in the world after China and Russia, and is growing at a rapid pace. According to Goldstein Market Intelligence, the India alcoholic beverages market is expected to grow at a CAGR of 7.4% during the 2017-2030 to touch $39.7 billion by the end of forecast period as alcohol consumption grows in urban areas of the country.
Interestingly, India will also lead the recovery of the global alcohol industry, particularly for whiskey. IWSR says the global whisky experienced a -10.7% volume decline in 2020, but the category is forecasted to rebound in 2021 and continue on its growth path, bolstered by the US and India. Whiskies are among the fastest-growing sub-categories of spirits and most of the growth for Scotch whisky will come from delayed recovery in the key market of India and eventual revival of global travel retail, especially for premium Scotch.
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