In FY24, Indians tightened belts but ramped up happy hours to fresh high

India’s tepid and tottering private consumption impulses has been a major gripe for policy makers and investors over the past couple of years, after such spends growth slipped to a three-year low pace of 5.6 per cent in 2023-24 (FY24). But while households grappled with high inflation and cut back on discretionary spends like clothing that year, they ostensibly sought to make up for their pruned shopping lists by imbibing more.

  In fact, consumption of alcoholic beverages grew at the fastest pace since 2011-12 when the current GDP data series was launched, according to disaggregated national accounts data released by the National Statistics Office this month. The 17.7 per cent growth in spends on alcohol in FY24 marked the third straight year of double-digit growth, outstripping the overall consumption spending growth significantly for two years in a row.  

  To put this trend in perspective, alcohol spends have only grown over 10 per cent twice in the years from FY13 till FY20. In the Covid-hit year FY21, private final consumption expenditure fell 6 per cent and alcohol expenditure fell a sharper 14.6 per cent.

In absolute terms, households spent almost ₹60,000 crore on liquor in FY24, nearly double the little over ₹34,000 crore incurred in FY14, and experts attributed this to India’s rising urbanisation accompanied by an increase in the drinking population and tipplers opting for more premium brews and distilled options. And this trend is not losing steam anytime soon. 

  Revenues of alcoholic beverages manufacturers have grown at a compound annual growth rate of 13 per cent over the three-year period of FY23 to FY25, and are expected to rise another 8-10 per cent this year to a whopping ₹5.3 trillion in FY26, Crisil Ratings said in a report.  

  “Revenue from premium and luxury segments, priced at over ₹1,000 per 750 ml, is expected to grow around 15 per cent, and the contribution from these segments will rise to 38%-40% of spirits revenue this fiscal compared with 31-33% in fiscal 2023,” reckoned Jayashree Nandakumar, director at Crisil Ratings.

  It is not just alcohol that consumers spent more on. Expenditure on tobacco products grew at an even faster 22.5 per cent in FY24, with ₹70,200 worth of tobacco consumed. Spending on mineral water, soft drinks and juices jumped 21 per cent, some of which was perhaps driven by what people chose to mix their nightcaps with.

  Spending on Restaurants and hotels also jumped 18 per cent, and while drawing a cause-effect correlation between all these spending decisions could be hazardous, households’ spending on health also surged 17.3 per cent. Economists, oenologists and the medical fraternity may debate if this is what it means to toast to one’s health.