Excise reset uncorks demand and investment in Andhra's liquor market

Retail privatisation, wider brand access and transparent rules are lifting volumes and drawing major players back to the state

Andhra Pradesh’s new excise policy is reigniting the alcohol market as companies rebuild supply chains, restore demand, and draw national attention. Effective from October 2024 to September 2026, it reopens a long-restricted industry, triggering volume recovery, renewed interest from national players, and a shift towards premium products, say industry leaders.

 

For years, Andhra’s tightly controlled alcoholic beverage (alcobev) market — marked by limited brand availability, centralised retail, and state-led supply allocations — curbed demand and business sentiment. Experts say the new government’s overhaul of excise rules and retail privatisation has reset the landscape.

 

The policy pivots sharply towards private retail, licensing 3,736 liquor outlets — 3,396 in the open category and 340 reserved for the toddy-tapping community — through a two-year lottery system. It introduces ₹99 price points for select 180 ml bottles and premium urban stores, mandates UPI payments to curb illegal cash transactions, fixes a 20 per cent retail margin, standardises operating hours, and positions the reforms around public safety, transparency, and community inclusion.

 

The International Spirits and Wines Association of India (ISWAI) says the revised framework has created transparency and a level playing field for manufacturers. “Following the implementation of the government’s new excise policy, Andhra today offers a fair policy environment. With the availability of national brands in the market, consumers have choice and access to quality products,” said Sanjith Padhi, chief executive officer, ISWAI.

 

Padhi said that with supplies now normalised, Andhra’s true demand will begin to reflect more accurately, with the market expected to grow in both volume and value as consumers shift towards premium products. He added that the alcobev industry, which contributes nearly 30 per cent of the state’s own tax revenue, could drive wider growth in hospitality, manufacturing, and allied sectors under a more stable, industry-friendly regime.

 

Anant Iyer, director general of the Confederation of Indian Alcoholic Beverage Companies (CIABC), calls the policy “fair and transparent”, noting that overall demand is “healthy and higher”.

 

Vinod Giri, director general at the Brewers Association of India, said Andhra is “coming out of an extremely restrictive environment”, with orders now placed based on demand rather than state allocation.

 

“The state is in a boom phase. Beer volumes, which once fell to a third of historic levels, are now recovering sharply. The state is returning to earlier norms, with about 100 per cent growth in some segments,” Giri said.

 

Bengaluru-headquartered United Breweries (UBL), part of Heineken, said the reforms have “unleashed market forces”. UBL, which operates the GMR brewery in Srikakulam and the Illios brewery in East Godavari, says it is preparing for sustained growth. The company believes the state could become a manufacturing and export hub, given its coastline and logistics advantages.

 

After a staggering 60 per cent fall in beer consumption between 2019 and 2024, UBL reports a revival. Andhra has emerged as one of the company’s strongest growth markets over the past four quarters. “These reforms have helped bridge longstanding market gaps, allowing actual consumer demand to be reflected,” a UBL spokesperson said.

 

The policy is shaping national discourse as well, the company added. When one state adopts reforms that unlock economic activity and boost government revenues, “it sets the foundation for a larger, thriving ecosystem that attracts investments, encourages manufacturing, and generates employment”, UBL said.

 

New Delhi-based Radico Khaitan describes the Andhra shift as a “progressive step” that improves stability and predictability. Better retailer participation and wider brand choice, said Amar Sinha, chief operating officer, are already driving performance in its premium portfolio.

 

Rockford whisky maker Modi Illva is preparing to re-enter the state after three years. “We were there earlier but pulled back operations due to unfavourable policy. With the new policy in place, we should be available in the next two months. We have applied and are awaiting approval,” a spokesperson said.

 

According to a CIABC report, in 2024–25, Andhra Pradesh sold more than 3.7 million cases and contributed about 9 per cent to India’s overall market. ISWAI says liquor-related taxes account for nearly 30 per cent of the state’s own tax revenue. Between 2018–19 and 2023–24, the state’s tax revenue grew at an 11 per cent compound annual growth rate (CAGR), while alcobev revenue grew at 9 per cent CAGR, despite restrictive policies through much of that period.