Liquor intake likely to treble in three years

The overall liquor consumption in India is growing at a compound annual growth rate (CAGR) of about 30 per cent and is likely to reach 20,000 million litre in the next three years, from the current level of 7,000 million litre. This is revealed in a study titled ‘India’s emerging imported spirits market,’ released by the Associated Chambers of Commerce and Industry of India (Assocham).

Besides, in terms of revenue, the alcoholic beverage market is currently estimated at about Rs 52,000 crore and is likely to reach Rs 2 lakh crore during the course of the next three years.

Also, wine consumption in India is likely to reach around 14.7 million litre (in volume terms) by the end of 2012 from 4.6 million litres in 2008, registering a growth of 35 per cent, the study said. According to the study, the Indian wine market stood at Rs. 800 crore in 2008 and is likely to touch Rs. 2700 crore by the end of this year.

 

Demand for vodka in India is growing at about 25 per cent annually and is likely to reach 10.2 million cases by the end of 2012 as vodka is emerging as a starting drink of choice for the youth in metros and Tier-II centres.

India ranks as one of the largest alcoholic beverage markets across the globe considering that almost 70 per cent of alcohol in the southeast Asia is produced in India.

Besides, India’s contribution in the total alcohol beverage imports in the region is nearly 10 per cent. According to the study, Kerala and Punjab lead the liquor-consuming states with Kerala alone accounting for 16 per cent of the total consumption, while Punjab accounts for 14 per cent.

States like Andhra Pradesh, Haryana, Himachal Pradesh, Karnataka, Rajasthan, Tamil Nadu and West Bengal are leading the liquor-consuming states in that order accounting for 40 per cent of all the liquor consumed in India. Union territories of Chandigarh and Pondicherry also record high consumption levels and together account for almost 6 per cent of the total consumption.

Nearly 15 to 20 per cent of the liquor consumed annually is estimated to be counterfeit, causing tax loss to the state governments and brand reputation damage to the manufacturers, the study says.

Sale of imported spirits, including the duty-free travel trade in India, is likely to cross the five-million cases mark and reach about 55 million litres by 2015.

Growing at a CAGR of about 25 per cent, the imported spirits market in India is currently estimated at about 28 million litres and about 3.1 million cases.

“Growth of imported spirits in India is largely driven by the spurt in tendency amid young Indian professionals and entrepreneurs to migrate from local brands to international brands,” DS Rawat, secretary general of Assocham, said after releasing the study report.

With more number of Indians travelling abroad for studying and professional purposes, their fondness for imported liquor is also increasing. This segment has also been fuelled by rising income levels, increasing young population, growing number of working women, increasing media penetration and expanding exposure to western lifestyle.

Market for imported liquor has huge scope for growth in India. The study forecasts a dramatic increase in the sale of foreign brands if the stiff regulatory environment together with state levies and high import tariff is relaxed to some extent.

There is also growth in sales of imported liquor in Tier-II and Tier-III cities as companies are focusing on retail channels like bars, restaurants and pub joints across these towns, the study said.