Flying off the shelves: Duty-free liquor sales at Indian airports rise 13%

Global drinks firms are banking on India's rising disposable incomes and Gen Z travellers' premium tastes to power growth of duty-free liquor sales in coming years

India’s duty-free and travel retail beverage volumes grew 13 per cent in 2024, more than double the 6 per cent rise recorded in domestic stores, The Economic Times reported on Friday. Volumes remain heavily skewed towards whisky — Scotch in particular — but analysts said there are signs of increasing diversification across categories.

 

Whisky dominates

 

Whisky accounted for three-fourths of duty-free beverage volumes and grew 12 per cent last year, according to IWSR Drinks Market Analysis. This contrasted with an 8 per cent decline in the category’s domestic market volumes.

 

“With Indian passenger numbers expected to grow 50 per cent over the next five years and beverage alcohol volumes rising rapidly, it is clear that Indian travellers will be vital to the future success of global travel retail (GTR),” said Charlotte Reid, senior insights manager, GTR at IWSR.

   

Global travel retail as a growth engine

 

Global travel retail has become an increasingly important growth engine for drinks companies at a time when the wider alcohol industry faces stagnant volumes. While global total beverage alcohol consumption is projected to remain flat between 2024 and 2029, IWSR forecasts GTR volumes to grow at a 3 per cent compound annual rate and 4 per cent in Asia.

 

Travellers explore premium brands

 

Reid noted that Indian consumers were moving away from price- and utility-driven behaviour towards brand consciousness and experiential spending. “India’s disposable income and travel demands are growing faster than their global counterparts, and this will in turn reshape consumer spending and drive demand in GTR,” she said. “Indian consumers are changing from price- and utility-driven behaviours to brand consciousness and experiential spending, with Gen Z and millennial consumers to the fore.”

 

Radico Khaitan chief operating officer Amar Sinha was quoted as saying that travellers are increasingly using airport dwell time to explore brands, especially premium and luxury options.

 

Indian whisky gains ground

 

While Scotch volumes rose 11 per cent in 2024 and US whisky increased 8 per cent, Indian whisky grew 10 per cent, with value rising even faster at 18 per cent. Despite this, Indian whisky remained a small player in global travel retail, accounting for less than 2 per cent of whisky volumes.

 

“Indian whisky has relatively little shelf space in GTR. Until about three years ago, it had virtually no presence in the channel, but this is beginning to change as consumers broaden their repertoires,” Reid said.

 

Beyond whisky, other categories are also expanding. Vodka volumes in duty-free outlets grew by 48 per cent in 2024, nearly three times the pace of domestic market growth.

 

Scotch whisky to get cheaper in India

 

Under a new India–UK Free Trade Agreement (FTA), the existing 150 per cent import duty on Scotch whisky will be reduced to 75 per cent initially and then gradually lowered to 40 per cent over the next 10 years.

 

The tariff cut is expected to benefit both consumers and the Scotch whisky industry. A bottle of Scotch that currently retails for about ₹5,000 may soon cost between ₹3,500 and ₹4,000 after the initial reduction, depending on state taxes and distributor margins.