Inflation and high taxes dampen volume growth
In 2013, alcoholic drinks in India witnessed lower volume growth in comparison to 2012. This was due to several factors like a drastic increase in excise duties and VAT, which led to an increase in average unit prices and a decline in volumes. Whenever the state governments increase the duties and tax levies, consumers shift to country liquor, which is dominant in West and North India. Other factors which led to an increase in the unit prices and a decline in growth rates include the upsurge in the cost of raw materials like molasses and ethanol. An increase in the price of packaging, mainly because of the rise in the price of glass bottles, also fuelled the unit price growth.
Companies use premiumisation to increase margins
Companies are expanding their product portfolio by adding premium brands so that they can charge a higher price. For example, Allied Blenders & Distillers Pvt Ltd launched Officer’s Choice Blue, a premium version of its flagship brand Officer’s Choice. Similarly, other companies like United Spirits Ltd have launched premium versions, such as Black Dog Triple Gold Reserve and Black Dog Black Reserve. In beer, Carlsberg India Pvt Lt launched a French super premium beer, Kronenbourg.
United Breweries Ltd maintains its leadership
Alcoholic drinks in India was led by United Breweries Ltd in 2013. The strong distribution channel of the company and the popularity of the brand Kingfisher, which is almost synonymous with beer in India, have helped the company to maintain its leadership position. The company has a wide portfolio of beers in the low, medium and premium price bands.
Distribution continues to be highly regulated
The distribution of alcoholic drinks in the majority of the states is highly regulated and controlled by the state government. In states like Tamil Nadu, Uttar Pradesh and Kerala, the wine shops are all licensed shops owned by the government. The regulations are relaxed a little in states like Karnataka and Andhra Pradesh where liquor is now sold in supermarkets and hypermarkets.
Young demographic population will aid volume growth
Despite the slowdown in volume growth in 2013, India remains an attractive market for global brands looking to offset sluggish growth in their traditional strongholds of North America and Europe. The young demographic profile of India continues to offer a large customer base to both domestic and international brands. With the changing social norms, increasing disposable income, consumers’ greater affluence and increasing social acceptance of alcohol, India will remain an attractive market for alcoholic drinks.
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The Alcoholic Drinks in India market research report includes:
- Analysis of key supply-side and demand trends
- Detailed segmentation of international and local products
- Historic volumes and values, company and brand market shares
- Five year forecasts of market trends and market growth
- Production, imports by origin, exports by destination
- Robust and transparent market research methodology, conducted in-country
Our market research reports answer questions such as:
- What is the market size of Alcoholic Drinks in India?
- What are the major brands in India?
- Have there been any alcoholic drinks legislative changes over the past 12 months?
- How is the alcoholic drinks industry affected by the recession?
- What is consumed more; beer, wine or spirits?
- What have been the key trends seen in new product developments?
- Do alcoholic drinks consumers want value for money or added value?
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This industry report originates from Passport, our Alcoholic Drinks market research database.