India's Liquor Market Splits Between Premium Growth and Mass-Market Decline
Inflation-hit consumers pull back on budget brands while premium spirits see record demand.
1Market Divergence Trends
India's liquor industry is experiencing a distinct divide between consumer segments. While high-income individuals continue to drive growth for premium spirits and beer, inflation-sensitive buyers are reducing discretionary spending. This trend was evident in the September quarter earnings, where mass-market brands faced significant volume declines across major industry players.
2United Spirits Performance
United Spirits reported a 2.5% revenue decline to ₹7,014 crore, with net profit falling 7.7% to ₹428 crore. Sales of popular brands like Director's Special dropped sharply, while the 'prestige above' portfolio grew 6.3%. CEO Praveen Someshwar noted that lower-income consumers are showing fatigue due to persistent inflationary impacts.
3Radico Khaitan Growth
Radico Khaitan saw its 'prestige above' volumes rise 36% to 5.28 million cases, significantly outpacing total IMFL volume growth of 7%. Conversely, its 'regular' portfolio declined by 9.7%. Managing Director Abhishek Khaitan attributed this shift to younger demographics and women increasingly favoring mixable white spirits like vodka and premium whiskies.
4Beer Sector Surge
United Breweries recorded a 23.7% revenue increase to ₹4,623 crore, bolstered by a 16% rise in total volumes. Premium beer segments performed exceptionally well, with Heineken Silver and Kingfisher Ultra growing 67% and 44% respectively. The company’s profit was also supported by a ₹36 crore interest income from tax refunds.
5Allied Blenders Results
Allied Blenders reported a 6.8% revenue increase to ₹2,085 crore, with net profit rising 9.6% to ₹69 crore. Total volumes grew 11.1% to 10 million cases. The company highlighted that its mass-premium portfolio, including Officer’s Choice Blue, performed strongly, growing 15.5% in volume despite broader industry supply chain cost challenges.
6Input Cost Pressures
Rising raw material and packaging costs continue to weigh on industry margins. United Breweries estimates cost impacts between ₹350-400 crore for fiscal year 2027. Similarly, Radico Khaitan faced ₹27 crore in additional costs, while Tilaknagar Industries saw profitability reduced by approximately ₹25 crore in each of the first two quarters.
7Strategic Industry Caution
Industry expert Poonam Chandel warns against viewing premiumization as a fundamental shift in nationwide consumer behavior. She suggests that current growth in premium portfolios is partly driven by companies consciously prioritizing higher-margin products. India remains a highly price-sensitive market where disposable income is currently constrained by ongoing inflationary pressures on households.
8Future Market Outlook
The sector faces a complex environment characterized by regulatory challenges and supply-chain disruptions. While premiumization offers a path to margin expansion, companies must navigate rising debt and input inflation. Future performance will likely depend on the ability to manage price increases across states while maintaining volume growth in competitive segments.