India's Alcohol Market Hit by Tax Hikes, Lower Consumption

Alcoholic beverages demand has slowed to 4% in the last calendar year, a significant drop from the 12% growth seen in 2022. This decline was attributed to increased taxes, a high base, and a reduction in alcohol consumption. Whiskey, which makes up two-thirds of the market, saw a 5.3% increase in volume, followed by brandy at 2.7% and rum at 1.1%, according to industry executives citing the latest excise department data. Vodka and gin experienced substantial growth at 18.8% and 15.3%, respectively, albeit from a smaller base.

"The demand environment has remained subdued as people are still experimenting," stated Hina Nagarajan, managing director of United Spirits, during an investor call. "Consumers are opting to drink more outside their homes, where prices are higher, rather than purchasing alcohol from stores and consuming it at home. This shift is impacting overall volume to some extent."

United Spirits anticipates that this subdued demand environment will persist over the next few quarters, putting pressure on consumer wallets. "We are seeing limited upgrades from lower-end products to mid-range or premium ones," Nagarajan added.