Alco-beverage sales in India expected to hit pre-Covid levels this fiscal

Alco-beverage sales in India are expected to hit pre-Covid level numbers this fiscal recording sales of at least 340-345 million cases.

A stable tax environment and lesser disruption in trade; followed by rising demand for Indian made foreign liquor (IMFL) are seen as drivers.

Sales of IMFL declined by 12 per cent year-on-year during FY21 - to approximately around 300 million cases - due to the pandemic-induced lockdown and increase in taxes. As recoveries were being noticed in the H2 of FY21 - growth being back - the second wave of infections and lockdown-led restrictions hit sales.

According to Vinod Giri, Director General, Confederation of Indian Alcoholic Beverage Companies (CIABC) - an umbrella organisation of Indian liquor-makers - an expected 6-7 per cent growth on annualised basis is expected over numbers reported in the second half of last year. This should bring sales close to pre-Covid levels by the end of FY22.

Vinod Giri, Director General, Confederation of Indian Alcoholic Beverage Companies (CIABC)

"There were nearly 6-8 weeks of no sales in FY21 which severely impacted the industry. As numbers were inching-up, the second wave hit demand. However, second wave was not so bad in terms of sales as Governments were better prepared. So a strong growth in the first half over last year's low base and sustained healthy increase in the second half should bring us back to pre-Covid level sales by the end of this fiscal," he told BusinessLine in an interview.

Volume drivers

The 180 ml offerings continue to drive volumes in the country.

In the IMFL segment - whiskeys - are witnessing growth in terms of volume and value sales; while white spirits - gin and vodka - are witnessing "high growth albeit a lower-base". However, despite the high growth, their contribution to overall alco-bev sales remain in "single digits". A few states like West Bengal, Odisha, Andhra Pradesh and Telangana where tax structures continue to be "high" are outliers in terms of sales. But, there too sales growth should be back in absolute terms give large fall and low base last year

The home delivery of liquor or e-commerce model needs to be "fine-tuned" as it is "not the normal route-to-market" for alco-bev companies. End consumers pay more "as delivery charges" impact demand ultimately. A few organised retailers have however been selling at retail prices and at no extra cost. "The model needs fine tuning. It came up as a bolt on response to a crisis. But you need to evolve it - at both state government policy and company levels," he added.

According to Giri, "downtrading" has also happened as sales in the premium and 'bottled in origin" segments - especially for brands which generally had good off-take through duty free shops - remain impacted. The price difference - when purchased from a duty free versus regular shop - is "quite high'' varying "50- 100 per cent" depending on the local tax structure of the state. Some select brands - normally available only in duty free - have been introduced through the general trade.

"Naturally there is some downtrading for select brands. But, the numbers should be back as restrictions on foreign travel are relaxed," he said.

On the other hand, exports too are expected to "do well" and grow at 20%.

"Export markets are looking up too," Giri said, adding that confederation has been representing the Centre to "push" for Indian alcoholic exports - across brands like Jaisalmer Gin, Rampur and Amrut in whiskeys, some newer brands distilleries from Goa, among others.

"We should look at creating brands from India that have global acceptance. India’s share is not even one per cent of total global trade. Some help is required at the government level too. We are, however, not calling for protection," he said.

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