Sales of alcoholic beverages in India to reach pre-Covid levels this fiscal year
Sales of alcoholic beverages in India are expected to reach pre-Covid levels this fiscal year with sales of at least 340-345 million cases.
A stable fiscal environment and less disruption to trade; followed by increasing demand for Foreign Alcohols Made in India (IMFL) are seen as drivers.
IMFL sales fell 12% year-on-year in FY21 – to around 300 million cases – due to the pandemic-induced lockdown and higher taxes. As recoveries were seen in the second half of FY21 – with growth returning – the second wave of infections and lockdown restrictions hit sales.
According to Vinod Giri, managing director of the Confederation of Indian Alcoholic Beverage Companies (CIABC) – an umbrella organization of Indian alcohol manufacturers – annual growth of 6-7% is expected compared to figures reported in the second half of the year. last year. . This is expected to bring sales closer to pre-Covid levels by the end of fiscal 22.
“There were almost 6-8 weeks without a sale in FY21 which severely affected the industry. As the numbers gradually increased, the second wave hit demand. However, the second wave was not that bad in terms of sales as governments were better prepared. Thus, strong growth in the first half compared to the weak base of last year and a healthy and sustained increase in the second half should bring us back to the level of sales before Covid by the end of this fiscal year ”, a he declared. Activity area in an interview.
The 180ml offerings continue to generate volumes in the country.
In the IMFL segment, whiskeys are experiencing growth in terms of volume and sales value; while white spirits – gin and vodka – are experiencing “strong growth although a weaker base”. However, despite the strong growth, their contribution to overall alco-bev sales remains at “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, here too, sales growth should be back in absolute terms with a sharp decline and a weak base last year.
The model of home alcohol delivery or e-commerce needs to be “fine-tuned” as it is “not the normal route to market” for alco-bev businesses. End consumers pay more “because delivery costs” ultimately impact demand. A few organized retailers, however, sold at retail price and at no additional cost. “The model needs to be fine-tuned. It has emerged as a response to a crisis. But you need to evolve it – both at the level of state government policy and at the corporate level,” he said. -he adds.
According to Giri, “downtrading” has also occurred as sales in the high-end and “original in bottle” segments – especially for brands that have generally had good sales in duty-free shops – remain affected. . free store vs. regular store – is “quite high” varying “from 50 to 100%” depending on the local state tax structure. Some selected brands – normally only available in duty free – have been introduced into general commerce.
“Naturally, there is a drop in sales for some brands. But the numbers should come back as restrictions on overseas travel are relaxed,” he said.
On the other hand, exports are also expected to “do well” and grow by 20%.
“Export markets are also improving,” Giri said, adding that the confederation has represented the Center to “push” Indian alcohol exports – through brands like Jaisalmer Gin, Rampur and Amrut in whiskeys, some newer brand distilleries in Goa, among others. .
“We should consider making Indian brands accepted worldwide. India’s share is not even 1% of total world trade. Help is also needed at government level. However, we are not calling for protection, ”he said. .