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Rising affluence in India sees higher sales of premium alcohol
THE rising affluence of India's middle class will drive growth of as much as 10 per cent a year in the US$33 billion spirits market, according to one of the nation's oldest distillers.
After three years of stagnation when the industry faced sales restrictions, Indians are drinking more and spending on premium alcohol, said Abhishek Khaitan, the managing director of Radico Khaitan Ltd, a market leader in vodka with its Magic Moments brand. The trend will likely continue as urban dual-income families in the nation of 1.3 billion follow peers in the US and Singapore when it comes to eating and drinking out, he said.
India's spirit sector - which includes whisky, brandy, rum and vodka - is estimated to expand 25 per cent to 2.92 trillion rupees (S$56.07 billion) by 2022, according to Euromonitor International. The country is among the world's most attractive alcohol markets and should increase its share of global consumption from about 2 per cent given high single-digit to low-teen growth, according to a report from brokerage Nirmal Bang.
"There's a cultural change happening," Mr Khaitan said. "Most importantly, the middle class is emerging in India and premiumisation is happening." The Indian distiller, founded in 1943, started selling branded products about two decades back.
The company introduced its Magic Moments vodka brand in 2006, added more premium products and new flavours. These along with its branded whisky, rum and other spirits have spurred profitability. Profits jumped more than 52 per cent last year.
Given the local market's potential, offshore companies have come calling, Mr Khaitan said, though, he says he isn't interested in selling. BLOOMBERG