Tag Archives: Indian Alcobev Market

Set Whiskey Free

The import tariffs for Bourbons have been reduced to 100% for bottled products, while bulk imports and other segments still attracting 150% duty structure. In a conversation with Trilok and Bhavya Desai, Chris Swonger, President & CEO, Distilled Spirits Council of the United States (DISCUS) speaks about the evolving dynamics between American and Indian alcobev markets, the impact of tariff reductions and the growing global appetite for premium spirits. Excerpts:

Chris Swonger, President & CEO, Distilled Spirits Council of the United States (DISCUS)

Trilok Desai (TD): The tariff on American whiskey has recently been reduced under the new trade framework. How significant is this change for U.S. distillers looking to expand in one of the world’s biggest whiskey markets?

The excitement is immense. With the Prime Minister and the President working together to reduce the tariff on bottled bourbon from 150% to 100%, it marks a major milestone. Of course, 100% is still high, but it’s a strong start. This creates real opportunities—we’ve seen in other markets that when tariffs drop to zero, both sides benefit. We believe this move opens the door for significant growth and stronger US–India trade relations.

The ultimate goal is to eventually move toward zero-for-zero tariffs, though that might take time—perhaps a decade. But it’s a step in the right direction. Both Indian and American consumers will gain from this exchange of distinctive products and cultures.

Bhavya Desai (BD): Have there been any further discussions between DISCUS, the U.S. government and the Indian government regarding further tariff reductions?

Yes, absolutely. We are in regular communication with the administration, the U.S. Trade Representative and the Department of Commerce. They are well aware of our aspirations. For context, between 1997 and 2018, the U.S. and EU maintained zero-for-zero tariffs, and trade in spirits grew by over 450%. That’s the kind of growth we hope to replicate between India and the U.S.

TD: Traditionally, India has been a Scotch-dominated market. How do you plan to position and expand American whiskey against such strong competition?

We work closely with the Scotch Whisky Association, and there’s no rivalry between us—in fact, our relationship is collaborative. My counterpart, Mark Kent, and I share the belief that standards matter—whether it’s American whiskey, Scotch or Indian whisky. All the economic data shows that when tariffs are reduced, every side benefits.

BD: How do you plan to raise awareness for bourbon in India? Scotch and Indian whiskies are already well established, but bourbon still feels relatively new here?

It’s really about bottle by bottle, sip by sip. The more Indian consumers get to experience American whiskey, the more they’ll appreciate its diversity and craftsmanship.

And awareness starts with accessibility. The recent tariff reduction is an encouraging first step, because it encourages American distillers to invest in this market. We’ve seen six leading American distillers participate at the recent exhibition, showcasing everything from bourbon and rye whiskey to Tennessee and American single malt.

TD: But India is a price-sensitive market and bourbon tends to be more expensive than Scotch—atleast the current ones?

That’s true, largely due to tariffs and import costs. However, premiumisation is an important global trend. Consumers here increasingly seek quality and authenticity. For those who want to experience something distinctive, American whiskey is worth it.

TD: Are American distillers exploring the possibility of bottling in India, like some Scotch producers do?

Some are certainly exploring that. A few already have arrangements to bottle locally or import in bulk. It’s an evolving opportunity, and companies are evaluating how best to bring their products closer to Indian consumers.

BD: Beyond tariff reductions, what other near-term goals does DISCUS have for the coming year?

Education—that’s our top priority. From bartenders and mixologists to retail professionals, we want to build understanding about American whiskey: its heritage, its role in classic cocktails, and its versatility.

American whiskey has a proud history—even George Washington was a distiller. Educating both the trade and consumers about this legacy will be essential to our long-term success.

BD: With ongoing trade tensions between India and the U.S., do you see these issues posing a challenge to your efforts in the alcobev space?

While there are certainly broader geopolitical challenges, we remain optimistic. The relationship between both governments is constructive, and recent dialogues have been encouraging. We’re confident that continued collaboration will bring positive results.

The key is recognising that our industry is interconnected. American whiskey can only be made in the U.S., Scotch in Scotland, and Indian whisky in India. We’re not competitors—we’re collaborators in a shared global culture of spirits.

TD: How is Indian whiskey perceived in the United States?

There’s a tremendous opportunity to introduce Indian whisky to American consumers. Just as we hope more Indians will discover American whiskey, the reverse should happen too. Both industries can benefit from a cultural exchange rooted in craftsmanship and appreciation.

TD: Some small U.S. distilleries have recently closed. What’s driving that trend?

The U.S. market has grown rapidly—from just 60 distilleries 25 years ago to over 3,000 today. Naturally, some smaller operations face challenges due to market pressures. Still, the overall growth of craft distilleries remains a major success story.

We now have craft distilleries in nearly every state. It’s a vibrant ecosystem, much like what’s emerging here in India.

TD: Do you think the growing popularity of Irish whiskey globally has affected bourbon’s market share?

Not necessarily. Irish whiskey’s growth has actually helped expand the overall whiskey category. More variety leads to more consumer interest. Removing trade barriers and increasing accessibility benefits everyone—from bourbon to Scotch to Indian whisky.

BD: Over the years, spirits have overtaken beer and wine in U.S. market share. What’s behind that shift?

Twenty-five years ago, spirits had about 28.7% of the beverage alcohol market. Today, that’s over 42% by value. We’re even projected to surpass beer by volume by 2031. That growth comes from authenticity, innovation and the rise of craft distilling.

Chris: Let me ask you both—why did India historically impose such high tariffs on imported spirits?

TD: Mainly to protect the domestic industry. The tariffs used to be even higher—around 250% years ago—and were gradually reduced to 150%, and now 100%. The plan is to lower them further over the next decade. It’s about giving Indian producers time to mature and strengthen their market presence.

BD: Exactly. India’s spirits sector has evolved rapidly. Domestic producers are now competing in premium segments and exporting globally. Once the industry fully matures, we’ll likely see a more open and balanced playing field.

TD: American whiskey, being corn-based, has a sweeter profile. Do you think that suits Indian palates?

Absolutely. India is a sweet-loving market—rum and sweeter Scotch profiles are already popular. We believe bourbon’s natural sweetness will resonate very well here.

If I may add an analogy—just as parents must eventually set their children free to learn and grow, markets must also open up. India should set its whisky free, allowing it to compete and thrive alongside global peers. When that happens, both Indian and international spirits will flourish together.

The Regular, The Semi-Premium, The Premium and Super Premium target audience

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India’s alcoholic beverage sector is the world’s third largest. Despite a lack of uniformity in state excise rates, state-specific regulations, and limited opportunities for the marketing of alcoholic beverages, the sector continues to record significant growth.

The alcoholic beverage industry is one largest processed beverage industries in the world. Globally, the alcohol market is valued at 2.4 trillion dollars. In India, the alcohol industry was valued to be at 55.84 billion dollars in 2024. The Indian alcoholic industry is one of the fastest growing and most diverse alcoholic beverages market globally. The sector has a high-growth potential given favourable demographics and increasing social acceptance.

Alcoholic Beverages industry (Alcobev) is a portmanteau for a large variety of alcoholic drinks. These drinks are categorised into Beer, Wine and Other Spirits. They are generated from variety of sources such as corn, wheat, grapes, molasses, and other agricultural products. The Alcobev Industry directly supports the agriculture and food processing industry in India. In India, alcohol consumption stood at 4.9 litres per capita with male alcohol consumption at 8.1 litres per capita. 18.8% of men and 1.3% of women in India consume alcohol.

India has one of the youngest populations globally. The total population of India is estimated at 1.43 billion for 2025. The median age in India is estimated to be 28.2 years in 2023 and is expected to remain under 30 years until 2030.

Regular

The population pyramid of India is bottom heavy with growing working age population and low dependence ratio. This trend is expected to lead to rising income levels per household as well as higher levels of discretionary expenditure.

The Indian middle class constitutes 31% of the population and is expected to be 38% by 2031 and 60% in 2047. Households with annual earnings between USD 5,000-10,000 grew at a pace of 10% between 2012 and 2020. These households are leading to an increase in discretionary spending on food and beverages, including alcoholic beverages, apparel and accessories, luxury products, consumer durables, and across other discretionary categories.

Women Participation: Increasing education, workforce participation, and urbanisation is leading to a change in the socio-economic status of women in society.

This increase of women in the workforce has resulted in a shift of patterns in terms of household activity, an increase in incidence of eating out coupled with entertainment which may lead to higher acceptability of women consuming alcohol.

Semi Premium

Young consumers are better educated, more tech savvy, well informed, and willing to try new products. Alcobev manufacturers are focussing on craft premium spirits at higher price points to capitalise on margins, while premium brands also tend to command greater loyalty among consumers.

The proportion of people who drink alcohol varies considerably low in a global context. This raises the expectation of significant growth potential in per capita consumption, especially as the acceptance of alcohol is spreading. A major consumer base that has emerged over the past five years is the rising acceptance of drinking amongst women.

The Indian alcobev industry is segmented majorly into Indian Made Foreign Liquor (IMFL) and Indian Made Indian Liquor (IMIL). Based on the type of products, Alcobev is classified as Beer, Whiskey, Wine, Rum, Brandy, Vodka, and other alcohols. The two segments of IMFL and country liquor cater to different sections of society. Country Liquor caters to the low-income groups in rural areas while IMFL caters to the middle-and high-income groups in both urban and rural areas.

Beer, a popular alcoholic beverage made from water, malted barley, yeast, and hops. It contributes approximately 8% to the recorded consumption of pure alcohol in India. The beer market in India is evolving from manufacturing usual beer products such as strong-lager beers to flavoured beers owing to the adoption of foreign trends and technologies. Today, more than 140+ beer brands exist in the Indian beer market, which could address the palate of each customer segment. The per capita beer consumption in India is still very low compared to other countries in the Asia Pacific region, and therefore the market could witness rapid growth in the coming years.

Super Premium

Ranked on its own as a country, India would have a population of 140 million spread across 30 million households, and would be the 10th-largest country in the world. Its per capita income would stand at $15,000 (about ₹12.80 lakh).

This would place it at 63rd position on the list of countries by per capita income. For perspective, Oman, which is at 54 on the real list, has a per capita income of $20,000.

Premium

The Indus Valley Annual Report 2025, published by venture capital firm Blume Ventures, divides India into three categories: India 1, representing the wealthiest 10% of the population; India 2, representing the middle 23%; and 3, 67% the rest of India.

The “aspirant class”, consisting of about 23% of the population, would be made up of 70 million households and 300 million people, and would have a per capita income of $3,000 (about ₹2.55 lakh).

Country

India 3 would consist of 1 billion people across 205 million households, the entire “bottom” 67% of the economy. Per capita income here stands at $1,000 (about ₹85,000).

How badly do averages skew perception? In 2023, India’s average per capita income was placed at $2,500, or about ₹2.12 lakh.

Super Premium

Who are the wealthiest?

3.7% of the world’s HNI individuals are Indian citizens, according to the Knight Frank Wealth Report 2025, released in March. They define HNI as a net worth of $10 million or more. 85,698 Indians met this mark, according to the Knight Frank report.

India is third on the list of countries with the wealthiest billionaires. Indian billionaires collectively hold an estimated $950 billion in wealth, coming in immediately after the US ($5.7 trillion) and Mainland China ($1.34 trillion).

191 is the number of billionaires in India, as of 2025, according to the Knight Frank report. 26 of these billionaires joined the ranks over the financial year 2023-24 alone. A big jump from seven new billionaires in 2019.

Indian Alcoholic Industry Overview

The Indian alcoholic industry has a high growth potential due to favourable demographics and increasing social acceptance. The alcobev industry in India grew remarkably in recent years because of factors such as rapid urbanisation, evolving consumer priorities, a burgeoning middle-class population, greater purchasing power, and growing liking for premium alcoholic beverages.

Alcohol consumption has surged across geographies, as a growing number of consumers, both men and women, enter the target consumer class. The legal drinking age in India varies from 18 – 25 years, depending on the state, highlighting the enabling environment for the alcohol market’s robust growth.

The consumer landscape in India has traditionally been a pyramid, with many households from low incomes forming the base, and a small number of households with large incomes at top. Similarly, alcohol consumption forms a similar structure with lower brand consumption dominating the larger base while premium brand consumption dominating the upper base. With growth being fuelled by economic development and demographic dividend, the rising “middle class” is divided into groups each with distinct consumption drives and needs.

In India, the alcohol consumption is expected to increase. Alcohol consumption stood at 4.9 litres per capita, with male alcoholic consumption at 8.1 litres per capita and female alcohol consumption at a mere 1.6 litres per capita. Alcohol consumption is expected to increase to 5 litres per capita in 2025 and to 6 litres per capita by 2036.

India’s alcohol market is experiencing rapid growth, with a compound annual growth rate (CAGR) of 3.3% from 2022 to 2027, making it the fifth-largest market globally, according to IWSR.

The role of the alcoholic beverage industry in India’s economic landscape is expected to grow. Recognising its potential and addressing the existing hurdles will help spur economic growth. The Indian alcohol beverage market is the third largest in the world and is poised to become a key player in the global spirits industry, with products made in India rapidly gaining prominence internationally. Valued at US$ 59.8 billion in FY24, the sector contributes significantly to India’s economy, accounting for nearly 3% of the nation’s GDP. As India becomes a manufacturing hub, the alcoholic beverage sector will play a key role in this growth. Both global and local players view India as a thriving domestic market and a potential exporter, particularly for home grown single malts. This growing segment aligns closely with the “Make in India” initiative, showcasing India’s potential in premium spirits production.

Whisky dominates the Indian spirits industry by a wide margin. By consumption patterns, Telangana, Maharashtra, West Bengal, Odisha, Karnataka, Uttar Pradesh, and Punjab, are among the largest consumers of alcobev in India. Liquor stores serve as the predominant sales channel nationwide, especially since alcobev consumption and sales primarily occurs outdoors.

The Indian alcohol industry is in a nascent stage compared to the global liquor industry. The growing economy supports the sector through an interplay of demographics, urbanisation, and policy reforms.

Young Population:

In 2024, revenue in the alcoholic beer market in India is projected to reach USD 9.8 billion, and exports experience a value of 34 million in 2023. The market is expected to experience an annual growth rate of 6.89% (CAGR 2024-28).

Whisky market

India is the largest whisky market in the world, with almost one out of every second bottle of whisky sold in India. The Indian whisky market was projected to reach USD 17.4 billion in 2024 and was expected to reach USD 22.4 billion by FY 2025 by leveraging demographic trends, new customers and premiumisation. Indian whisky market can be divided into four segments including popular (up to ₹450), prestige (₹450-1000), premium (₹1000-2000) and luxury segments (More than ₹2200). The value segment, consisting of popular and prestige segments, contributed close to 86% of the total volume for the Indian whisky market.

The contribution of the premium and luxury segment by value is projected to reach around 34% of the overall whisky market by FY 2028 from 33% in FY 2023. However, its contribution by volume would still be close to 16% in FY 2028. The Whiskey industry is expected to grow annually at 5.3% (CAGR 2024-2028). The Indian whisky sector generates the highest revenue among all alcoholic beverages in India.

Wine Market

The consumption of wine in India constitutes a small share but is one of the emerging alcoholic beverage categories. Growing awareness, underpinned by income growth, westernisation and a changing profile of consumers, is driving growth in the wine category.

Domestic wine manufacturers have invested in both the upstream and downstream operations of value chain. To leverage the growing acceptance of wines in the premium and luxury segments in metro cities in India. Metro cities including Mumbai, Bangalore, Delhi-NCR, Hyderabad, and Pune are the major consumption centres for wines in India. The Indian wine market is a concentrated market with domestic players controlling the market and steadily increasing their prominence in the market.

The wine segment was valued at ₹2,660 crore, with the domestic wine industry constituting 73% of the market size in 2023. It is expected to grow to ₹6,425 crores in 2028, with the domestic wine industry constituting 77%. The wine market sold 3 million cases in 2023 and is expected to sell 3.9 million cases in 2025 (Provisional). It is expected to experience an annual growth rate of 14.57% (CAGR 2024-2028).

Rum market

Rum is made by fermenting and then distilling sugarcane molasses or sugarcane juice. It is available in dark rum and light rum. Dark rum is the more popular category with a share of ~98% followed by light rum. Dark rum differs from traditional rum due to the addition of caramel or by the maturation in oak containers. Canteen stores department or army canteens are the primary drivers of rum sales in India. Rum is also the preferred alcobev drink in the northern and eastern states of India.

The Rum segment was valued at ₹21,074 crores in 2023 and is expected to increase to ₹30,240 crores by 2028 (provisional). The sale of Rum, which stood at 51 million cases in 2023, is expected to increase to 68 million cases in 2028 (provisional). The sector is expected to grow at 5.65% (CAGR 2024-2028).

Brandy market

Brandy is a beverage made by distillation of wine. It may be aged or matured to possess aroma and taste of brandy. Indian blended brandy is a mixture of minimum 2% of pure grape brandy with any other fruit or flower brandy as recommended by the Indian Law. Indian brandies are permitted to use extra neutral alcohol (ENA) from other agricultural origin sources.

Indian Brandy market can be divided into four segments, including popular (up to ₹450), prestige (₹450-800), premium (₹800-1500) and luxury segments (More than ₹1500). Brandy consumption is price sensitive as most brandy brands are in the popular and prestige segment. There is a high degree of variation in the price structure of brandy in different states, with each having an independent cost structure with unique excise duties and other applicable taxes, which leads to varying prices from state to state.

In 2024, the revenue from the brandy market in India was estimated to reach USD 3.7 billion. The Brandy segment is projected to grow annually at 4.33% (CAGR 2024-2028).

Vodka market

Vodka is a clear distilled alcoholic beverage. It is made from a fermentable base which can be grains, potatoes, or other starchy or high-sugar plant matter. The vodka industry in India constitutes a small part of the overall alcoholic beverage industry, but is experiencing one of the highest growth rates among all the alcoholic industry. Magic Moment, a core Vodka brand in India recorded sales of 6.3 million cases during the year and crossed sales value of 1,000 crore.

The revenue of the vodka segment amounted to USD 37.8 million in 2024. It is projected to grow annually at 2.13% (CAGR 2024-2028).

This is attested by the growth in sales, profit, along with projected capacity addition by alcobev companies. The alcoholic drinks sector will witness strong growth prospects in the alcoholic drinks sector over the years, driven by an improving macroeconomic growth, positive demographics, shifting cultural values, expanding young, middle class, rising sophisticated retail channel, a progressively more adventurous consumer base, and a burgeoning premiumisation trend.

The increasing focus on streamlining state excise policy, increasing support from the government, entry of international brands, effective promotion and branding by the companies, and improving the standards of alcoholic beverages available in India will provide further impetus to the growth of the alcobev industry in India. Concerted attempts to relax the cumbersome complex regulatory framework, simplify its operational complexities, enhance its Ease of Doing Business (EODB), and unlock its full growth potential will provide tailwinds to this industry. However, rising consumer inclination to consume non-alcoholic beverages may constrain market growth.

INDSPIRIT 2024: A New Era for the Alcobev Industry | Inaugural Address by Trilok Desai