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In recent years, liquor store shelves have been making space for more and more options. Moreover, now there are options for every type of drinker. A cheap yet strong beer for youngsters, a pre-mixed rum cocktail for people who love it but don’t have the time for a cocktail, a can for Delhi’s very famous car-o-bars or even premium Indian whiskies for old and experienced connoisseurs. You name it, and you have it!
Speaking of consumption patterns, numbers are a testament that the alco-bev industry has been on the rise, despite Covid, recession, price hikes and many other external factors. In Delhi itself, residents consumed more than Rs 100 crore worth alcohol during the two weeks of festivities. This marked a 31 percent increase in liquor sales as compared to last year.
But surrogate advertising acts as an obstacle for this rapidly growing market. One beer brand that caught everyone’s attention on the cricket field this World Cup was Bira 91, but they could only have their banner placed; there was no ad campaign.
According to industry experts marketing liquor is tricky as promoting alcohol products requires a high degree of responsibility. “Navigating the digital landscape in marketing is paramount, and strict adherence to intricate advertising regulations is necessary,” says Amar Sinha, Chief Operating Officer, Radico Khaitan.
“Striking a delicate balance between effective marketing and the ethical promotion of responsible alcohol consumption is a nuanced challenge that is essential for both maintaining the brand’s integrity and ensuring consumer well-being,” he said.
Further, the alcohol industry operates within a framework of stringent and ever-evolving regulations, requiring vigilance to ensure compliance, according to Sinha.
Even though the marketing, advertising and regulations act as a constant hindrance in the growth of this industry, what has made these brands innovate and bring in new products to the Indian market?
Brands such as Bacardi India and even Bira 91 choose experiential marketing as an alternative route.
The Business
The International Spirits and Wines Association of India (ISWAI) has in a recent report, revealed that the Indian alcoholic beverage industry could reach an astounding USD 64 billion over the next five years, ensuring India’s position as the fifth-largest contributor to global market revenues in the near to medium term.
Sinha sees a significant transformation marked by a prominent shift toward premiumisation in the sector, resulting in the proliferation of high-end offerings within the market. In response, liquor companies are actively introducing a broader range of premium selections.
“It is imperative to recognise that premiumisation encompasses more than just product quality; consumers also assess the overall experience, which includes packaging and the distinctive flavor profile, especially when paying a premium price for the product.”
In another conversation, Vijay Dev, Category Lead, Bacardi India, shared that he too has seen Indian consumers gravitating towards the premium spirits.
Furthermore, with increased global travel and exposure to international palates, Indian consumers are also gravitating towards the culture of cocktails, added Sinha. “Whether in bars or for in-home consumption, consumers are increasingly experimenting with cocktails featuring whisky, brandy, and rum. They are now going beyond traditional cocktail bases including Vodka and Gin.”
This has burgeoned the demand for Ready-to-Drink (RTD) cocktails. Sinha said, “These options have found a solid foothold, reflecting consumers’ preference for convenient and on-the-go drinking experiences.
There are other challenges for established liquor brands, as well as, new entrants. Comte De Grasse, a French liquor brand which recently launched its gin and vodka in the Indian market, has faced a few challenges too. Bhagath Reddy, founder, Comte De Grasse shared, “The greatest challenge once you get around the regulatory phase is price parity. Currently, India has an import duty of 150 percent on imported spirits, which makes it more difficult to achieve in India. Additionally, sometimes, the movement of products across state boundaries can be complicated.”
He also highlighted that import of spirits into the country is highly regulated, and the taxation varies by state, so this can be intensive both from a time and cost point of view. “As a start-up brand, you don’t have the resources a large brand has, so it is important to have a good importer who is well-versed with import laws.”
The emergence of new players in the market undoubtedly intensifies competition, but it also acts as a catalyst for both expansion and innovation, as per the Radico Khaitan executive. Alongside continued innovation, emergence of new players also creates different categories to cater to a dynamic and diverse consumer landscape. This presents brands with opportunities to expand their portfolio and geographical reach, tapping to the new consumer base.
How the Indian consumer is different
Consumers of other markets also seem to have starkly different demands than the Indian market. Reddy underlined that within Gin as a category, a large number of consumers in India prefer whisky and are now exploring Gin as an option. While in other countries, there is a clear distinction between white and dark spirits shoppers. Lastly, discounting is the most common method used to drive sales within brands.
Adding to this, Sinha mentioned, in contrast to international markets where white spirits like vodka and gin are popular, brown spirit is the preferred choice in India. The Indian consumer is also price-conscious, and affordability significantly influences their purchasing decisions.
“Interestingly, the country’s large youth population is driving this transformation, with their changing views and attitudes towards alcohol. The younger generation is increasingly open to trying new alcoholic beverages and diverse drinking occasions. The emergence of women drinkers and the enhanced liquor buying experience are also major contributors to the growth of the industry.”
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