Whiskeys & IMFL

India is the largest whiskey market in the world, selling almost 200 million cases. India accounts for almost 40% of Diageo sales volume and 9% of net sales. Diageo’s recently announced that its new India-¬based business services centre was likely to become one of the company’s biggest by 2020. But the Scotch Whisky Association (SWA) has perhaps most succinctly outlined the potential of India, long a whisky stronghold, with its statement that Scotch accounts for just 1% of the Indian spirits market, and yet as a country India is the third¬-biggest importer of Scotch by volume. Total whisky sales grew by 15% over the past five years to 189m cases. The premium and above segment is expected to grow at a cumulative annual rate of 14% over 2016-21, whereas the top-end prestige segment is estimated to grow at 12% over the same period, according to industry executives. Recently, John Distilleries, the 15-year-old maker of the home-grown Paul John range of premium whiskies and malts, raised an undisclosed investment from Sazerac, the largest family-owned spirits company in the US. In quick time, John Distilleries has made inroads into a market dominated by storied names such as Glenmorangie and Glenlivet and is now stepping on the gas.

In November 2016, Beam Suntory launched two peated single malt Scotches into India – Ardmore Legacy and Bowmore 12 Year Old. The one trend that has been dominating the Indian alcobev market for some time now is that of premiumisation. With rising aspiration and increasing disposable income, consumers are upgrading towards premium segments in the country, within IMFL or to international brands. Allied Blenders & Distillers plans to soon launch a new range of premium whiskies with footprints in the semi¬-premium and premium whisky segments to address this. According to India’s Agriculture & Food Export Authority, the country exported $343 million of alcoholic beverages to nations including the U.A.E., Ghana, Angola, Nigeria, and Singapore in 2014.

India’s alcohol industry is the third largest in the world with a value of $35 billion. The Indian alcohol market is growing at a CAGR of 8.8% and it is expected to reach 16.8 Billion liters of consumption by the year 2022. India is the largest consumer of whiskey in the world and it constitutes about 60% of the IMFL market. Over the coming year, it’s expected that demand for whiskey will grow by 3.5 percent and will grow at this rate every year for the next 3 years while whiskey's share of the entire Indian liquor market will be 60%. Whiskey sales will comprise73% of the value of liquor sold in India in 2019 clearly revealing that premium prices attached to whiskey don’t dampen Indian consumer’s appreciation of this liquor. Within the whiskey segment, it is estimated that demand for Bottled in India (BII) Scotch, Premium Whisky, and Semi-premium Whisky will grow between16%, 10%, and 8% respectively.

Micro and craft brands, hitherto largely missing from the market, are still fledgling. they remain “nascent concepts” with Agave India and Wild Tiger Fine Spirits the only two micro¬distillers present in 2016. The maker of McDowell’s No.1and Antiquity whisky saw its sales grow 4% and net profit 39% in FY17. Demand for scotch, Indian made foreign liquor (IMFL), deluxe whiskey, and regular whiskey will be between 12%, 3%, 15%, and -2% respectively.

The popularity of wine and vodka is increasing at a remarkable CAGR of 21.8% and 22.8% respectively. It isn’t just upstart Indian companies. Bacardi came to India in 2002 with its white liquors. Since then, the world’s largest privately held, family-owned alcobev company, has made significant inroads into the vodka, gin and rum segments. Now, it wants more. Flavoured vodka gained significant ground in 2016 as more young adults began drinking cocktails and shots, particularly women. Flavours are also being seen in white rum, with peach, raspberry and apple proving popular.

Rum is the second most common spirit in India. India-based Mohan Meakin Ltd.’s Old Monk is popular. Gin and vodka also comprise the IMFL category, growing in demand among urban youth and women. Bermuda-based Bacardi’s Bombay Sapphire gin and U.K.-based Diageo’s Smirnoff vodka are top products. Other liquors such as rum, brandy, and white spirits share by volume in India is expected to be 15%, 22%, and 3% while their share by value is expected to be 10%, 12%, and 5%. A casual examination of these numbers reveals that in India consumers still prefer relatively inexpensive rum and whiskey while those who consume white spirits are more likely to consume a premium product.

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