Alcohol Industry in India

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Indian Spirits Sector - Overview
Indian Liquor Industry with estimated market value of INR 340 bn is growing at 12-15% over the last two years. The industry is estimated to have sold 115 mn cases of IMFL last year. The sector is expected to maintain its CAGR of ~15% while the premium segment Wine and Vodka is expected to grow at a higher rate. With consolidation and foreign acquisitions gaining steam the sector is about to witness next phase with realization rising in line with that of their foreign counterparts. There are 325 distilleries in India, with an installed capacity of about 3.58 billion litres of liquor. However, production rate is about 40% of total licensed capacity as total requirement of liquor stands at 1.3 billion liters.

Major National Players
United spirits with about 60 % of market share in IMFL is the undisputed leader. Radico Khaitan who entered the IMFL space some 8 years back has already cornered 12 % market share and gaining. Other players include Mohan Meakin (9%), Jagatjit (8.5%), etc.

International players
The major international players are Pernod Richard, Remy Cointreau, and Diageo (Diageo has tied up with Radico for entering Indian markets in brown spirits)

Investment Rationale
Inherent Potential, Deregulation, western cultural influence and high entry barriers has helped the industry in notching up higher sales growth. Alcohol sale is driven by the high GDP growth and more people entering the drinking club with newly obtained prosperity or from up trading from the existing brand.

Inherent Potential:
Since liberalization, the economy has been growing at steady pace with per capita income rising from INR 23,222 in 2005 to INR 6,012 in 1991. Shift from country liquor to IMFL is expected with rising per capita income and limiting the sale of country liquor by states due to hygiene factor. Industry has one of the lowest per capita consumption of both Liquor and Beer and also since the margins are amongst the lowest...
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