Flurry of spirit launches raises competition in alcobev sector

New Delhi: The Indian alcoholic beverage market is experiencing intensifying rivalry spurred by the launch of several new spirits.

In the past week alone and since April this year, companies such as Radico Khaitan, Allied Blenders & Distillers Ltd, and Khemani Distilleries Pvt. Ltd have introduced multiple spirits across categories such as whisky, gin, and rum. Industry executives say that the main impetus behind this surge of innovation is a mix of stiff competition and growing consumer acceptance of Indian brands.

For instance, in August, TRDP Group, the maker of Mario biscuits and Raj Niwas pan masala, will launch its premium vodka brand under group company NeuWorld Spirits Pvt. Ltd.

Meanwhile, riding on the success of its gin, Jaisalmer, Radico Khaitan has launched a new gin, ‘Happiness in a Bottle’, which is being initially retailed in Rajasthan, and is expected to cost between ₹2,000 and ₹2,200 a bottle, depending on the state it is being sold in.

“Some years ago, nobody in the world believed we could make world class beverages. Look at where we are now. We are now making products to reckon with, which are successful. We expect this gin to be profitable and to cross the one million case mark in a very short period of time because this product will create a segment of its own,” Amar Sinha, chief operating officer at Radico Khaitan told Mint.

Others are taking the special edition route to test waters. This May, Stilldistilling Spirits India, which owns Goa-based Maka Zai rum, launched a limited-release barrel aged rare rum Mesma. The same month, Stranger & Sons gin maker, Third Eye Distillery Holdings, expanded its dark rum portfolio, adding five new variants.

The new spirit additions make sense keeping in mind that volume consumption in India’s total spirits market topped pre-covid levels of 2019 in 2022. There was a 20% rise in volume from 2019 to 2020 but a 23% jump in volume consumption from 2021 to 2022, said British beverage alcohol data and insights firm, IWSR.

Jason Holway, a market analyst at IWSR, said this could be because earlier ‘imported’ used to be synonymous with premium. But now Indian consumers are proud and happy to acknowledge that local companies can deliver on quality—and at lower prices, as there are no import duties and that premium local brands are evident across all categories.

Organizations are taking the cue in a growth market and launching multiple brands. Officer’s Choice blended scotch whisky, for instance, has launched a special edition, bottled-in-origin product from Blairmhor Distillers, Scotland.

“Some will succeed and many will fail in this jostle for consumers in a very tightly regulated trade with a limited number of stores. But it will mean there will be a wide array of choices, better quality and innovation, which are great things to have in a market,” said Bikram Basu, COO, marketing sales and strategy for Allied Blenders and Distillers.

He added that at present, government and excise is centered only around revenue increase from traditional and time-tested products.

But this must change to let more companies enter the fray, both to innovate and boost revenue flows from newer sources over time.

While several new spirits like these are well received in many markets, distribution has conventionally been a big challenge for most new entrants. Excise is a state subject and availability of brands can be very challenging due to the distribution network.

Cities like Delhi have faced a huge challenge in recent months due to its excise policy changing over multiple times. Sales growth in national capital is trending down, reaching a negative range, the Confederation of Indian Alcoholic Beverage Companies (CIABC) said in a recent report.

It, however, pointed out that share of Indian products in this segment rose from 18% in FY22 to 20% in FY23, indicating faster growth for homegrown products, compared to imported ones.