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80% of alcoholic beverages consumption in India happens in value segment and below.ht (MINT_PRINT)
80% of alcoholic beverages consumption in India happens in value segment and below.ht (MINT_PRINT)

Premium spirits fly off shelves amid pandemic

  • Urban, affluent Indians and those who moved out-of-home drinking to their homes, are picking more premium brands, making for a better drinking experience at home, top executives at liquor companies said

The liquor industry, battered by the closure of bars, restaurants and retail trade as well as higher taxes this year, may have some reason to cheer at last: high-end spirits are doing well.

Urban, affluent Indians and those who moved out-of-home drinking to their homes, are picking more premium brands, making for a better drinking experience at home, top executives at liquor companies said.

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“Alcohol consumption has seen a shift from on-premise to in-home over the last six to eight months. Consumers have stepped up socializing in small bubbles, have embraced a DIY (do-it-yourself) culture and experiments with premium trusted brands and new serves to create relaxed and memorable in-home experiences," said Deepika Warrier, chief marketing officer, Diageo India, which sells a range of brands such as Johnnie Walker, Smirnoff Vodka, Tanqueray Gin, Bagpiper and White Mischief.

“This year, social gatherings and celebrations have shifted to homes as safety becomes the priority. These home celebrations have become crucial occasions for the alco-bev industry. Consumers have also increased their focus on elevating the quality of the home experience and are looking for avenues to premiumize it, leading to a rise in consumption of premium brands and variants," said Anmol Gill, head of customer marketing, Bacardi India Pvt. Ltd. This year’s festive season saw Bacardi clock higher sales than a year ago.

With travel abroad restricted, consumers have been shifting their duty-free purchases of premium brands to duty-paid ones in premium and upscale off-trade alcoholic beverages retail formats, Warrier said.

This meant more consumers picked its premium liquor such as Johnnie Walker. “The ongoing festive and wedding seasons have led to strong demand for the Scotch category. We have seen a shift to smaller intimate weddings and celebrations with consumers focusing on quality versus quantity," Warrier said.

William Grant and Sons said brands such as Glenfiddich, Monkey Shoulder and Hendrick’s gin did well after the government lifted lockdown curbs without giving details.

Diageo India’s net sales fell 6.6% in the September quarter but improved sequentially from the first quarter. Diageo’s ‘prestige and above’ segment—brands such as Johnnie Walker, Vat 69 and McDowell’s No 1—reported 1% growth in net sales in the September quarter from a year ago. Sales in the mass segment were down 12.5% in the same period.

In May and June, liquor sales plunged 60% because of higher taxes in several states, industry body Confederation of Indian Alcoholic Beverage Companies said in August. After months of deliberations, several states allowed liquor vends to open.

To be sure, 80% of India’s alcoholic beverages consumption happens in the value segment and below, including country liquor, according to a December report by Emkay Global Financial Services. It pointed to down-trading in the regular segment of alcoholic beverages—that is, consumers swapping branded liquor for cheaper variants or country liquor in some states.

Avneet Singh, the founder of Medusa Beverages, which retails liquor in Delhi and Punjab, said consumers have shifted to cheaper brands. He said if indeed people are buying premium brands to drink at home, that trend would be hard to quantify.

The picture may be mixed: for the three months to September, French spirits company Pernod Ricard that sells the popular Blenders Pride and Absolute Vodka reported a double-digit decline in India business. It, however, said its strategic international brands were very resilient in India, highlighting double-digit growth for Jameson Irish Whiskey and Ballantine’s Scotch Whisky brands.

Its local brand Seagram’s Indian whiskey saw a decline in the quarter. Pernod Ricard declined to comment on queries sent by Mint.

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