Riding a new ‘high’in the lap of luxury!
Riding piggyback on the spurt in demand for super premium luxury alcobev brands, India’s alcobev industry is hitting an unprecedented high, literally speaking. Does this mean that the unexpected spurt in demand for top alcobev brands in the unlikeliest of times like the Covid- 19 pandemic coupled with repeated ‘economic’ lockdowns defy the realms of logic?
If industry leaders we interviewed for our latest Cover Story are to be believed, the uptick in super premium brands has been unprecedented. And there are many factors responsible for this surge. For one, the absence of opportunities to travel abroad has worked like a booster shot in loosening the purse strings of the affluent young and well-heeled professionals in India who decided to splurge on the best of the alcobev brands, that too, in the comfort of their homes.
Perhaps the high-end consumers decided that since they had time on hand, it was time to spoil their taste buds silly, unmindful of high prices. One industry insider tells us that the rise in demand for premium alcobev brands in the country during the pandemic period has led to a 326 percent growth in sales of premium alcobev brands, something unheard of in the annals of India’s liquor industry.
The Delhi Duty Free shop top honcho puts it succinctly when he says that India’s liquor market has been undergoing a transformation as the demand for premium brands has been growing, and the Covid-19 pandemic only hastened the process.
According to him, from July 2021 however, we have witnessed a better-than-expected recovery across most of the alcobev industry of India. This was facilitated by considerable development in vaccines and the trinity (airlines, airports & retailers) working together.
One can predict that as the rollout of vaccines and improved treatment will help countries manage the pandemic, and open up international travel, it won’t be long before business reaches 2019 levels.
Another industry insider quotes a report by Statista to prove her point. She says the country’s alcobev market is expected to have a compound annual growth rate (CAGR) of 12.41 percent during 2021-2025, making it one of the world’s fastest-growing markets. She has seen an upsurge in sales in the super-premium and luxury categories over the last 12-18 months.
This boom is perhaps also due to the disruption of duty-free service as a result of pandemic-related travel restrictions, as well as the flow of the high-end spirits stock into the retail channel. This trend is likely to continue, fueled by a shift in spending habits and consumption patterns.
The lockdown allowed people confined to their homes to experiment more with their taste palates and flavours. The income usually spent on travelling or leisurely activities was now available to upgrade the quality of products that were being consumed. Further, the home delivery of alcoholic beverages offered a chance to enjoy luxury spirits conveniently at home, thereby increasing their demand.
We asked many experts if this kind of encouraging buying of top alcobev brands in India could be attributed to ‘revenge shopping.’ While the jury is out on this, one of those we interviewed says there is no way to know if this has been the outcome of what they call ‘revenge shopping.’ However, there are two distinct consumer trends playing out in urban India – consumption among low-income groups dropping after lockdown while those among the high-income households remaining unaffected.
One expert told us that he found out that during lockdown people had built up their savings. With the India’s hospitality industry now opening up it provides an opportunity to maintain the momentum by ensuring that premium and luxury liquor brands are distributed widely so that they are available at many high-end venues where consumers will be willing to spend their money.
We also talked to label and design company honchos on the packaging and visibility aspect which have spurred sales of luxury alcobev brands. One insider struck a poetic note on how labels and bottle designs are making their impact on luxury brand buying changing over time.
He reflects that luxury is an instinctive need of humans that transcends rational thinking and logical decision making.
Striking a more discordant note, a labeling company owner rues the fact that the shift in luxury packaging is still quite slow in the country. In terms of design, many new ideas seem to be emerging, but broadly speaking most seem to still ride the ‘me too’ bus.
He feels very little innovation is demanded or accepted in materials or print effects in labeling technology in India, as far as alco-beverages are concerned. Cost still seems to be a key driver, even while setting ‘stand out’ goals. However, he is happy to see that not all entry level whiskies in India are blue anymore.
There are many more sparkling insights and observations by industry veterans and new players in the Cover Story who talk endearingly of this upward spiral. This issue may induce you to raise the bar of luxury.
