A Frothy Year Ahead for Beer

After several years of adjustment, the beer category enters 2026 with renewed momentum. Evolving consumer preferences, innovation in products and stabilising market conditions are positioning beer for sustainable growth. Yet, according to VINOD Giri, Director General, Brewers Association of India (BAI), the sector’s long-term potential can only be realised through regulatory reforms.

There is firm conviction within the alcohol beverage industry that the fundamentals underpinning the beer sector are good. The size of the beer industry in India remains heavily under-indexed. Its less than 10 percent of China, about 15 percent of the US’s, and roughly 20 percent of that of countries like Brazil and Mexico. Per capita consumption levels are very low. So, obviously there is a massive headspace for growth. “However, realisation of this potential demand needs a regulatory reset,” says Vinod.

A Mixed Year

The year gone by was a mixed one for the beer industry. Early summer rains and prolonged monsoons dampened demand during the peak season, especially in northern India. “Recovering loss of sales in the peak season is always difficult, though there is little one can do about the weather,” Vinod points out.

On the positive front, Andhra Pradesh recorded strong growth for the second consecutive year and has now caught up with sales lost over the last few years due to regulatory hurdles.

Additionally, the global standard of ‘ad quantum’ taxation, which links tax to the actual amount of alcohol in a product, entered the regulatory dictionary in India for the first time. “We know that the same taxation framework, whether on bulk volume basis or ad valorem basis, overtaxes products with low alcohol content. Hence, steps by states like Maharashtra, Assam, Meghalaya and West Bengal to restructure taxes towards little more parity between beer and spirits was the centrepiece of regulatory shifts in the Indian alcobev sector,” Vinod elaborates. All these states witnessed a return to strong beer growth following these changes.

Even in terms of distribution, regulatory conversations progressed around low-alcohol beverage licenses to encourage moderate alcohol consumption. Many states rolled out these licenses and in states like Uttar Pradesh, easing beer licensing norms led to strong double-digit growth. “The year 2025 was also when many states in India started looking at beer differently from spirits in regulatory terms, and many translated the thought into action,” Vinod adds.

Need for a New Approach

Historically, beer in India was produced by spirits companies as an add-on product, making a uniform regulatory framework convenient. However, beer is fundamentally different from spirits. It is a naturally carbonated, high-volume, low-margin, low-alcohol product with a limited shelf life which needs massive investments to produce. “The regulatory system has to recognise that and differentiate it from the highalcohol products,” Vinod states.

Encouraging more moderate forms of alcohol through levers of policy is a proven way of delivering better public health outcomes, an objective various governments are also entrusted with. This approach is followed globally, endorsed by the WHO, and strongly advocated by associations like the BAI.

The Focus

The beer category has endured a difficult phase, and 2026 could be a pivotal year for rebuilding. As an industry body, the BAI will focus on unlocking growth through regulatory course correction, which could lead to improved public health outcomes besides revenues. “Beer is different and needs be regulated on its own merit. This is, and will remain, our core belief,” Vinod said.

Industry players also feel that keeping the sector outside the GST framework is unjustified and hope the industry gets together to push for inclusion, which could unlock tremendous growth potential. Most of the threats to beer or any alcoholic products ironically come from the dependence of state governments on excise revenues. This often makes them risk-averse and slows reform. In some cases, it leads to ill-considered revenue-raising measures like the recent series of tax increases beer saw in Karnataka. “These moves are often based on ill-founded presumptions not backed by databased analysis, and in almost all cases, turn out to be counter-productive. The industry needs to act proactively to prevent such misadventures,” Vinod states.

Besides, BAI members currently account for over 85 percent of beer sales in India. The association intends to add more members to be more inclusive and representative of all beer interests. However, it is still in the early phases of consolidation. “Once it is ready to add more members, I am sure the executive board will act accordingly,” Vinod adds.

In its engagement with policymakers, the BAI will also highlight beer’s massive economic impact. Breweries need heavy investment. It is not possible to build a reasonably sized brewery for less than ₹400-500 crore. Operating costs are also higher due to scale, with significantly larger workforces and service ecosystems. While this creates extensive economic opportunities, it comes at a cost. Unless favourable conditions are provided to produce reasonable volumes and margins, breweries will find it hard to sustain. The government also has to consider ways to support this massive investment.