Consumer Trends Premium Push to Boost Alcobev

In 2026, the alcohol industry is forecast to expand as producers adapt to changing consumption patterns, premium offerings and emerging market demand. Strategic pricing, product diversification and brand-led growth are expected to offset pressures from regulation and cost inflation. With the International Spirits and Wines Association of India (ISWAI) consistently engaging with central and state authorities to usher in positive reforms, its CEO SANJIT Padhi believes that benefits will begin to accrue in the coming months.

There are going to be no miracles when it comes to the forecasted growth in the alcohol beverage industry in 2026. No sudden upward spiral and no overnight regulatory transformation. But yes, optimism is high and everyone expects the industry to perform moderately well, led by premiumisation, evolving urban consumption habits and improved on-trade recovery. “While demand will grow, it is unlikely to be exponential, given pricing pressures and regulatory complexity,” says Sanjit.

Imported wines and spirits are expected to grow selectively, driven more by premium niches than mass volumes, following the consolidation phase seen in 2024-25. Growth will remain concentrated in metros and affluent tier I cities, supported by experiential consumption, wine education and increased exposure to global brands.

In terms of categories, whisky will continue to dominate the imported alcohol category in India, with Scotch comprising around 81 percent of the 10.9 million cases imported annually. “Tariff reductions will enhance accessibility of premium Scotch, drive premiumisation and support growth in hospitality, tourism and state revenues,” Sanjit elaborates.

Spin-offs From FTAs

A significant reduction in tariffs on the UK whisky and gin from 150 percent to 75 percent initially, followed by a phased cut to 40 percent over 10 years, is expected to expand consumer choice and accelerate premiumisation by making international spirits more accessible. There will be positive spillovers across hospitality, tourism, retail and state revenues. “It will strongly benefit the IMFL industry, as nearly 79 percent of Scotch imports are bulk spirits used for bottling and blending in India,” Sanjit points out. It will, however, have a balanced impact on the domestic industry, with imports accounting for just 2.6 percent of India’s 400-plus million case spirits market.

The deal will significantly benefit Indian consumers, as premium international spirits will become more affordable and accessible. At a macro level, it will enable both nations to leverage their respective synergies and competencies. Some benefits may also accrue from revision in policies in some states. “Several states, including Rajasthan, Uttar Pradesh, Madhya Pradesh and Karnataka, have undertaken encouraging reforms aimed at improving accessibility, modernising retail infrastructure, enhancing transparency and elevating the consumer experience,” Sanjit elaborates.

Touchpoints for 2026

There are multiple ongoing conversations between ISWAI, along with other trade bodies, and the central and state governments on several core issues. “We look forward to bringing a resolution of the ENA on GST issue for the period July 2017 to October 2024,” Sanjit says. In terms of reforms, ISWAI will focus on inflation-linked pricing and greater pricing freedom. “There is an urgent need for dynamic pricing models to offset rising costs, as for example, ENA is up 24.9 percent and glass has grown 12 percent, allowing revisions on a continual basis,” Sanjit elaborates.

Other focus areas will be excise duty rationalisation, ease of doing business through uniform state rules, timely permits and flexible policies to encourage investments and ancillary sector growth. These measures would indirectly bolster ISWAI members’ operations and global competitiveness in India’s alcohol beverage market.

Changes & Challenges

Rajasthan’s excise policy (2025–29) is poised to become a benchmark for other states with its four-year policy framework that emphasises business continuity, tax simplification and retail expansion. By removing restrictive pricing clauses and establishing a stable excise regime, the policy seeks to attract investment and drive sustained growth. Uttar Pradesh has introduced structural changes to enhance retail accessibility, streamline operations and safeguard revenue streams. The move towards composite vends, rationalised pricing and regulatory improvements is expected to support both state revenues and long-term business sustainability.

Madhya Pradesh’s excise policy (2025–26) brings in structural taxation reforms and retail measures aimed at narrowing the price gap between economy, regular and premium segments. By encouraging premiumisation, the policy seeks to boost revenues while reinforcing responsible consumption.

Maharashtra, meanwhile, has introduced excise changes alongside the Maharashtra Made Liquor (MML) category. In 2025, sharp excise hikes significantly altered price structures, raising steep duties on several premium and affordable brands while offering preferential tax treatment to locally defined MML products. This impacted competitiveness and consumer pricing.

However, sales of major brands were materially affected, with reported volume declines in key segments as products became less pricecompetitive in India’s largest liquor market. This prompted industry concern and legal intervention, with ISWAI challenging the policy on grounds of discriminatory taxation and uneven market access, underscoring the need for fair and predictable excise frameworks to sustain investment and growth.

In Telangana, ISWAI, along with Brewers Association of India (BAI) and Confederation of Indian Alcoholic Beverage Companies (CIABC), raised concerns over worsening payment delays, with outstanding dues exceeding ₹4,000 crore. Despite strong sales and robust excise revenues, delayed payments severely impacted working capital and pushed companies into financial distress. “Revenue growth did not ensure stability, exposing structural gaps in payment and excise systems. Festive demand highlighted supply risks, as cash-flow stress threatened availability during peak periods,” Sanjit explains.

Policy execution emerged as a critical issue, with breaches of agreed payment timelines hurting industry confidence. High advance excise duties further strained balance sheets. Industry– government engagement intensified to safeguard revenues, jobs and the wider ecosystem. The year 2025 reinforced the need for systemic reform focused on payment discipline, predictability and long-term sustainability. “We believe that with rising affluence and influx of new consumers in the legal drinking age, gravitation towards new brands and categories will drive premiumisation,” Sanjit says.

Focus on Responsible Drinking

Responsible consumption and road safety has remained a key priority for the ISWAI. The association has significantly expanded its ‘Never Drink and Drive’ initiative, working closely with government and law-enforcement authorities to curb drunk driving and promote safer behaviour, especially during high-risk festive periods.

The campaign was first launched in Lucknow, Uttar Pradesh, and reinforced ahead of Holi, a period typically associated with an increase in alcoholrelated road incidents. The initiative combined on-ground awareness drives, youth-led roadshows and targeted interventions at pubs and bars to ensure the message resonated with young adults and regular patrons.

ISWAI also partnered with Lucknow University, where over 100 students participated in roadshows, amplifying peer-to-peer advocacy. Public engagement was strengthened through rallies, outdoor advertising and radio partnerships, while enforcement efforts were supported through the donation of breathalysers to the UP Traffic Police. In total, 40 pubs and bars were covered through targeted awareness messaging.

“Towards the end of the year, we carried this momentum beyond Uttar Pradesh with a digital activation in Chandigarh, demonstrating how this campaign can be scaled across cities as a sustainable model for responsible consumption and road safety,” concluded Sanjit.