Premium Push & Policy Hurdles To Define 2026

The Indian alcohol industry is looking towards 2026 with growing optimism as signs of recovery begin to align. Improving economic conditions, evolving product portfolios and a rebound in on-trade and experiential sales are fuelling hopes that the coming year will mark a return to sustainable growth. However, this is not to say that the challenges have been overcome. PREM Dewan, Managing Director, Devans Modern Breweries Ltd. warns that regulations remain a stubborn brake and many problems need to be resolved at individual state level.

As the alcoholic beverage industry ushers in 2026, analysts believe the Indian liquor market has matured and companies are focusing on the premium segment. There is a genuine shortage of matured malt spirit in the Indian market at present, but several malt-spirit plants are coming online, leading to a substantial increase in quality spirit available for blending into premium portfolios. This should augur well for the industry.

Moreover, the central government has recognised the export potential of alcoholic products and has set an ambitious target of ₹8,500 crore for exports by 2030. “It is actively promoting exports and facilitating the participation of liquor companies in fairs outside the country, which is a welcome development,” opines Prem. If companies capitalise on this opportunity, exports could zoom. The fact that Indian liquor is now getting accepted across many countries will definitely open new doors for manufacturers.

A Year of Healthy Growth

The liquor industry is believed to have performed quite well in 2025 with growth in excess of 7 percent. Reports indicate the premium and luxury segments grew by up to 8 percent. “The momentum is bound to grow as companies enter the market with newer products,” Prem states.

Probably the biggest impact of policy change was felt in Uttar Pradesh, where the government opened the full retail sector for beer, resulting in a huge jump in beer sales. It is expected that other states may follow suit.

Strategies for 2026 

With 2026 in mind, companies are framing strategies to ensure consistent growth. “We are ready with a host of premium products to be launched during 2026, starting with our premium gin, which already won a gold medal in the super-premium category in the UK. This will be followed by a herbal liqueur, RTDs and probably a premium vodka,” Prem informs. Devans Modern Breweries is confident these premium offerings will perform well.

The company is also preparing to enter Maharashtra and other key markets with single malts, including a wine-finished, highly matured single malt. “Our strategies are being reworked on the assumption that any impact from duty reductions under FTAs is probably going to be felt only in the last quarter of 2026,” Prem elaborates.

What Could Derail Recovery?

Among the key regulatory or policy risks that continue to concern the industry, prohibition is the biggest factor. “It does not help anybody and gives rise to liquor smuggling, resulting in a powerful liquor mafia. This leads to a wastage of national resources and creates huge problem for stakeholders who have invested heavily in any region,” says Prem. Then there is the backlog of dues payable to producers by state liquor corporations, which is virtually bleeding the industry. Funds payable to the industry are often diverted to fund the election promises in those states

A Practical Reform Menu

With considerable reductions in import levies under FTAs, the industry is seeking recognition for Indian blended whiskies in partner countries. The system of making whisky in India is quite different from that produced elsewhere but compare favourably with international blends. “It would be in the fitness of things if the state governments remove all discriminatory evies that favour imported liquor and create a level playing field for domestic producers,” Prem says. He notes with regret that India is probably the only country in the world where policies are framed favouring imported products at the cost of the local industry.

“It should also be kept in mind that the countries with which India is negotiating FTAs, need us more than we need them, and as such we should not give them undue benefits unless they provide reciprocal benefits to our industry,” he adds

There is also a call for the state governments to adopt five-year excise policies instead of a new one every year. This would lend more stability to the trade and also lead to ease of doing business. Another demand is that only FSSAI-mandated legends should be printed on the labels vis-a-vis the present system of each state mandating their own legends.

Further, beer needs to be excluded from excise policies of states and made widely available across all retail channels with minimum fuss. Industry insiders also state that liquor must be brought fully into the GST system so that a uniform rate of tax prevails across the country. Finally, Bihar must be opened for the liquor industry. Given that the demand curve is tilting upwards due to an increase in consumers with disposable incomes and preference for beer and premium spirits, there is an urgent need for removing complex regulatory hindrances.