Resilience and Reinvention The Way Ahead

For months ahead, the alcohol beverage industry’s growth will be triggered by a wave of factors, most importantly, the change in consumer trends. And this will propel it further as compared to 2025 when the global alcohol beverage industry delivered solid financial performance, supported by premium product growth, disciplined pricing strategies and expanding emerging-market demand. While volume growth remained uneven across regions, producers benefitted from higher margins, brand-led innovation and improved cost management, helping offset pressures from inflation, regulatory scrutiny and changing consumer preferences, as pointed out by ANANT S. Iyer, Director General, CIABC.

The alcoholic beverages industry is set to enter 2026 on a strong foundation, industry analysts believe. Core demand drivers remain intact, supported by rising incomes, urban lifestyles, an expanding legal drinkingage population, recovery of the ontrade, and increasing travel-linked consumption. Growth is expected to continue at a decent pace for premium and above brands in spirits and wines, with value growth remaining central. The mass or popular segment will face headwinds more so with country liquor and state-made categories growing.

At the same time, consumer behaviour is evolving. “India is seeing more selective and mindful consumption, not a withdrawal from alcohol. Consumers may drink less frequently, but they continue to participate meaningfully in the category, particularly in spirits, choosing quality, provenance and occasion over excess. This nuance is often lost when global narratives are applied mechanically to the Indian market,” points out Anant.

Looking Back

The year gone by reaffirmed the structural strength and resilience of India’s alcoholic beverages industry. Demand remained healthy across regions, anchored by IMFL volumes and supported by rising disposable incomes, urbanisation, evolving lifestyle choices, on-trade recovery and growing exposure through duty-free and travel retail. Growth was broad-based rather than speculative, with participation visible across price segments and consumption occasions.

“What stood out during the year was the divergence in outcomes across states. Where excise systems were stable, pricing mechanisms responsive, and administration efficient, demand translated smoothly into revenue,” Anant states. Where policies were abrupt or rigid, outcomes were uneven. This included sudden duty revisions, prolonged pricing freezes despite rising input costs, uneven treatment across product categories, and frequent changes to licensing, distribution or retail frameworks. The contrast underscored how governance quality, rather than consumer demand alone, increasingly determines fiscal outcomes.

Another defining feature of 2025 was the industry’s improving financial health. Growth was accompanied by stronger cash flows, better cost absorption and disciplined capacity utilisation rather than aggressive debtled expansion. This reflects a sector that has matured and is increasingly focused on sustainability over shortterm volume chasing. One of the major developments that contributed to higher revenues was the consistency of consumer participation across major markets. Even in states undergoing policy transitions, demand remained intact, highlighting the depth of underlying consumption drivers and the sector’s role as a dependable contributor to state revenues, Anant elaborates.

An under-the-radar development was growing evidence that predictable policy design and revenue efficiency matter more than headline rate hikes in delivering durable fiscal outcomes. Maharashtra Made Liquor (MML) policy demonstrated how product classifications and eligibility criteria can redirect demand through regulatory design rather than consumer choice. Such interventions risk creating market distortions that disrupt national brands’ presence and lead to commoditisation. As a result, investment in the state comes under pressure and it weakens long-term revenue stability.

A Call for Better Management

Industry experts argue that administrative efficiency must take precedence over repeated rate hikes. Digitisation, stronger enforcement, simplified licensing, rationalised fee structures and clearer compliance frameworks have proven more effective in sustaining excise collections than increasing tax incidence alone. For a sector driven by rising disposable incomes, urbanisation, premiumisation, on-trade recovery and expanding travel retail, policy stability and fairness will be decisive in 2026.

Growth Triggers & Priorities

While the wine industry is facing headwinds, both domestic and imported, industry players expect steady and sustainable growth in the months ahead, particularly in premium and mid-premium segments, supported by diversified demand, changing lifestyles, the recovery of restaurants and bars, and expanding duty-free and travel retail exposure. “Growth in 2026 is expected to be driven more by value and mix than sheer volume expansion,” Anant adds.

From CIABC’s perspective, priorities for 2026 are structural, not cosmetic. The focus must be on policy predictability, competitive neutrality and governance quality so that consumer demand can translate into stable revenues and sustained domestic value creation. In turn, stable and fair policy frameworks can unlock higher revenues, exports, employment and global recognition for Indian products.

The main concern is uneven policy application across states, particularly pricing rigidity and abrupt fiscal interventions, which can introduce volatility and weaken otherwise healthy demand trends. CIABC’s analysis consistently shows that predictable, medium-term excise frameworks outperform ad-hoc interventions. States that rely on calibrated duty structures, timely price revisions aligned with rising input costs, and stable regulatory signals are better able to convert demand growth into durable revenue. In contrast, abrupt fiscal actions or rigid pricing regimes often suppress volumes, distort consumer choice and weaken long-term collections.

“A critical priority is competitive neutrality between domestically produced IMFL and bottled-in-origin (BIO) products,” Anant points out. In several states, BIO products benefit from lower fees, differential margins or greater pricing flexibility even when competing in the same premium segments as Indian brands. Such asymmetries neither strengthen competition nor maximise state revenues. Governance and administration are equally important. Delayed settlement of industry dues in controlled retail systems, prolonged pricing rigidity, policy-led product substitutions that exclude national brands such as the MML policy and gaps in enforcement that encourage leakage into informal channels continue to adversely impact the industry at large. These issues impact cash flows, discourage investment and ultimately undermine state revenue outcomes.

At central level, implementation of FTAs must strike the right balance between liberalisation and fairness. “Calibrated duty reductions are manageable, but safeguards are essential to prevent undervaluation and unintended competitive distortions,” Anant says. The objective should be competition based on quality and consumer choice, rather than structural fiscal advantages.

Equally important is reciprocity. As Indian spirits gain global recognition, FTAs should actively address non-tariff barriers and improve market access for Indian products abroad so that liberalisation works both ways. “We also expect the central government along with the state governments in GST Council to clarify on various issues of our industry such as retrospective GST on ENA, GST on brand owners’ surplus, etc.,” Anant concludes.