Towards a ‘Viksit’ Alcobev Industry The second session of the ThinkPad titled ‘Alcobev Industry - A Committed Partner to the Viksit Bharat Agenda’ highlighted the significant contribution of the alcobev industry to India’s economy, By Spiritz Desk 15 Nov 2024 in Cover Story New Update The second session of the ThinkPad titled ‘Alcobev Industry - A Committed Partner to the Viksit Bharat Agenda’ highlighted the significant contribution of the alcobev industry to India’s economy, gradual shifts in perception towards domestically produced brands, the wave of premiumisation sweeping through the alcobev industry, retail reforms aimed at modernising retail structures and distribution systems among other industry pertinent issues. Sanjit Padhi, CEO of International Spirits & Wines Associationof India (ISWAI) moderated the session which had Abhinav Jindal - Founder & CEO of Kimaya Himalayan Beverages; Ankur Sachdeva, a senior alcobev industry professionel; Sanjeev Vijh, Vice President, Corporate Affairs at Diageo India; R Subrahmanyam, Executive Director - Tax & Eco Policy Advisor, E&Y LLP; Abhishek Parameswaran - Chief Strategy Officer, Nao Spirits & Beverages Pvt Ltd and Neeraj Singh, Chief Business Officer - Cartel Bros Pvt Ltd as the distinguished co-panelists. The panel discussion began with remarks from the moderator, Sanjit Padhi, CEO of ISWAI, who set the tone by emphasising the significant contribution of the alcoholic beverages industry to India’s economic growth over the past decade. He supported his statement with data, noting that India’s alcobev industry generates substantial annual revenue of Rs. 3.40 lakh crore, and accounts for about 25 percent of the revenue collected by certain state governments. Contribution to the Economy In terms of employment, Sanjit highlighted that India’s alcobev industry supported around 70 lakh farming families and provided indirect employment to 9 lakh individuals across various sectors. “We contribute 22 percent of the packaging industry in the country,” he noted. He stressed that it was now crucial for policymakers in India to recognise the importance of this industry and address its concerns. Sanjeev Vijh pointed out that alcobev sector with its backward and forward linkages such as agriculture, hospitality, F&B, and packaging industry, etc. was contributing approximately 1.5 percent to the nation’s total employment, providing livelihoods to nearly 7.9 million people. Sanjeev further remarked that, until now, the industry’s immense contributions had not been adequately emphasised, but it was time to proudly and concertedly highlight alcobev industry’s role in employment generation. He also pointed out that the industry’s role in innovation that is in more direct contact with farmers also needed to be highlighted upon. March towards Premiumisation Sanjit highlighted that the march towards premiumisation was one of the important trends in India’s alcobev industry. “Premiumisation is driven by socio-economic factors such as rising income, exposure to more choices and emergence of new categories,” he stated. Abhishek talked about the shift in consumers’ perception regarding premiumisation in India’s alcobev industry, which now include not only imported but also indigenous spirits. He tagged premimisation with the Viksit Bharat Agenda. He said, “We all need to examine what the idea of Viksit Bharat is. Is it just to ape the west or is it create an India with strong identity of its own. That is way the idea of premiumisation should move towards.” He elaborated on the vast opportunities within India to develop world-class brands, noting that since India is also a tropical country like the Caribbean, there is no reason why we can’t produce premium cane rum to match theirs. According to him, it’s time for India to develop its own premium and luxury spirits brands, rather than continuing to imitate the west. Neeraj said that more financial independence and better information access have fuelled premiumisation in India’s alcobev industry. Neeraj explained premiumisation that involved understanding the niche aspirations of consumers for higher-quality spirits and ingredients. He mentioned that his company is focused on predicting what consumers would aspire to in terms of premium brands. He said aspiration of consumers was his vision behind creating a product. He added that premunisation was fuelled by the financial independence and aspiration to have good products. Ankur viewed that India was poised for continued ‘premiumisation’ over the next few years, provided that the quality and standards of domestic products remain on par with international brands. “People talk about premiumisation as if it has just started. Premiumisation has been happening for many, many years, and post COVID, it was a necessity as opposed to a choice because the cost of goods just kept going up whether it was glass, whether it was ENA. You know, for those of us who were managing largescale businesses, it was a nightmare during that time because as we all know that our industry doesn’t get price increases that easily. So, we were looking at a situation where our margins were getting compressed,” Ankur gave his voice while talking on the growing trend of premiumisation. “So, premiumisation was the only answer for India’s alcobev industry. Luckily, the consumers were ahead of us, and they forced us to cater to that. And, you know, a lot of the innovation that you see today from the larger players has come as a result of it,” Ankur proffered. Sanjit said that one of biggest drivers of premiumisation in India’s alcobev industry was the changing retail landscape, which is creating better ambience and more choices. “Shopping experience plays a key role in driving the sales of premium products,” he reasoned. According to him, the other aspect that has driven premiumisation in India’s alcobev industry is the changing landscape of on trade, which gives a group of consumers the opportunity to walk in an outlet which have products in line with their aspirations. The third factor driving premiumisation, according to him, of course, is the improved quality of products and more importantly the evolving mindset of our consumers to expect quality from the producers. To continue the discussion on the topic of ‘Viksit Bharat,’ Sanjit asked Ankur Sachdeva about his vision for 2040, when India aims to be self-reliant and also his views from a brand and product perspective on what needs to be done to achieve these objectives. Conducive Factors Ankur noted that while India is now the most populous country in the world, yet it ranks fifth in the global alcoholic beverage market. This ranking, he explained, was largely due to factors such as rising per capita income, the growing population of legal drinking age, and the increasing social acceptance of alcoholic beverages in India. He pointed out that alcohol had become an integral part of celebrations and social gatherings and emphasised that there should be no regressive actions against the industry. Ankur views alcobev as a lubricant and a force multiplier that cuts across hospitality, tourism, and even the entertainment sector as a whole. He also praised the contributions of new start-ups in the Indian alcoholic beverages industry, which are adding value through innovation and high[1]quality craft spirits. Growth Drivers R. Subrahmanyam highlighted that as India targets a projected GDP of $30 trillion by 2047, it was important to consider how alcobev sector would contribute to this remarkable economic transformation. He believes the industry has the potential to contribute $600 billion to India’s economy in the coming decades. However, achieving this growth will require India’s alcobev sector to expand by twelve times its current size, with a Compound Annual Growth Rate (CAGR) of 12 percent to 15 percent. According to Subrahmanyam, two key drivers will be crucial in reaching this target which are policy initiatives to upgrade consumers and retail reforms. He views a strategic focus on enhancing the consumer experience through premiumisation will be vital. “Recent trends indicate that value growth in the alcohol industry is outpacing volume growth, a pattern which is expected to continue. While volume expansion may remain moderate, driving higher value from each unit sold will ensure steady revenue growth. Government initiatives to support premiumisation, such as encouraging investment in high[1]quality brands and upgrading consumer preferences, will play a pivotal role,” Subrahmanyam asserted. He also talked about retail reforms aimed at modernising retail structures and distribution systems. He viewed making quality brands easily accessible at the right price points, streamlining licensing processes, simplifying regulations for outlets, and supporting the growth of organised retail would contribute to building a more robust ecosystem. Beer is a Key Segment Abhinav Jindal underscored the significant role of beer as a key segment of the Indian alcoholic beverages industry. He discussed the evolving preferences of new-age consumers, who are increasingly experimenting with and enjoying lager and low-ABV beers, in contrast to the dominant market trend, where 90 to 95 percent of beer sales consist of super-strong, high-ABV varieties. Abhinav also emphasised the importance of India’s agricultural produce, such as barley and malts, in brewing high-quality beers. He remarked that India had a wealth of these resources, unmatched by any other part of the world. At the end of the session, Sanjit Padhi summarised the key discussion points and valuable insights shared by each speaker. He reinforced that India was now exporting high-quality products globally and “the global acceptance of Indian brands demonstrates that we can also offer premium and luxury products of similar calibre.” This progress has prompted a significant shift in the industry’s mindset, encouraging collective efforts to compete on a global scale. “The remarkable growth of Indian single malt whiskies reinforces that we are on the path toward Viksit Bharat,” he concluded. Need for a Viksit Bharat Report At the Q&A session, Nita Kapoor, the former CEO of ISWAI and Founder of Integrated Insights Consultancy proposed that India’s alcobev industry should collectively develop its own ‘Viksit Bharat Report’ which would facilitate meaningful engagement with key decision-makers and stakeholders. “While familiar topics like inflation, ease of doing business, accessibility, retail dynamics, and pricing strategies have been discussed extensively, policymakers now expect fresh narratives which align with India’s growth ambitions as bureaucrats are actively seeking new perspectives,” Nita asserted. Subscribe to our Newsletter! Be the first to get exclusive offers and the latest news Subscribe Now You May Also like Read the Next Article