Year of both Opportunity & Recalibration

The alcoholic beverages industry has evolved rapidly over the past decade, driven by innovation, shifting consumer preferences and new business models. Yet many regulations remain rooted in an earlier era, creating challenges for producers, distributors and regulators alike. DEEPAK Arora, CEO, SOM Group of Companies argues that these policies need to be overhauled in 2026 to ensure fair competition, encourage responsible innovation and better align regulatory frameworks with modern public health and economic realities.

As far as the alcohol beverage industry is concerned, the year ahead will be defined by premiumisation, changing consumer preferences, and digital-led brand engagement, alongside ongoing regulatory shifts though disruptions may arise from policy volatility, rising input costs and changing retail models.

Opportunities lie in diversification across categories, including premium IMFL (Indian Made Foreign Liquor) and selective craft-style offerings, which will create new growth avenues and reduce dependence on a single segment. However, frequent changes in state excise structures, pricing approvals and operational guidelines remain a key concern.

2025 in Review

The year 2025 marked a decisive shift from volume-led growth to brand-led value creation. “For us, it was a year of sharper focus on compliance, premiumisation and portfolio diversification. At SOM Group, this phase aligned well with our strategy of introducing differentiated offerings like Sunny Beaches Beer and Mahavat Whisky, designed for today’s evolving consumer,” says Deepak. With the launch of Sunny Beaches Beer, the company witnessed growing demand for refreshing taste profiles, contemporary packaging and brands that connect emotionally with younger consumers.

The most surprising trend the industry witnessed was the rapid shift towards premiumisation and at-home consumption, as consumers sought higher-quality experiences at home. Lifestyle-oriented beer brands also received a particularly strong response.

International markets too responded positively to India’s improving brand maturity, particularly in the premium and single malt whisky segments. Indian brands gained global recognition through awards, wider export presence and listings alongside established international spirits, reflecting growing acceptance of quality and craftsmanship.

On the flip side, the Indian alcobev industry continued to face significant challenges due to evolving government policies, particularly the relatively high taxes and duties imposed on beer compared with spirits, despite beer generally having a lower alcohol content.

State-level excise changes, particularly frequent revisions to licence fees, label-registration costs and pricing approvals, have had the greatest operational and financial impact on the industry. “Many states demand advance duty payments that are, in most cases, three to four times our revenue per case. This makes things more complex from the perspective of ease of doing business,” Deepak explains.

While some states introduced digital processes that improved transparency, policy volatility remains the most significant challenge. “States offering stable and consultative policies enabled faster rollouts of new brands like Sunny Beaches Beer and Mahavat Whisky, reinforcing the importance of regulatory predictability,” he points out.

2026 Strategy

For 2026, the SOM Group is aligning its strategy with changing preferences, demand and regulations. “Agility, strong distribution and focused brand building will be key to navigating these shifts and sustaining growth,” Deepak states.

As such, SOM Group is gearing up with a strong focus on geographic expansion and brand building, anchored in a commitment to responsible, sustainable and long-term nation-building. “We are strengthening our CSD network, accelerating export penetration and moving into highervalue segments with the launch of an Indian single malt whisky,” he adds.

Impact of FTAs

An important question is whether rationalisation of customs duties and progress on free trade agreements (FTAs) will deliver long-term benefits. “As domestic players we see 2026 shaping up as a year of both opportunity and recalibration.

With customs duty rationalisation and FTAs progressing, sourcing flexibility is expected to improve, even as pricing pressures and competition intensify across whisky, bourbon and gin,” says Deepak.

The general feeling is that a more stable and predictable policy framework like rationalised taxation, simpler compliance and greater uniformity across states would materially accelerate growth by encouraging long-term investment, boosting exports and enabling Indian brands to compete internationally. “Support from partner countries under FTAs, such as lower tariffs, simplified regulations and improved market access, can significantly aid Indian brands in expanding exports and competing more confidently in global markets,” concludes Deepak.