ISWAI’s push for inflation-linked pricing

With over 40 years in the alcobev industry, Sanjit Padhi has led at SABMiller Asia & India, Diageo Plc, and UB Group. His expertise in sales, marketing, and general management, along with global market exposure, positions him to steer International Spirits and Wines Association of India (ISWAI) as its CEO through India’s complex regulatory landscape. His recent work in grain ethanol policy, working on policy development and industry growth adds to his strategic vision. Bringing global best practices and industry insights, he aims to drive impactful change.
Shalini Kumar talked to him on a wide range of issue including the ISWAI’s key challenges, progress in state negotiations, and the industry’s future outlook.

What are the key challenges you face as the head of ISWAI and what are your primary agenda and objectives for 2025?

The industry faces two significant challenges: Pricing freedom and ease of doing business. At ISWAI, our objective is to constantly engage with the policy makers in helping them understand and appreciate the challenges that we, as manufacturers and suppliers, are facing, such as cost and inflationary trends as well as losing time and money due to business operating practices that can be improved if we work together in a collaborative manner.

What progress has been made by regulators in response to ISWAI’s proposal for an inflation-linked supplier pricing model for alco-beverages, and how is ISWAI addressing the challenge of equitable and fair market access in the light of existing policies?

We have engaged with two state government regulators in putting forth an independent pricinglinked model, which will be based on macro and micro-economic indicators, and work in providing a neutral solution which should be fair and equitable to all.

As far as market access is concerned, there are still some markets where access is still restricted. We have, however, started loosening some of the restrictions in terms of states along with brands of certain upward value, through imports into that state. Barriers from a cost perspective continue to exist in states and will be there in future as well, as it is a practice continued since years.

Given that excise duties account for 70–80 percent of the maximum retail price of liquor, what specific measures can regulators take to rationalise excise duties and address the growing challenges of rising production costs and import duties?

Yes, you are right, duties and taxes account for significant chunk of the value chain and in many of the states, ad valorem duty structure results in an exponential increase in pricing as you go up the price ladder.

As India becomes more and more prosperous and aspirations rise, the demand for premium products will increase. However, to take advantage of this increasing prosperity and the ability to spend requires careful tax measures by states. Also, a shift to a slab-based structure could be evaluated as affordable pricing will generate demand and lead to overall economic growth, both directly for the state revenue as well as downstream industries.

"A shift to a slab-based structure could be evaluated as affordable pricing will generate demand and lead to overall economic growth, both directly for the state revenue as well as downstream industries"

What progress has ISWAI made in its discussions with the central government regarding GST-rates for molasses, recycled bottles and others? Are you confident that the government would cut down the GST rate on these items?

As you are aware, GST on ENA has been removed since November, 1, 2024. GST on other inputs, such as molasses and re-cycled bottles have been discussed with the central government and we are extremely pleased to say that the rates are in line with what is fair, particularly given that no input tax credit is available for alcohol.

Your predecessor had initiated dialogue with state authorities to bridge the gap between stakeholders, fostering exchange of ideas and identifying areas of mutual interest to support the growth of alcobev industry in India. Could you shed light on your current initiatives in this direction?

We have various forums wherein we interact with the state authorities and I’m pleased to inform about the ISWAI ‘Economic value of the Indian alcoholic beverage industry’ report that captures the contribution of the alcobev sector to the economy of the country. As part of the next step, we have created an Economic Report for another state, which will then be disseminated to all the stakeholders. This initiative will be carried across the country and will involve working with the state governments in helping them bolster their revenue and contribute to the overall economic growth of the state.

Please tell us in detail about your ‘Never Drink and Drive’ campaign.

Drunk driving accounts for 2.5 percent of road fatalities in Uttar Pradesh, often impacting individuals in their most productive years. To address this pressing issue, ISWAI, in partnership with the Uttar Pradesh Excise Department and Police, has launched the #NeverDrinkAndDrive campaign. This initiative aligns with National Road Safety Week 2025, observed from January 11 to 17, focusing on raising awareness about road safety and encouraging responsible behaviour among road users.

As part of this campaign, ISWAI has implemented a series of public awareness initiatives, including awareness drives, starting with Lucknow, with radio, out-of-home (OOH) amplifications, youth-focused digital campaigns, and influencer-led initiatives across social media platforms like LinkedIn, X and Instagram.

Through these activities, ISWAI aim to educate the public, inspire behavioural change, and emphasise the importance of individual responsibility in road safety. Citizens are encouraged to pledge their support by refraining from driving after drinking, thereby ensuring safety for all road users.

What is your outlook for the Indian alcobev market in 2025? Are there any Free Trade Agreements (FTAs) expected to be signed this year, and what are the prospects for a reduction in customs duties on imported products?

We expect to see moderate gains in 2025 fuelled by structural changes in market such as Andhra Pradesh, rationalisation of duties in Karnataka and hope certain markets re-look at their RTMs so as to foster availability and build accessibility in due course of time.

It is expected that discussions will resume regarding FTA with UK, which we hope to move in positive direction as it will significantly impact the Indian market in terms of building affordability as well as improving quality of products, and help in improving operational efficiencies.

Drink Less and Drink Better

ISWAI champions responsible alcohol consumption with its guiding principle: “Drink Less, Drink Better.” This promotes moderation and informed choices, aligning with the growing trend of premiumisation where consumers increasingly opt for higher-quality, premium products.

While global markets have long embraced premiumisation, India is now experiencing a surge driven by rising incomes and aspirational lifestyles. With over 20 million individuals reaching the legal drinking age annually, a young population with higher disposable incomes is fuelling demand for premium and super-premium products. This shift presents exciting opportunities for industry growth, while ISWAI remains committed to responsible consumption and consumer awareness

Which categories within the alcobev sector do you anticipate will perform better in the coming years, and what factors or market trends lead you to this conclusion? Could you elaborate on the consumer preferences, industry dynamics or innovations that might drive growth in these categories?

A key driver of the Indian alcohol market’s transformation is the influx of 20 million potential consumers entering the legal drinking age each year. This younger generation is not only embracing alcohol but also prioritising “drinking better,” reflecting a discerning consumer base eager to invest in premium products that enhance their social experiences. Their preferences are shaping the industry, pushing premiumisation to the forefront as their conscious choices for quality and curated experiences define the evolving trends.

Also, Indian single malts, a growing segment of the spirits market, have aligned themselves with the “Make in India” initiative. With domestic sales of an estimated 3.5 lakh cases, which is at par with imported malts, this segment demonstrates the country’s capacity for creating world-class products and creating new experiences for the domestic and global market.