Overview: India’s liquor market is witnessing a distinct divide in consumer spending habits during the September quarter. While consumers with deeper pockets are increasing expenditure on premium spirits and beer, budget-conscious drinkers are reducing purchases due to inflation. This trend was evident in the earnings reports of major manufacturers, where premium portfolios drove growth for some companies while lower-priced segments faced sharp declines.
The Full Story
United Spirits reported a significant contraction in its popular segment, with net sales value falling 22.7% year-on-year to Rs.181 crore. Despite this downturn, the company’s ‘prestige & above’ portfolio grew 6.3%, bolstered by brands such as Johnnie Walker and Smirnoff. Managing director and chief executive Praveen Someshwar noted that the India 1 consumer is showing signs of fatigue due to inflation impacting disposable income. Conversely, Radico Khaitan experienced robust growth in its premium offerings, including After Dark whisky, Magic Moments vodka, Morpheus brandy, and Royal Ranthambore whisky. The company’s ‘prestige & above’ volumes rose 36% year-on-year to 5.28 million cases, while regular portfolio volumes declined 9.7%. Radico’s managing director Abhishek Khaitan attributed this shift to younger consumers, particularly Gen Z and women, favoring white spirits for mixability.
United Breweries also posted strong results with beer volumes increasing 16% and premium beer volumes rising 38% year-on-year. Heineken Silver and Kingfisher Ultra grew 67% and 44%, respectively. Allied Blenders reported broad-based growth in volumes, while Tilaknagar Industries saw performance boosted by the acquisition of Imperial Blue. United Breweries’ managing director and chief executive Vivek Gupta stated that its growth strategy rested on “affordability, availability and the clear tax differentiation”. Radico’s consolidated revenue from operations rose 10% to Rs.5582 crore, while net profit increased 66.5% to Rs.232 crore.
What This Means
Industry veteran Poonam Chandel cautioned against interpreting premiumization as a fundamental shift in consumer behavior across India. She noted that strong growth in premium portfolios is partly due to companies focusing on higher-margin brands rather than mass-market consumers trading up. Analysts from Nuvama Institutional Equities flagged persistent pressure on lower-income urban consumers and rising input costs across the industry. United Breweries estimated the impact of higher costs at Rs.350-400 crore for fiscal year 2027, while Radico Khaitan faced grain and packaging cost inflation.
Consumer Takeaway
The market data indicates that premiumization is gaining momentum as consumers with deeper pockets spend more on high-end spirits and beer. For the drinker, this suggests a continued availability of prestige brands like Johnnie Walker and After Dark whisky, though budget options face pressure amid rising living costs and economic uncertainty.
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