The Future of Alcoholic Beverages in India: Changing Consumer Preferences and Emerging Opportunities

This report analyzes the changing societal perceptions of alcohol consumption in India, marketers’ efforts through surrogate advertising and event sponsorship, and the resultant rise in demand for alcoholic beverages across several urban Indian consumers. It points out key opportunities for companies to explore, in terms of both product development and marketing.

• Detailed insights and analysis documenting the drivers and inhibitors in the Indian alcoholic beverages market * Exclusive occasions, market and consumer survey data and analysis covering each category * Strategic conclusions combined with actionable recommendations for all industry players looking to fully capitalize on this market * Consumer understanding: obtain a detailed understanding of Indian consumers' attitudes and behaviors towards consumption of alcoholic beverages * Market understanding: identify key consumer segments, profitable alcoholic beverage categories and product innovation trends in India and globally

While partying with friends at a pub, bar or restaurant, it is observed that beer is the most favored drink by Indians across all age groups, but spirits/liquor is most favored while partying at home. This is a result of the beer brands’ marketing efforts to promote beer drinking as part of social interactions in the context of sports, music, etc. Indian consumers' value-for-money considerations are found to decrease with age, and this is more apparent among the Indian women. Also, value-for-money plays a more important role while drinking at a pub, bar or restaurant, than while at home, which is a result of the significant premium that is charged in most on-trade channels. Advertising restrictions have given rise to a number of alternate avenues for the promotion for alcohol brands in India. Indian market players have been forced to be more innovative in their approach to engaging with consumers, branching out into concepts such as non-alcohol brand extensions and surrogate advertising and alignment with sport.

• What are the key category growth trends in the Indian alcoholic drinks market? * What societal trends are influencing Indians' propensity for alcoholic drinks consumption? * How are different demographic groups' (different ages, gender, etc.) attitudes and behaviors towards alcoholic drinks changing? * What drives Indians' perceptions of value in the alcoholic drinks products they buy? * How is the Indian alcoholic drinks market balanced between on- and off-trade sales and how is this changing over time?

Table of contents

OVERVIEW
Catalyst
Summary

THE FUTURE DECODED
INTRODUCTION: Indians’ changing consumption patterns and choice of alcoholic beverages is fueling the growth of the market
TREND: Even with the rising acceptance of social drinking, the Indian alcoholic beverage market is defined by the moderate consumption behavior of consumers
Falling negative perception related to alcohol among urban Indians is changing the patterns of consumption of alcoholic beverages
Although per capita consumption of alcoholic beverages by Indians is low, it is growing at a much faster rate compared to other BRIC nations and countries such as the US and the UK
Trends in the frequency of alcohol consumption among Indians are reflected in the changing alcoholic drink preferences and the rising number of consumption occasions
Traditional gender-based attitudes towards alcohol still weigh heavily on occasion numbers between the sexes
Alcohol consumption occasions among Indians rises until the age of 50, but health concerns and shifting consumer priorities result in heavy moderation thereafter
Gender roles and societal norms result in a large proportion of consumers abstaining from alcohol consumption
Key takeouts and implications: high levels of moderation in alcohol consumption will necessitate the companies to align product portfolio more with societal and health concerns to profit on the long-term
TREND: Changing alcohol consumption patterns are fuelling a more diverse alcohol market in India
With evolving employment avenues and work culture, there is rising acceptance of alcoholic beverage consumption as a part of socializing
Along with standalone drinking, association with sports and music has increased the popularity of beer among young urban Indians
There is growing appreciation for wine among Indian consumers, but many perceive a knowledge gap while selecting their wines
Key takeouts and implications: rising appreciation for beer and wine would play a major role in shaping on-trade alcohol consumption frequency and perception in India
TREND: Indian consumers' off-trade consumption is largely driving the overall market growth
Key takeouts and implications: although there is balanced growth across on- and off-trade channels in India, the latter continues to drive the overall alcohol market
TREND: Alcoholic beverages brand marketers are using innovative marketing concepts to bypass restrictions on advertising of alcoholic beverages in India
Advertising restrictions have given rise to a number of alternate avenues for the promotion for alcohol brands in India
Key takeouts and implications: restrictions with respect to content and media channels for advertising alcohol in India will continue to drive innovation in surrogate promotional strategies
INSIGHT: Indians exercise a high degree of moderation in alcohol consumption owing to equal concerns over both weight gain and long-term health impacts
Rising awareness of the possible health impacts of alcohol and societal constraints are creating a cautious attitude among Indians
Amid many health concerns, potential weight gain is a major factor restricting alcohol consumption in India
Although Indians are well informed about the recommended alcohol intake and the associated health risks, many believe that alcoholic products should carry health warnings
Key takeouts and implications: strengthening health considerations impact heavily on Indians' drink choices and consumption patterns
INSIGHT: Indians' perception of value is driven by quality more than price in their choice of alcoholic drinks
Indians' price-consciousness while choosing alcoholic drinks is less rigid compared to most other CPG purchase decisions
Post-recessionary changes in consumer attitudes have shaped Indians' attitudes towards alcohol selection for at-home consumption in ways similar to that of consumption at pubs, bars and restaurants
As the economic uncertainty begins to wear off, Indians are less likely to choose cheaper types of drinks for at-home consumption or at pubs, bars and restaurants
Key takeouts and implications: value- and quality-consciousness weigh more heavily on Indians' alcohol drink choices than just lower prices
INSIGHT: Since Indians tend to have a ritualistic attitude towards alcohol consumption, brand loyalty plays a significant role in consumers' choice of alcoholic drinks
Key takeouts and implications: Indians are highly brand-conscious and habit-driven in their choice of alcoholic drinks, and show no strong signs of trading-down brands just to save money
INSIGHT: Though an external attribute, packaging of alcoholic drinks is an important factor in shaping Indians' purchase decisions
Key takeouts and implications: packaging is still not a strong influence on Indian's alcoholic drink purchases through on-trade channels, but off-trade dynamics still offer scope for innovation
INSIGHT: There is a rising understanding among Indians about the link between food and alcoholic drinks
Though there is lack of succinct information at both on- and off-trade destinations in India about food-alcohol pairing, consumers are beginning to seek alternative source to educate themselves
Wine and beer are the most preferred alcoholic drinks by Indians with a meal for at-home consumption, but there is no clear preference for an alcoholic drink while eating at bars, pubs or restaurants
Key takeouts and implications: Indians' rising desire to match food and alcohol is going to open up new and innovative consumption occasions in the future

ACTION POINTS
ACTION: Popular alcohol brands should evaluate possibilities for the introduction of low-calorie variants to appeal to health-conscious drinkers
Resist the temptation to tamper with formulations of established key brands
ACTION: Introduce innovative packaging concepts to drive off-trade uptake of beer
ACTION: Be aware of the imminent opportunity that exists in the ready-to-drink alcoholic beverages market
ACTION: Capitalize on the consumer desire to trade-up in an optimistic economic environment
ACTION: Make available more comprehensive information on the link between food and alcohol at on-trade destinations such as bars and restaurants
Building an association of a certain type of alcohol and food can help to ritualize consumption
Matching alcohol with desserts can open up possibilities for new wine consumption occasions

APPENDIX
Definitions
Spirits
Wine
Beer, cider and FABS
Cider
Methodology
Further reading and references
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Datamonitor consulting
Disclaimer

Related research categories

By sector: General alcohol, Consumer (in Trends), General drinks

By market: India (in Asia), India (in BRICM)