The shifting nature of Indian society is expected to grow the spirits market

The shifting nature of Indian society is expected to grow the spirits market

Rising disposable incomes and a growing proportion of young people are expected to give the spirits market in India a leg-up at a 12% CAGR by volume in the next five years, according to global banking group Rabobank.

Increasing acceptance of alcohol and a current low level of per capita consumption are also given as reasons for the anticipated growth. In a report on the Indian spirits market, released earlier this week, Rabobank Group said it expects the country to become “one of the most attractive spirits markets in the world”. 

India is already the second-largest spirits market in the world by volume and has been growing at a CAGR of about 11% for the past ten years, the report says. 

The country is an “attractive destination for spirits companies”, but “developing routes can be challenging”, according to the report. One strategy for Western spirits companies is to partner with a local Indian Made Foreign Liquor (IMFL) manufacturer initially, either through joint venture or acquisition, before going solo, Robobank said.

Nitin Kalani, Rabobank’s VP of India Finance, said: “Most of the multinational spirit players are eager to strengthen their presence in India.

"However, bringing their international brands into India is an uphill task given the heavy and complicated tax structure and the stringent government regulations."

He added: “As an alternative, multinationals are on the lookout to acquire or partner with Indian players who have brands which are placed in the premium segment. However, there are limited choices.”