Indian tipplers becoming quality conscious, finds study

With growing urbanisation and rising income levels, Indian alcoholic beverages consumers are becoming more quality conscious rather than staying price-sensitive, a recent study has found.

With increasing international travels and exposure to foreign brands, their behaviour change is reflected in their purchase choices, which makes India an attractive market for global manufacturers and retailers, the joint study by Indian Council for Research on International Economic Relations (ICRIER) and solicitor firm PLR Chambers said.

According to the study, the country is one of the fastest-growing markets for alcoholic beverages, with an estimated market size of USD 52.5 billion, and it is expected to grow at a CAGR (compound annual growth rate) of 6.8 per cent between 2020 and 2023.

While this data does not capture the size of the informal or illicit liquor market, it does provide directions to the state excise departments to plan their revenue projection based on the consumption demand, it said.

The data also demonstrates that by 2030, while 50 per cent of the consumers would buy more of the same category of alcoholic beverages that they are consuming, 26 per cent are expected to move to higher brands and 24 per cent will spend on newer categories of alcohol.

In India, judicious use of consumer purchase data to design tax rates was a rarity in the past.

A lack of organised data collection and collation led to ad hoc and non-aligned changes in excise policies.

Recently, various states are taking bold measures to see the impact of the policy changes on consumption and revenue collection. In the case of West Bengal, a downward alignment of previously increased excise duties on India Made Foreign Liquor (IMFL) is allowing consumers to access better quality products, the study said.

A wrong policy may push consumers towards lower quality products, and illicit markets may cause health hazards and reduce revenues, it warned.

Sushmita Mukherjee, assistant secretary of West Bengal Foreign Liquor, Country Spirits, ON, OF Shops and Hotels Owners’ Association, told PTI that the impact of price reduction is evident in the spurt in sales in the state.

Though December is a festive season and sales are generally higher, the price drop has added to the rise in consumption, she said.