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India’s alcoholic beverage industry, the third largest in the world, has been showing increasing signs of recovery since the beginning of 2023. “Events and marriages are back to pre-covid levels and shall drive a spike in alcohol consumption. This could negate the urban slowdown, which is plaguing many other forms of discretionary consumption such as QSR, apparel, and footwear,” said Nuvama Wealth, an Indian wealth advisory firm.
The growth of India’s alcoholic beverage market
A resilient economy, changing social norms, rapid urbanisation, and the post-pandemic market recovery are strong reasons behind this revival. According to Future Market Insights, India’s alcoholic beverages market stands at $54 bn in 2023, and it’s poised to touch $111 bn in 2033.
The government has also streamlined licensing and registration processes for alcohol-related businesses and reduced bureaucratic obstacles. India also plans to increase its alcohol exports to G20 by addressing non-tariff barriers like minimum maturation conditions for whisky. Highlighting this as a massive opportunity for India, the Director-General of the Confederation of Indian Alcoholic Beverage Companies (CIABC) Vinod Giri said, “G20 countries not only account for 80% of global alcoholic beverages imports, they also allow higher product prices and better operating margins.”
The growing dominance of domestic players
Acting on a complaint by Radico Khaitan, the leading company in India’s alcoholic beverages market, Indian regulatory authorities have launched an antitrust probe against Pernod Ricard. The French liquor giant allegedly offered additional discounts to retailers in the Southern state of Telangana to stop selling Radico’s whisky brand 8PM.
This incident highlights how domestic Indian liquor companies have emerged as tough competitors to global players.
Marking a shift in consumption patterns, the country has started to look beyond the premium global brands to nurture its domestic offerings. As per the CIABC, the share of Indian products in the premium segment (INR 1,000 and above) has climbed from 18% to 20% in the last fiscal year (FY23, which ended 31 March 2023), indicating a faster growth for Indian products against imported products.
With distinct flavours, these homegrown brands offer an extensive variety of alcoholic beverages, mixers, and pre-mixed cocktails. The country is also showcasing innovations in the alcoholic beverage market, particularly in the ready-to-drink segment. Whisky continues to remain a favourite for Indian consumers. In FY23, whisky would remain the largest segment with an expected sales volume of 243 million cases. It is likely to contribute 63% of sales of the total industry, estimates the CAIBC.
Top alcoholic beverage stocks to invest in India
Investing in alcohol stocks in India can be profitable, as this is one of the most rapidly growing industries in the country. We list down three stocks that investors may want to pursue. These companies have a strong market presence in India’s alcoholic beverages market and have exhibited steady growth.
United Spirits Limited
The Indian alcoholic beverages company, United Spirits is also a subsidiary of the British giant, Diageo. McDowell’s No. 1, Royal Challenge, Signature, and Antiquity are some of its major domestic brands. It also imports and markets some of the iconic brands of Diageo like Johnnie Walker, VAT 69, Black & White, Smirnoff, and Ciroc in India.
For the year ended 31 March 2023, the company’s operating income dropped 13% over the year to INR 11.3 bn ($136.52 mn). Additionally, United Spirits saw year-on-year revenue growth of 9.9%, totalling INR 106.1 bn ($1.28 bn).
With a market capitalisation of INR 743.75 bn ($8.95 bn), the company is listed on the Bombay Stock Exchange (BOM: 532432). Its shares surged 21.82% over the past one year. United Spirits boasts a PE ratio of 345.58 and a price-to-book ratio of 12.92.
Radico Khaitan Limited
Radico Khaitan manufactures, sells and markets whisky, vodka, rum, and country liquor in India. The company houses brands including 8PM Whisky, Pluton Bay Rum, After Dark Whisky, Contessa Rum, Old Admiral Brandy, which have a strong presence in the market. The company also exports its products to several international destinations.
The company saw a 14.1% year-on-year decline in its operating profit, reaching INR 2.9 bn ($34.59 mn) in the full year ended March 2023. During this same period, Radico’s revenue witnessed a 10.8% year-on-year increase, amounting to INR 31.4 bn ($0.38 bn).
The company, with a market capitalisation of INR 162.90 bn ($1.96 bn), has its shares traded on the Bombay Stock Exchange (BOM: 532497). Over the past year, the Radico Khaitan stock has experienced a 10.50% increase. The company boasts a price-to-earnings ratio of 17.79 and a price-to-book ratio of 7.36.
Globus Spirits Limited
Globus Spirits is involved in the manufacturing and selling of third-party branded products through its blending and bottling facilities. County Club, French Castle, Bagpiper Whisky, Ghoomar, Moghul Monarch are some of its leading brands. Globus also exports its products to Europe, Africa, the Middle East, and Southeast Asia.
For the year ended 31 March 2023, the company saw a year-on-year surge of 33.3% in its revenue earnings, reaching INR 21.1 bn ($0.25 bn). During that same period, its operating profit came in at INR 1.9 bn ($22.78 mn).
Globus Spirits shares are traded on the Bombay Stock Exchange (BOM: 533104). The company currently holds a market capitalisation of INR 26.867 bn ($0.32 bn). The company’s stock has experienced an increase of 6.19%. Additionally, its shares are characterised by a PE ratio of 22.32, and a price-to-book ratio of 3.04.
Editor’s note: All stock movement figures as of September 15, 2023.
