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Is India the next China?

Published:  24 July, 2023

India has emerged as a key volume driver for beverage alcohol, whilst China's growth has softened according to the latest IWSR analysis.

The data reveals that India, alongside Mexico and Brazil, will be the key volume growth markets for total beverage alcohol (TBA) over the next five years, taking over from the US and China.

India alone accounted for a third of all global TBA volume growth between 2021-2022, driven by the recovery of the beer category and increasing growth of the spirits category, as people continue to trade up within whisky as well as domestic brandy, rum, vodka and gin.

The IWSR noted that TBA volumes are predicted to remain flat over the next five years for China and the US, although these key nations will, of course, continue to be significant drivers for the global industry.

Jason Holway, market analyst, IWSR, said: “There is strong consumption and growing premiumisation in India, helped by higher middle-class disposable incomes, the lifting of pandemic restrictions and improved quality, variety and availability in retail.

“Momentum is trending positively across drinks categories, with brown spirits performing particularly well. Consumers are trading up, notably in sparkling wine, whisky and agave-based spirits.

“As more brands come into the growing Indian drinks market, consumers are enjoying trying new categories.”

With consumer behaviours shifting, the IWSR found that premium-and-above price bands for beer, spirits and wines all outperformed their standard-and-below counterparts in 2022 and this trend is set to continue. Consumers in India, China and the US have shown a higher recall spend than other key markets, with much of this driven by younger adults between the ages of LDA and 39.

The opportunity for the drinks industry in India is further bolstered by the potential impact of India’s population overtaking China this year.

China’s population fell in 2022 for the first time since 1961, according to the National Bureau of Statistics of China, dropping by 850,000 in 2022 to 1.4bn. 

UN statistics also reported that China’s population will be overtaken by India in 2023, and will continue to decline based on current projections.

In 2021, China accounted for a fifth of worldwide alcohol volume consumption and it will be some time before India can match China in terms of scale, but it's certainly on the right track.

UK/India relations

Premiumisation is more evident in imported bottled Scotch than in any other category in India. Since the turn of the century, sales volumes have multiplied by 20 times and volumes have very nearly doubled between 2020-2022, according to the IWSR.

The free trade agreement (FTA) between the UK and India might boost the market for imports further by lowering tariffs for Scotch imports. However, the situation is complicated by a number of factors: the need to respect Australia’s Most Favoured Nation (MFN) status in the negotiations; variations in state-level taxes and tariffs; and the different types of imported Scotch, including bottled in Scotland, exported in bulk to be bottled as Scotch in India, and exported in bulk as an input liquid for domestic blended whiskies.