Stocks On The Rocks: Alcohol-Beverage Sector Sees Premium Surge In Q4
The standout trend this quarter has been the continued momentum in premiumisation, particularly within the IMFL segment.
The Indian alcohol-beverage industry has reported a robust quarter, driven by a strong wave of premiumisation, margin expansion, and strategic capacity investments.
The standout trend this quarter has been the continued momentum in premiumisation, particularly within the Indian Made Foreign Liquor (IMFL) segment. Prestige & Above (P&A) brands are growing at 2–3 times the rate of popular brands, underscoring a structural shift in consumer preferences. This trend is being fueled by favourable demographics, rising disposable incomes, increasing social acceptance of alcohol, and a slew of new product launches in the premium category.
IMFL Outpaces Beer
IMFL has outperformed beer in terms of growth, with companies like United Spirits and Radico Khaitan reporting strong volume increases in their P&A segments—9.2% and 16%, respectively. Allied Blenders led the pack with a 32.7% surge in P&A volumes and a 13.3% overall volume growth. In contrast, United Breweries saw a 24% rise in premium beer volumes but only a 5% overall growth, highlighting the relatively smaller contribution of beer to total alcohol consumption in India.
Despite global trends favouring beer, its share in India remains subdued. Premium beer accounts for only about 12% of the category, compared to around 50% for IMFL. This disparity is attributed to higher taxation, stricter regulations, and a high base effect that continues to weigh on beer consumption.
Margins On The Rise
Margin expansion has been another key highlight this quarter. Allied Blenders reported a significant 700 basis points increase, followed by United Spirits (+350 bps), Radico Khaitan (+230 bps), Tilaknagar (+270 bps), and United Breweries (+135 bps). The margin gains are being driven by premiumisation, easing input costs, backward integration, and stable pricing strategies.
Capacity Expansion Signals Confidence
The industry’s confidence in sustained growth is evident from the aggressive capacity expansion plans. Radico Khaitan invested Rs 740 crore between fiscal years 2022 and 2024 to boost capacity. United Breweries has announced a Rs 750-crore capital expenditure plan over the next 12 years, while Allied Blenders has initiated a Rs 525 crore capex plan for FY25-27.
