India offers a favourable market opportunity to the alco-bev industry with the youngest population in the world, and over five hundred million people in its workforce. The country is also home to some of the highest number of billionaires, behind only the USA and China. There's a growing and vibrant middle-class population with rising disposable income, who are increasingly looking for an aspirational lifestyle and premium experiences and products.
While India’s per capita consumption of alco-bev is one of the lowest in the world, given India is the largest whisky market in the world and one of the top 10 economies, it remains one of the fastest-growing markets with a compound annual growth rate (CAGR) in the mid-teens.
Like most sectors, the pandemic has adversely impacted the alco-bev industry with the complete closure of alcohol retail – both on and off trade outlets during the lockdown. With all avenues of offline socialisation suspended, the pandemic has redefined the future of socialising and the alco-bev industry. Starting with the onset of virtual happy hours and gradually as normalcy returned, smaller gatherings around specific occasions, consumer behaviour has evolved with the new consumption patterns.
As consumers are homebound, with the closure of bars and restaurants either shut or operating partially, the permissibility of alcohol consumption at home has increased. Consumers have discovered that they could drink better as in-home consumption has made it possible for them to upgrade and enjoy their favourite drink within the safe zone of their homes.
Mixology experience at home
The premium and luxury categories have seen an impetus, becoming an integral part of the current culture, with white spirits like vodka and gin an essential part of sundowners and brunches. With ‘drinking better’ and in moderation at home gaining popularity, consumers have started to gravitate towards experimenting with new offerings, creating the 'mixologist experience', stocking up on varied mixers, tonics and premixes to bring alive the bar ambience at home. To cater to this rising demand, ready-to-drink brands have strengthened their presence at physical and digital retail distribution channels are witnessing phenomenal growth.
The wave of craft
Craft beer was here first and continues to rise. Following that curve, came the onslaught of craft gins. With the availability and consumption of beer adversely impacted during the pandemic, consumers who craved craft have shifted to higher ABV spirits such as gins. This has led to a host of offerings in the RTD space – everything from low calorie and flavoured tonic waters to pre-mixes which can easily be consumed with a host of spirits.
Organic and natural
Consumers have started becoming selective about ingredients in their favourite beverages, looking to infuse the best of natural ingredients stems from “nature” being a surrogate for 'good, sustainable and healthy' . Brands have begun to respond with RTD’s manufactured with organic ingredients, removing artificial additives, and adding flavour with natural ingredients such as juices and botanicals. The year 2020 saw one the largest number of claims with the word 'natural' globally and India is certainly not going to be left behind.
Healthy for life
Originating from the US in the early 2010’s, the hard seltzer, an alcohol based and flavoured sparkling water, revolutionised the North American RTD market. This trend is now repeating itself across Europe. Hard seltzers are marketed as low calorie, low sugar alternatives to beer and other beverages, and thus appeal to consumers who are prioritising health and wellness. Their modern positioning makes them a fresh alternative to traditional alco-bev drinks. In India, while there are very few brands promoting hard seltzers, the growth rate and acceptance of these offerings have seen a meteoric climb in the last few months.
Amidst the emerging and constantly evolving alco-bev landscape, 'Ready to Drink' offerings, while a small part of the Indian alco-bev market, is likely to see exponential growth against the cultural and behavioural metamorphosis of the Indian consumer.
Vikram Damodaran, Chief Innovation Officer, Diageo India, Bengaluru