India: Alco-bev industry set for a 6% volume growth in FY26

India’s alco-bev industry is set for a 6 per cent volume growth in FY26, driven by steady demand across segments. While the Indian Made Foreign Liquor (IMFL) segment is expected to grow by 5–6 per cent, reaching around 464 million cases, the beer segment is likely to expand faster at 8 per cent, hitting approximately 412 million cases, The Hindu BusinessLine reported on July 4.

According to Jayashree Nandakumar, Director, Crisil Ratings, growth across segments in this fiscal is expected to be primarily volume-driven, with premiumisation trends continuing to support realisations. Overall, the beer segment may grow 1–2 per cent more than the spirits segment, supported by higher volumes.

In its report titled ‘Cheers continue for alcobev cos this fiscal’, Crisil Ratings shared that the industry is dominated by spirits, which contribute 65-70 per cent of total revenue, with the remaining coming from beer, wine, and country liquor.

The industry is expected to grow 8–10 per cent in FY26, reaching ₹5.3 lakh crore, driven by a 13 per cent CAGR over the past three years. The growth is being propelled by rising volumes and continued premiumisation.

India’s per capita alcohol consumption is estimated to be around 2.5 litres (100 per cent pure alcohol) for FY26, compared to the global average of over 5 litres . It has risen from approximately 2.3 litres in FY23. Karnataka, Tamil Nadu, and Maharashtra remain the top IMFL-consuming States, accounting for 40–45 per cent of total volumes sold.

Nandakumar commented, “This fiscal, healthy volume and ongoing premiumisation will support revenue growth despite the absence of major price revisions. Revenue from premium and luxury segments, priced at over ₹1,000 per 750 ml, is expected to grow by around 15 per cent. The contribution from these segments will rise to 38-40 per cent of spirits revenue this fiscal compared with 31-33 per cent in fiscal year 2023.”

The report also noted that higher volumes and realisations would support the profitability of players through better contribution and cost absorption, despite a marginal increase in input costs.

The major raw material input for the spirits and beer segments are extra neutral alcohol (ENA) and barley respectively, together accounting for 60-65 per cent of the total material cost, while the rest is towards packaging, primarily glass bottles.

ENA prices are expected to rise 2-3 per cent this fiscal due to higher demand from the ethanol blending program, despite the expected higher supplies. Barley prices are expected to increase 3-4 per cent this fiscal due to the tight demand-supply situation. However, a 3-4 per cent increase in realisation due to premiumisation, along with continuing volume growth, will help in cost absorption and improve operating margins.