India: Indian beer sales boosted as drinkers switch from spirits

Favourable state policies in some Indian states are resulting in drinkers switching from spirits to beer according to government excise data,

Favourable regulatory changes in several Indian states are prompting drinkers to shift away from hard spirits towards beer, with excise data showing sharp volume gains following changes in taxation and retail rules.

According to a report in The Economic Times of India, revisions to liquor policies in Assam, Uttar Pradesh, Maharashtra, West Bengal and Meghalaya have resulted in beer sales growth ranging from 14% to more than 100% since the changes were introduced. Together, the five states account for roughly a quarter of India’s total beer consumption.

The reforms have varied by state but broadly include higher duties on spirits, price rationalisation, and an expansion of retail access for beer. In Maharashtra, the government raised taxes on Indian-made foreign liquor (IMFL) by 50% in July while keeping beer prices unchanged, leading to a more than 30% rise in beer sales. Uttar Pradesh relaxed licensing norms in April and nearly doubled the number of outlets permitted to sell beer, driving sales growth of close to 14%. Assam recorded the strongest uplift, with beer volumes more than doubling since April after policy adjustments.

Vinod Giri, director general of the Brewers Association of India, told the publication the changes mark a correction of long-standing distortions in alcohol taxation. “Most countries in the world tax beer far lower than spirits to encourage consumption of moderate forms of alcohol,” Giri said. “In India, many states have historically taxed beer much higher than spirits in real terms, which has encouraged consumers to shift towards harder alcohol.” He added that recent reforms have improved access to lower-alcohol beverages while also boosting state revenues.

The Brewers Association of India represents United Breweries, AB InBev and Carlsberg, which together account for about 85% of beer sales in the country. Giri said local governments are increasingly reviewing legacy excise structures as they seek both public health and fiscal benefits.

While beer volumes have surged, the IMFL segment has slowed to mid-single-digit growth nationally and has declined in some states that raised duties. In Maharashtra, IMFL volumes fell 18% in September and October, according to the latest data. Global spirits groups have begun monitoring the impact, with Pernod Ricard chief executive Alexandre Ricard warning that the Maharashtra excise hike will weigh on performance through the financial year.

Despite its warm climate, favourable demographics and rising affluence, the beer market still remains underpenetrated in India, accounting for just 10% of the alcohol market. The per capita consumption of around two litres is well below most Asian peers. Moreover, excise on beer remains disproportionately high, averaging 1.8 times the tax burden on whiskey, a key driver of spirits consumption in the country.