Industry Overview

The distilleries and breweries industry in the global market plays an extensively
huge role as it accounts for more employment and job opportunities along with
revenue. This has also started to attract an intense amount of foreign investments in
different major suppliers of the same. Being a dynamic sector, the kinds of liquor,
cocktails etc. that helps expand the market by bringing in more products and lines
that can directly increase the revenue and employment. The alcohol industry in
India is a culmination of both Indian made foreign alcohol and Indian made Indian
alcohol and the foreign liquor accounts for only 0.7% of the Indian Market.

According to the Indian Council for Research on International Economic

Relations, India has become one of the world's fastest growing alcoholic beverage
sectors, with a market price of $52.5 billion which is ballpark Rs. 3.9 lakh crore.
This industry is extensively known to contribute to around 15 lakh jobs and
employment offers. The Indian alcohol market is expanding rapidly with wine and
vodka showing very high demand. India also happens to be the largest consumer of
whiskey in the world. The government data suggests that around 16 Crore people
in India consume alcohol regularly. In India, the alcoholic beverages sector
employs over 1.5 million people and generates ballpark USD 48.8 billion in
revenue the year of 2019. Foreign investment seems to be largely welcome in the
industry, and several governments provide incentives and subsidies to domestic
suppliers and manufacturers.

Global contribution

The expansion of international youth and early adult population, spike in

discretionary cash, and higher level of customer preference for deluxe, expensive
and premium products are propelling the development of the worldwide alcoholic
beverages industry. As shown in a report published in Health Careers, alcohol sales
climbed by 5.1 percent in 2018, and the typical American drinks 2.3 gallons
average annually. In the alcoholic beverage sector, globalisation frequently leads to
increasing managerial ownership and higher marketing reliance. In these areas,
globalisation offers a number of benefits. As products become more uniform and
regulated over the globe, the general quality of alcoholic beverages provided may
improve drastically. The market is growing due to innovations and breakthroughs
in the manufacture of vodka, flavoured wines, lager, beer and cocktails, as well as
evolving customer preferences, alcohol choices, and an uptick in the level and
number of brewers and wineries throughout the world. Economically, worldwide
distribution systems can be more profitable and economical allowing for
production and marketing economies of scale. That being said, Competitiveness
due to globalization also enhances quality of the products as well as diversification
of the same.

Miller Coors, Anheuser-Busch In Bev, Carlsberg A/S, Heineken Holdings N.V.,

and Bacardi Limited PL, Diageo PLC, Beijing Yanjing Brewery Company
Limited are some of the major participants in the industry.1

The market for Alcoholic beverages was foreseen to stand at ballpark USD 1475
Billion in the year of 2021, then further expected to progress to 2797 Billion USD
in the year of 2028. The rate at which the expansion happens seen to be at 9%. By
the year of 2026, at least USD 1837 Billion is expected to be garnered. In 2020,
Asia Pacific accounted for 42 percent of the worldwide alcoholic beverage
industry. The second biggest area being North America, accounted for
1
Alcoholic Beverages Market: Global Industry Trends, Share, Size, Growth, Opportunity and Forecast 2021-2026-
IMarc.
ballpark 24% of the worldwide alcoholic beverage industry. In the worldwide
alcoholic drinks market, the Middle East was the lowest region. Due to religious
restrictions and limitations, the Middle East has accounted for the least
contributions to wineries, distilleries and breweries. Premium and super-premium
alcoholic drinks are becoming increasingly popular in both established and parts of
the developing world.

COVID’s effect on the industry

The state and global wide lockdown triggered by the COVID-19 epidemic
culminated in a 41-day period of total ban on the sale of alcohol. Globally, the
pandemic and its concomitant curfews, as well as social distancing rules,
culminated in a 35-40% loss in production and a 15% dip in consumer demand and
sales. Due to the entire shutdown, pubs and eateries have been negatively
impacted.

Being a huge part of the social lives of the alcohol industry, it becomes a huge
challenge for the consumers to have made shifts and amendments in their drinking
habits due to the constraints imposed by the pandemic norms. However the lift on
sale of alcohol from government liquor shops led to an increase in purchase of the
same for home consumption. The state's revenue comes mostly from the alcohol
sector. Because the prohibition had a direct impact on state government revenue,
some governments began delivering alcohol to people's homes during the
lockdown to reduce crowds and establish social distancing norms. Although there
was an upward trajectory in the alcohol trade from January to March 2021, the
sector is still recovering.

India’s top competitors

2
Top Companies Market Cap (Rs. Cr.)

United Spirits 64,496.45

United Breweries 38,275.29
Radios Khaitan 11,971.15
Globus Spirits 4,263.09

GM Breweries 1,275.50

3 Net Sales
Company Name
(Rs. cr)
United Spirits 7,889.20
United Breweries 4,240.73
Radico Khaitan 2,418.14
Globus Spirits 1,225.52
Tilaknagar Ind 548.75
2
Top Companies in India by Market Capitalization – BSE- MoneyControl

3
Top Companies in India by Market Capitalization – BSE- MoneyControl.
Industrial SWOT Analysis

A SWOT analysis is a tool for taking a realistic, data-driven look at an

organizations, initiatives, or industry's strengths and weaknesses. It must be
maintained by the accuracy of the study by eliminating presumptions or grey zones
and rather than focused on practical and real systems and scenarios. It should be
used as a recommendation and a guidance rather than a rulebook or textbook by
businesses. This SWOT analysis will shine a light on the breweries and distilleries
industry of India.

Strengths

Following China and Russia, Indian alcohol industry is expected to rise at a rate of
7.4% over the projected timeframe of 2017-2030.

 Favourable demography and rapid urbanization: Firstly India has a

rich demographic of young adults, youth and working class population
who rely on alcohol as a part of their social life. This demography is
primarily targeted by the liquor industries looking to boost sales. People
between the ages of 18 and 40 drink or largely involve themselves in the
purchase of alcohol, and also being a comparatively youthful nation, this
group accounts for more than 55 percent of the total population of India.
A large portion of India's population is relocating to larger cities, where
they are subjected to a greater range of alcoholic beverage items and
hence contribute considerably to industry expansion.
 Recession resistant Industry: Being a dynamic industry, Alcohol is the
one product that seems to stay stagnant and strong throughout almost all
factors and circumstances. Alcohol being a rather storable substance, the
purchase of such a product is once in a very long time and when
 invested in, a person tends to invest more. One may think that people
may lay off of luxuries during recession, but due to psychological
factors, the population tends to stick with alcoholic drinks, albeit less
expensive ones. Previous market trends have shown that hard liquor
sales tend to go up and so do cheaper alternatives such as instant drinks.
 Greater alcohol availability and provision: The number of alcohol
items and companies and range of products offered has expanded, and
they are all easily obtainable at government-licensed establishments and
governmental shops.

Weaknesses
 Over-regulation and taxes: One of the biggest challenges that the alcohol
industry faces is the overregulation and taxing procedures that hinders the
expansion of industry. Government regulations continue to keep overseas
alcohol out of the nation and limit liquor commerce among regions by tax
and government policies, resulting in exceptionally high domestic liquor
prices for Indian consumers.
 A Ban on direct advertising of liquor: Even though explicit ban is
imposed on advertisements, Private channels do let alcoholic companies
advertise their brands via an indirect method. They generally advertise the
same through other products with the brand name such as music, water,
events under the name of the brand etc.

Opportunities

 Middle class demographic: The rise of middle class and their rising
interest and consumption of alcohol is a huge opportunity for lesser
expensive domestic alcohol which may be a rather cheaper substitute to
 larger more expensive liquor which would tend to attract this particular
crowd largely.
 Creation of employment opportunities: Being an industry of the rather
personalised nature, substituting all of human workforce with
technological replacements would be impossible. Also the diversification
of the alcoholic products, further creating lines and ranges of the same
product causes more opportunities for job creation in pubs, restaurants,
alcohol companies etc.
 Urbanization: A large portion of India's population is relocating to
larger cities, where they are subjected to a greater range of alcoholic
beverage items and hence contribute considerably to industry expansion.

Threats

 Competition: The number of brands in the liquor industry has risen at

an impressive rate in the past few decades which have also established
themselves fairly well with net sales as shown previously in the table
given.
 Increasing costs of raw materials: Agricultural produce used for the
alcohol manufacturing has not only become more expensive but also
rarer in the nation, thus causing a hindrance to the quality and quantity
of alcohol produced. These materials are also included in the tax regime.
 Ban in various states: Dealing with alcohol is largely banned in a few
states such as Gujarat, Mizoram, Bihar and Nagaland due to certain
traditional beliefs. For instance, the ban in Gujarat is an ode to Mahatma
Gandhi who was against the consumption of alcohol, hooch.
 Religious restrictions: The various religious holidays, beliefs, festivals
and customs cause an increase in the number of dry days and also may
 lessen the number of consumers of alcohol; hence reducing the target
consumers.

PEST analysis

PEST Analysis (political, economic, social, and technological) is a strategic tool

that allows a company to examine critical external elements that affect its
operations in order to improve its competitiveness in the market. This PEST
analysis enumerates on the external factors affecting the breweries and distilleries
industry.

Political factors:

 Ban on alcohol in selected states such as Gujarat, Bihar, Nagaland, Mizoram

etc. causes the companies to have to reduce their consumption base and this
leads to the competitors to miss out on a lucrative source of revenue.
 Government rules continue to keep foreign alcohol out of the country and
restrict liquor trade across areas, resulting in astronomically high domestic
booze costs for Indian consumers. Alcohol is not included in the GST
regime and tax is still imposed on its raw materials and products
 Dry days being pronounced due to political events, commemoration of
political figures etc.
 Ban on direct advertisements of Alcohol.

Economic Factors:

 Competitiveness as the range of companies and brands in the alcohol market

have increased dramatically in recent decades, and many of them have
established themselves pretty successfully in terms of net sales, profits and
 market cap. Innovation, invention and diversification becomes more crucial
for each company to adopt.
 The MAKE IN INDIA initiative is one of the most lucrative and successful
initiatives taken up by the Indian Government. This initiative has helped the
alcohol industry thrive in the field of domestic liquor that has helped Indian
made Indian Liquor progress.

Social Cultural factors:

 Religious Factors: Religious and traditional norms and beliefs as well as

the hesitance to the lifestyle causes a barrier to the expansion of the
industry. Today's India however cannot be regarded a nation where
religious ideals influence activities and are taken seriously.
 There is a shift towards premium produce as millennial consumers
become more aware of nutritious beer and wine that has demonstrated
health advantages.

Technological Factors:

 India is rapidly developing to become a digital centre, which has boosted

the profitability of many businesses, and ancient distilleries and beer
industries have also seen significant advances.
 Food delivery apps have also taken up the option to deliver alcohol with
appropriate precautions taken. Swiggy, Dunzo, Zomato are a few
examples.
 United Breweries recently invested in a start-up that helps provide an
online platform to assist with the mobile payment and delivery services.
 Legal Factors:

 Ban on alcohol in selected states such as Gujarat and Bihar significantly

tampering with the growth of the alcohol industry.
 Ban on advertising of liquor in the direct form which reduces the
awareness of brands. However, private companies help brands by
permitting them to advertise vicariously through other products and
services. This increases diversification of alcohol brands.

Environmental Factors:

 Customs and social hesitation might be rather sexist or hesitant

towards consumption of alcohol. However this aspect seems to be
changing and progressing according to evolving society.
 Corporate Social Responsibility- sustainability agenda.