The Indian alcoholic beverage (alcobev) industry is expected to see a revenue growth of 8-10% in FY2025, driven by a revival in the consumption of spirits, according to a report by the rating agency ICRA. This growth will be supported by the premiumisation trend and price hikes granted by some state governments in the current fiscal year.
In the first quarter of FY2025, the spirits industry saw a 9% year-on-year revenue increase, with 5-7% improvement in realisations and a 2-4% rise in volumes. The beer industry also recorded higher growth, with a 12% revenue increase due to a 3-5% increase in volumes and 7-9% improvement in realisations.
Operating profit margins are expected to remain stable at 12-13% in FY2025, supported by a decline in packaging material costs despite rising grain prices in the first half of the year.
Capital expenditure (capex) by alcobev companies is expected to moderate to 2-3% of their operating income in FY2025 and FY2026, following recent capacity enhancements. In FY2023 and FY2024, key players invested over Rs 1,000 crore each, representing around 4% of their operating income, primarily for distillery and brewery capacity expansion and manufacturing infrastructure upgrades.
