Indians drank less beer during the pandemic but liquor companies are still high on profits ⁠— here’s why

• Shares of some of the top breweries and distilleries have witnessed strong uptrend in the last one year.
• Analysts believe unlocking activity across the country will boost beer consumption.
• Although the pandemic restricted mobility, in-home consumption and premiumisation increased as per a top executive at a leading alcoholic beverages firm.

Beer seems to be losing popularity among Indians since the pandemic hit the country early last year. On the other hand, sales of spirits have picked up ever since Indians had to stay at home.

So, have people shifted to premium alcoholic beverages or is this just a temporary blip?

It could well be a temporary phenomenon as bars in India have been mostly shut for the last 18 months. There are few reasons for this change. One is that beer is widely consumed outdoors like bars, pubs, parties etc. This also has to do with the not so common Indian family culture of hoarding beer at home.

Bars have been shut for almost 18 months in the country. While that has hurt beer sales, companies covered for all of it and more with increased demand for whisky, vodka and rum. The combined June quarter revenue of the top five listed companies in this space jumped 72% year-on-year.

As per Elara Securities, the spirits segment has outperformed beer due to reasonable product pricing in some states versus premium beer. Also, spirits don’t have any storage issues like refrigeration.

Top 5 liquor companies in terms of market cap
Data source: BSE

McDowell’s owner United Spirits, Kingfisher maker United Breweries, Magic Moments vodka manufacturer Radico Khaitan, Country Club whisky seller Globus Spirits and GM Breweries, which owns brandy brand Pioneer Doctor, are the top five liquor companies in India. United Spirits is the liquor giant in the country with the highest revenues and a $7 billion market capitalisation.

“As the pandemic restricted mobility, in-home consumption and premiumisation increased – consumers discovered that drinking at home was safer and lighter on the wallet, leaving them with more to spend on better quality alcohol. Restricted overseas travel also resulted in a shift from duty-free to duty-paid purchases,” said Anand Kripalu, managing director and chief executive officer of United Spirits, in the company’s FY21 annual report.

Spirit industry pick up while beer business slows down

Analysts say that the beer industry has been affected due to lack of on-premise drinking since the pandemic. “Beer has also been severely affected due to work from home, which in turn has marred on-premise volumes,” said a report by Elara Securities. The report stated that the beer industry volumes have declined 30% in FY21 primarily due to COVID-19 lockdown in the months of April-July 2020.

But hope floats ⁠— as infections fall and vaccinations rise ⁠— that bars will reopen again and beer will be back in demand.

It helped these companies that some states including Delhi have announced home delivery of liquor due to COVID-19. However, even that has not helped beer sales because retailers like to push for high-margin hard liquor, said analysts at Elara Securities.

Business has been so good for Radico Khaitan ⁠— which sells brands like Magic Moments, Jaisalmer Indian Craft Gin and 8 PM whisky⁠ — it has repaid most of its debt and the stock has more than doubled in the last one year. “Radico Khaitan is the leader in vodka in India – with over 45% volume and value market share – and an emerging competitor in whiskey, brandy, rum and gin. It has seen a steady improvement in cash generation and repaid most of its debt,” said a report by Goldman Sachs on August 10 while it initiated coverage on the company’s stock with a “buy” rating.

The market value of Globus Spirits, the company behind Country Club and French Castle, has grown nearly 6 times in the last one year.

Amarjeet Maurya, assistant vice president, mid caps at Angel Broking said the broking firm is positive on the company’s stock because of healthy revenue growth of nearly 61% and profit growth of close to 197% in June quarter. Going forward, he expects the company to report healthy income and profit on capacity expansion plan and newer product launches.


“The outlook for Indian alcoholic beverages continues to remain positive due to favourable demographics, expanding middle class, rising disposable income levels, greater preference for premium food and drink experiences and greater acceptance of alcoholic beverages in social circles. Increased consumption of liquor in rural areas will be another major reason for the growth in the market,” United Spirits said in its FY21 annual report.

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