India’s alcoholic beverages sector to see growth up to 10% in FY25

India’s alcoholic beverages companies are expected to witness 8-10% revenue growth in FY2025, driven by a recovery in spirits consumption and premiumization, according to ICRA. Price hikes by some state governments will further boost revenues. Operating profit margins are forecasted to remain stable at 12-13%, despite rising grain prices.

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Alcoholic beverages companies in India are expected to see revenue growth of 8-10% this financial year, driven by a rebound in spirits consumption, according to a report by rating agency ICRA. The report also highlights that the ongoing trend of “premiumisation” will contribute to the topline growth.

Additionally, ICRA notes that “revenue increase in FY2025 will additionally be supported by the price hikes granted by a few state governments in the current fiscal.” Despite this, the report suggests that operating profit margin (OPM) will remain stable at 12-13% for FY2025, as the decline in packaging material costs offsets the rising grain prices in the first half of the year.

The report further mentions that during Q1 FY2025, “the spirits industry reported a 9% year-on-year increase in revenues, supported by 5-7% improvement in realisations, while volumes grew by 2-4%.” The beer industry also saw revenue growth of 12% in the same quarter, driven by a “3-5% increase in volumes and 7-9% in realisations.”

Capital expenditure (capex) by alcoholic beverages companies is expected to moderate to 2-3% of their operating income in FY2025 and FY2026, following recent capacity enhancements by key players. ICRA highlights that companies in its sample incurred over Rs 1,000 crore each in capex during FY2023 and FY2024, amounting to approximately 4% of their operating income. This capex was focused primarily on expanding distillery and brewery capacities, as well as improving manufacturing infrastructure, indicating a revival in investment post-pandemic.