Lifting of social taboos restricting liquor consumption across the country, rising disposable incomes, enlarged marketing and improving regulatory policies are the key factors that are offering a conducive environment for innovation to global liquor biggies and domestic majors.Season`s special
The last two quarters of a financial year -- from October to February, to be precise – are typically the revenue generators for liquor brands in India, thanks to an extended period of festivities comprising festivals, weddings, Christmas and New Year -- for most parts of the country. This is also an opportune time to roll out value-added liquors and packaging innovation, as United Spirits recently did with a new festive packaging for its premium vodka brand Romanov Red.
With a view to optimise the opportunity, Aspri Spirits has also come out with a special gift package of a select range of super-premium sparkling wines in its portfolio. The range includes four luxurious sparkling wines -- Lombard Brut and Lombard Brut Rosé from the Lombard & Cie House of Champagne; and Bulle N°1 Blanquette de Limoux and “Bulle N°1 Cremant Rosé de Limoux from Sieur D`Arques.
Elaborating on the importance of the particular season for wines, Hans Raj Ahuja, CEO, wine division, Riona Wines Private Limited shares, “The period from October to February accounts for almost 70 percent of total annual sales of wines in the country. However, this rise in consumption is not really driven by weddings, as in weddings a very small quantity of wines is consumed. What really pushes sales is that with the onset of winter, the overall weather is very conducive for wine consumption and partying.”
“Typically, during these months, a host of year-ending corporate parties, off-site activities and get-togethers take place, where wines – rather than beers or spirits – are the norm. Corporate parties and celebrations largely take place during this time to discuss and celebrate the achievements made through the year.”
“Another factor that propels higher wine consumption during this period is that a lot of foreign tourists visit the country during these months due to the favourable weather conditions,” adds Ahuja.
Sumedh Singh Mandla, CEO, wine division, Aspri Spirits Pvt Ltd says, “The period from October to February is clearly the best period for liquor sales in India. Various factors contribute to this uptick, but festivals such as Diwali and Christmas coinciding with a peak tourism season across India are the two key contributors for higher overall liquor consumption.”
He further adds, “Months from November to January generally contribute over 40 percent of annual sales for us. However, the same period last year was very slow due to the terror attacks and the global economic slowdown.”
“This particular period usually contributes around 26-27 percent of total revenues for United Spirits and this year has being no exception, we are well on course to achieve the sales target of 100 million cases by the end of FY 2009-10,” shares Rekhi at United Spirits Limited.
“The Indian festive season combined with the wedding season -- to be more specific, the north Indian wedding season that lasts from mid-November to mid-January -- accounts for around 25 percent of incremental sales,” says Mohit Kampani, vice president – merchandising, food and FMCG, Spencer’s Retail. “This period is currently dominated by spirits and wines, because of the cold weather in north, east and to some extent, west India. Typically, spirits – over wines and beers -- are consumed due to the cold weather.”
“The Indian festive season combined with the wedding season that lasts from mid-November to mid-January -- accounts for around 25 pc of incremental sales,” – Mohit Kampani, VP – merchandising, food and FMCG, Spencer’s Retail. “This period is dominated by spirits and wines, because of the cold weather in north, east and to some extent, west India. Typically, spirits – over wines and beers -- are consumed due to the cold weather.”
Analysts and market research agencies forecast robust growth for liquor consumption in the country over the next five years. Euromonitor International states that demand for branded alcoholic drinks is expected to continue to rise over the period 2009-2014, as purchasing power improves and consumers of country liquor trade up to affordable alternatives such as economy spirits. “Strong growth is projected across the price and product spectrum as urban consumers become increasingly brand-savvy and experiment with international brands and niche products. A double-digit total volume growth is expected over the period of 2009-2014,” it projects.
“Liquor consumption in the days to come will increase at a higher pace than in the last three years, and several factors will contribute to this growth,” says Ahuja. “First of all, going by demographic analyses, a greater chunk of the Indian population will comprise youths or younger people. This large number of young consumers with better disposable incomes will continue to drink for a longer period of time. Therefore, I think in the next few years we will witness faster growth in alcohol sales.”
“The other factor is the ceasing mental blocks against liquor consumption in the country. With the trend veering towards nuclear families, more frequent alcohol consumption – not just at social gatherings but also in homes -- will boost sales.”
“In the case of wines, one of the main reasons for rise in consumption will be the adoption of liberal regulatory policies by most state governments, specially Maharashtra and Karnataka. More licenses are being issued for opening new shops and department stores for selling only wine and beer. In Delhi such policies are expected to be passed during March-April 2010. Better visibility, more availability and liberty to sell wines will be conducive for the industry,” he adds.
Ahuja further predicts that wine sales at the end of the current peak season should show an increase of around 30 percent, as compared to the 2007 sales during the peak season. Last year cannot be compared as wine sales witnessed a nominal growth of about six to seven percent, owning to unnatural factors, he points out.
Agreeing with Ahuja on the acceleration in wine consumption as a future trend, Mandla says, “I personally believe in wine as a future beverage for India, as there are health benefits associated with drinking wine, thereby drawing in an increasing number of consumers opting for healthy lifestyles. At this point of time, the wine segment in size is certainly miniscule as compared to spirits and beers, but there lies a huge potential in the times to come.”
“Alcohol consumption in its entirety has evolved considerably and the consumption is expected to increase in the future,” opines Kampani at Spencer`s. “I think for the next couple of years there is a strong scope of growth in beer consumption. The reason is that beer manufacturers have started segregating the market on price range, in order to match everyone’s wallet size There is now a price range for every kind of consumer. For instance, there are now 650 ml beer bottles priced from as low as Rs 30 to above Rs 100. In the case of beer, its easier availability and pack size versatility -- as compared to other liquor segments -- is also enlarging its consumption, specially for new entrants and starters.”
While strong growth is also being recorded in wines and spirits, Kampani believes that being as of now there is larger scope for the growth of beer consumption. “Wine consumption will grow significantly once the regulatory policies are simplified in various states,” he notes.
“We are a fairly large food & grocery retailer and liquor contributes a very small amount to our overall sales turnover. Having said that, the only way to go is up. We expect liquor sales to rise and contribute up to four percent of sales at Spencer`s.”