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Indian Manufacturers Spice Up the Gin Market

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In India, a spirits market, brown spirits have traditionally been the preferred choice among consumers. Nevertheless, recent years have witnessed a remarkable surge in the popularity of gin, driven primarily by indigenous brands. While gin is still relatively young in India, with a volume consumption of less than two million cases, it shows promising growth.

In the past, gin had been plagued by the perception bias of being a drink reserved for older men, which hindered its broader appeal. However, the emergence of modern Indian brands is challenging and overturning this stereotype. These newer brands are successfully reshaping the perception of gin, making it more accessible and appealing to a broader demographic.Chart Showing Volume Growth Across Spirits in 2023

Botanicals act as a differentiator for Indian craft gins

India, renowned as the world's spice capital, has contributed globally popular dishes with a distinctive use of herbs and spices in its cuisine. Consequently, the infusion of these botanicals into alcoholic drinks was a natural progression.

Over the past decade, mass-produced brands predominantly controlled gin sales, led by Blue Riband. Despite imported options of high-quality gin, steep duties limited access for many consumers. Recognising this gap, local entrepreneurs seized the opportunity to launch their own craft gin brands, using indigenous botanicals such as herbs and spices. Nao Spirits & Beverages particularly catalysed this revolution with its 2017 launch of the Greater Than brand, infused with coriander seeds, fennel, chamomile, ginger, and lemongrass. This paved the way for competitors such as Third Eye Distillery and its brand Stranger & Sons, which uses nine herbs and spices in its formulation. These companies partnered on-trade establishments and bartenders, to educate and market their products.

A surge in the off-trade channel's growth can be attributed to the younger generation's fascination with cocktails and their desire to recreate the on-trade experience at home

Source: Euromonitor International

The state of Goa emerged as the focal point for craft gin brands due to its favourable exercise policies, abundant spice farms, and status as a tourism hub, providing access to a large consumer base. Companies, whether adopting an asset-light model or building their capacity, were drawn to the state. The state became home to brands such as Samsara, GinGin, Pumori and Tickle.

Favourable demographic and macroeconomic factors and low per capita consumption bode well for gin

As of 2023, India boasts a sizable and youthful population comprising 327 million millennials and 377 million Generation Z individuals. This demographic composition has resulted in a substantial annual increase in the legal drinking age population over the past five years. In tandem with its demographic strength, India is experiencing rapid economic growth, demonstrating resilience compared to many other regions. The real GDP growth in India surpasses inflation rates, setting it apart from countries grappling with the lingering impacts of COVID-19 or geopolitical conflicts such as the war in Ukraine. Contrary to some nations' inflation challenges, India has effectively managed to keep inflation in check. Additionally, disposable incomes in India have witnessed double-digit growth, providing further impetus to overall consumption. Notably, the per capita alcohol consumption in India remains approximately one seventh of the global average. This statistic underscores the existing challenges and hints at considerable growth potential for the future.Chart showing Population Aged 18+ Years 2018-2023

Demand for craft brands is fuelled by premiumisation and localisation

In the realm of alcoholic drinks, premiumisation translates to drinking less but better-quality alcohol. The young Indian consumer base, with access to affordable internet, known for their aspirations and information-seeking behaviour exceeding global averages, are willing to explore new products and services while showing a preference for branded items, indicating a motivation to upgrade. As India undergoes rapid development, a substantial portion of the population is transitioning from lower to mid-income brackets. Increased consumer sophistication, expanding product knowledge, and heightened interest in experimenting with innovative beverages are evident across India. Craft spirit brands often build their image and marketing around the place of distillation or production, creating a strong sense of location for their products. Consumers are increasingly drawn to brands with authentic stories and localised production, reflecting a desire to align their purchases with their values.Chart showing Attitudes and Motivations/Shopping Preferences 2023

Export opportunities galore as the category is democratised

Amrut Distilleries paved the way for Indian spirit manufacturers when its single malt options, particularly in foreign markets like the UK, gained popularity. With increased equity, the company facilitated opportunities for other spirits manufacturers to market their products in Tier 1 countries, a departure from the dominance of Indian made foreign liquor brands primarily in developing markets. In the last five years, brands such as Greater Than and Hapusa from Nao Spirits & Beverages, and Stranger & Sons from Third Eye Distillery have earned numerous accolades and global recognition at award shows and championships. This acclaim resulted in Stranger & Sons exporting 100,000 bottles, including 70,000 bottles, to the UK, even amid the challenges posed by the pandemic in 2020. Nao Spirits & Beverages also sells its products in more than 15 countries.

The adventurous nature of Generation Z and the fact that gin has reached saturation in Western markets bode well for Indian manufacturers. Although India remains the primary focus for these craft manufacturers, the opportunity in foreign markets will only compound their success. This development has empowered newer entrants and prompted established players such as Amrut Distilleries and Radico Khaitan to introduce their gin brands, further democratising the category. Furthermore, the demand could encourage foreign gin producers to establish local manufacturing facilities, allowing them to compete with craft gin brands, as Pernod Ricard did for its single malt brand, Longitude 77. Could Indian gin provide much-needed spice to an increasingly saturated and mature category?

Read our article What is Driving Global Inflation? for further analysis on the drivers of global inflation.

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