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Are Alcohol Brands Going Premium To Attract The Younger Generation?

by Trade Brains | October 9, 2024 12:00 pm

The Indian spirits market is making waves globally, with a third of the world’s 30 fastest-growing spirit brands hailing from India. This impressive statistic, reported by Drinks International, highlights India’s growing dominance in the global alcohol industry. The country’s influence is particularly strong in the whisky category, where six out of the top ten brands worldwide are Indian.

This surge is not limited to whisky alone; Indian brands are performing well across various spirit categories, including brandy, vodka, and rum. The potential for growth in the Indian market is immense, driven by demographic shifts. With more people set to reach the legal drinking age in India compared to the rest of the world, India has become a top priority for global alcohol firms.

This demographic shift, coupled with recent policy changes such as the lifting of alcohol bans in states like Gujarat and Manipur, has further boosted the market’s potential. The Indian alcoholic drinks market, with revenue of $52.7 billion, is split between at-home consumption of $47.1 billion and out-of-home consumption of $5.6 billion, indicating a strong preference for home drinking.

Table of Contents

  • Shifting Consumer Demographics and Preferences
  • The Future of Branding: Premiumisation Meets Inclusivity
  • Brand Strategies and Market Innovations
  • The Future of Branding in the Alcohol and Beverage Sector

Shifting Consumer Demographics and Preferences

The alcohol industry is witnessing a significant shift in consumer demographics and preferences, particularly with the rise of Gen Z and women consumers. Gen Z, while drinking less overall, is interacting with alcohol differently from previous generations. They show a preference for ready-to-drink (RTD) beverages, spirit-based cocktails, and aperitifs over traditional high-volume categories like wine and beer.

This generation prioritises health-conscious choices and premium experiences, reflecting a trend toward mindful consumption. One notable trend is the increasing consumption of spirits, particularly whisky, fuelled by urbanisation and Western influences.

This has led to a proliferation of whisky distilleries and brands in the market. Simultaneously, there’s a growing demand for flavoured alcoholic beverages, especially among younger consumers seeking innovative tastes. The craft spirits and microbrewery segments are also gaining traction, adding diversity to the market.

The Future of Branding: Premiumisation Meets Inclusivity

Another significant shift is the premiumisation trend, with consumers increasingly gravitating towards higher-end products. This is particularly evident in the rise of Indian single malts, which now rival Scotch single malts in popularity. The industry is also witnessing a change in consumption patterns, with a 1.3 times increase in socialising-led consumption. This shift from solitary to shared drinking occasions will drive substantial growth. 

Source: Statista

Women are playing an increasingly significant role in the alcoholic beverage market. Women’s share of consumption growing more than ever before, partly due to changing cultural attitudes and more women entering the workforce. The COVID-19 pandemic has accelerated this trend, reshaping drinking habits and purchasing patterns.

This shift is forcing brands to become more inclusive and move away from traditional gender roles in their marketing strategies. The industry is responding by creating products and experiences that appeal to a more diverse consumer base. For instance, aesthetics and packaging now play a crucial role in brand experiences.

This is especially true for women and Gen Z consumers, who are drawn to thoughtful details and non-binary brand stances. These trends, combined with India’s favourable demographics and increasing disposable incomes, position the industry for continued growth and diversification.

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Brand Strategies and Market Innovations

In response to changing consumer preferences, alcohol brands are adapting their strategies and introducing innovative products. McDowell owned by United Spirits Ltd, a subsidiary of Diageo, has launched its X range, aiming to redefine premium spirits for a new generation.

This move is part of a broader trend towards premiumisation in the Indian market, with companies like Pernod Ricard, UB Spirits, and AB InBev also focusing on higher-end offerings. The success of Indian brands is not limited to domestic markets. Companies like Radico Khaitan, Pernod Ricard, and Diageo are investing significantly in premium single malts for the export market, indicating a growing global interest in Indian whisky.

United Spirits McDowell has retained its position as the world’s largest whisky brand, selling 31.4 million cases in 2023. The diversity of successful Indian spirits brands, including Iconiq White Whisky, Courier Napoleon brandy, and Magic Moments vodka, demonstrates the breadth of innovation in the Indian alcohol industry.

The Future of Branding in the Alcohol and Beverage Sector

The future of alcohol marketing in India is set to be more inclusive, digital, and experience-focused. Brands are moving away from traditional stereotypes in advertising, recognising the need to appeal to a more diverse consumer base. The rise of alcohol-based festivals has created new opportunities for community building and brand loyalty, attracting a wide range of demographics.

Digital and social media are becoming increasingly important in building brand awareness and loyalty. Looking ahead, the Indian spirits market is poised for further growth and transformation. While domestic sales currently dominate, there’s potential for increased global marketing and consumption of Indian alcoholic beverages. This global expansion and the trend towards premiumisation may challenge established brands, potentially reshaping market shares in the coming years.

Written By Fazal Ul Vahab

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