What Happened?
The pandemic was a disaster for alcohol firms because it was the first time they were completely shut. Beer was the worst-affected category due to restrictions in on-premise consumption and consumers avoiding cold beverages. After the first and the second lockdown, people now prefer home-drinking sessions, where consumer preference is more over spirits than beer. It is expected that the sales will improve in FY22 as compared to FY21.
According to IWSR Drinks Market Analysis, “Total spirits are forecasted to grow by almost 5% CAGR 2021-2025 and beer is expected to post growth of nearly 13% volume CAGR during that same period. Whisky in India, the dominant spirits category, was down 16% in 2020 but ultra-premium-and-above scotch enjoyed growth.”
What Does It Mean For Alcohol Firms?
During the pandemic, it was seen that consumers did a lot of experimentation. Women started to drink more. The new drinkers preferred gin, wine or vodka as opposed to hard alcohol. That’s why the alcohol firms launched a bevy of new products with renewed focus on smaller categories. Vodka has seen a resurgence and gin is the most sought-after category for new product launches. Post 2020 lockdown, majority consumers have shown high interest in online liquor delivery. As everybody is getting accustomed to the idea of work-from-home and quarantine, the demand for home delivery of liquor has also risen leading to higher sales for alcohol firms.
Stocks like Radico Khaitan and Som Distilleries have doubled in share price in the last one year. Meanwhile, United Breweries and United Spirits have also delivered a healthy performance. All these companies are back in-demand and have reported robust earnings. As long as home delivery is allowed, alcohol firms will continue to generate high revenue.
What Lies Ahead?
2020 was a dreadful year for alcohol manufacturers but 2021 saw a shift from over drinking to occasional drinking. More and more people are accepting alcohol drinking as a part of the social culture. This means alcohol makers will have to bring new products and continue to innovate. With two years of at-home drinking, it is expected that FY22 will end on a high note.
