Sunday, February 25, 2024
HomeFood & EntertainmentDemand for spirits slows on increased taxes and high base, ET Retail

Demand for spirits slows on increased taxes and high base, ET Retail


<p>Representative image</p>
Representative image

Demand for spirits slowed down to 2.2% during the quarter ended September, reversing the 7-15% growth trend it saw over the past two years hurt by lower sales of mass-priced products, increased taxes and high base. While volume increased between 3-13% for whisky, gin and vodka, sales fell in the rum and brandy category, industry executives said citing latest excise department data.

“In general, the regular category or the popular category is having muted growth as far as the industry is concerned. Certain states, which are big states like Karnataka, increased the duty by 20%. There is an impact on the demand at that price point. In UP, there is some down trending,” said Dilip Banthiya, chief financial officer at Radico Khaitan during its earnings call.

Between July and September, whisky remained the biggest segment by far, accounting for two-thirds of the overall spirits demand and grew 3.2% on a high base.

Brandy and rum sales fell 0.7% and 0.3% each. Vodka grew 13.1% and gin sales increased 10.6%, although on a low base, according to the excise data.

Mass priced whiskey sales fell 4.5%, indicating pressure on the segment even as premium products, especially whiskey grew 4-18%.

“The overall spirits industry after very strong growth in the post- Covid years has normalised to a steady state. Consumers continue to aspire for better quality products and brands,” said Bikram Basu, chief strategy and marketing officer at Allied Blenders and Distillers which saw newer brands – Sterling Reserve and ICONiQ Whiskies – each crossing sales of million cases annually.

The spirits market in India expanded 10% during the first half of the calendar year, and 7% in the quarter ended June, the only discretionary category to retain strong growth momentum as consumers cut back on other lifestyle segments such as apparel and electronics.

The December quarter is generally a peak period for spirits due to weddings, festivals and winter months.

USL, the maker of Johnnie Walker and Smirnoff said September was a fairly soft month in terms of demand due to the delayed festive season but October was not strong either. It said there was a slowdown in discretionary spending in the period, and the festival pickup has not been as buoyant as previous years.

Companies, however, expect faster growth in the second half of the calendar that typically accounts for a larger share of liquor sales due to festivals and weddings.

We remain cautiously optimistic that demand will pick up, though we don’t see the signs right now,” Hina Nagarajan, managing director at Diageo-controlled USL, told investors on an earnings call. “But we still have a big festival season to go through–Diwali and then Christmas, etc. So, we are cautiously optimistic and we are definitely investing and activating for growth.”

  • Published On Nov 22, 2023 at 04:05 PM IST

Join the community of 2M+ industry professionals

Subscribe to our newsletter to get latest insights & analysis.

Download ETRetail App

  • Get Realtime updates
  • Save your favourite articles


Scan to download App




Source link

RELATED ARTICLES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular

Recent Comments