Industry

 

Industry Overview

Four major factors contribute to the glad tidings of the alcohol beverage industry.

India’s demographics brings more and more people into the market.
Rising incomes and aspirations make drinking affordable to more people.
Greater social acceptability eases the social stigma..
Deregulation of the pricing and distribution make alcohol available at affordable prices.



Sustaining High Growth
Increasing demand, easing of the regulatory framework and industry consolidation indicate the sustainability of the high growth rates in the alcohol beverage industry.



Expanding global footprints
Apart from serving the domestic market, Indian alcohol beverage companies are increasingly looking at expanding their global footprint. Today there is distinct trend of Indian alcohol majors building their product portfolio through international brand launches and acquisitions.



Scrapping additional excise duty on imports
With the reduction of additional duty on imports of spirits, premium international brands are now available via the legal imported route. This effectively brings the parallel market existing until now into the mainstream and helps in expanding the consumer base. To players such as AABL, it is also an opportunity as every major liquor manufacturer will require increasing amounts of feedstock.



Deregulation in the industry
The Indian alcohol beverage industry is one of the most regulated. Alcohol beverages are a state subject and moving stock from state to state is considered equivalent to imports/exports and taxed accordingly. The industry is probably the only one in which the inputs are decontrolled, but the selling prices are determined by local state levies and excise. These factors distort the market and skew competition. Yet, the alcohol beverages are the single largest contributors to the exchequer.

Today administrations across the country increasingly understand the dividends of de-regulation and there is a distinct move to unshackle the stifling regulatory framework. This is good news for the industry, promising a new market where the play of competitive forces will decide market share.



Poised to benefit from the opportunities

These changes and trends mean many things to a company like AABL.

Increasing demographics translates into greater demand for our brands and feedstock
Up-trading will result in greater margins as sales of premium brands increase.
Deregulation will (over time, perhaps) allow access to restricted markets.
Increasing competition from International brands will sharpen our competitive edge and increase overall quality regimen.
The global play will result in the maturing of the industry and expose the Indian industry to international best practices.
Sustained double digit growth assures ready market for expanded capacity.

Industry