India's liquor market is experiencing a clear divide between premium and mass-market segments, with Radico Khaitan and United Breweries reporting strong growth in their premium portfolios while United Spirits faces pressure on lower-priced brands. According to reports from Mint, Radico Khaitan's 'prestige & above' volumes rose 36% year-on-year to 5.28 million cases, significantly outpacing the 7% growth in total Indian made foreign liquor (IMFL) volumes. The company's consolidated revenue from operations increased 10% to ₹5,582 crore, while net profit surged 66.5% to ₹232 crore. United Breweries also demonstrated strong performance with 16% volume growth and 38% increase in premium beer volumes, with Heineken Silver and Kingfisher Ultra growing 67% and 44% respectively. As per latest reports, this urban-rural divide is particularly evident, with metro cities showing packed bars and breweries while small towns and villages experience slower sales due to inflation and low wage growth affecting rural consumers.
The premiumization trend contrasts sharply with challenges in the mass-market segment, as reported by Mint. United Spirits saw its popular brands, including Director's Special (DSP) and DSP Black, fall 22.7% year-on-year to ₹181 crore in net sales value and 29.7% to 1.58 million cases. However, the company's 'prestige & above' portfolio, including brands like Johnnie Walker and Smirnoff, grew 6.3%. Allied Blenders reported 11.1% volume increase to 10 million cases with consolidated revenue of ₹2,085 crore, while Tilaknagar Industries showed 171.8% revenue growth to ₹2,437 crore boosted by its Imperial Blue acquisition. The sector faces additional challenges from rising input costs including glass bottles, barley, and packaging materials, along with state price controls that are affecting different players differently.
According to Mint reports, the premiumization trend reflects changing consumer preferences among younger demographics. Radico Khaitan's managing director Abhishek Khaitan noted that Gen Z and younger consumers are shifting towards white spirits due to their mixability, contributing to the prestige segment growth. United Spirits managing director Praveen Someshwar explained that India 1 consumers are showing signs of fatigue due to inflation impact on wallets, while middle and higher-income groups are holding up better. The company reported consolidated revenue of ₹7,014 crore with net profit falling 7.7% to ₹428 crore. This urban-rural divide is creating a complex landscape where premium brands thrive in metro areas while traditional mass-market products struggle in smaller towns and villages.
Despite strong premium performance, industry players face significant input cost challenges that are creating a split outlook across different companies. As reported by Mint, United Breweries estimated the impact of higher costs at ₹350-400 crore for fiscal year 2027, while Radico Khaitan faced an estimated ₹27 crore impact during the quarter. Tilaknagar Industries reported pressure from elevated raw material costs reducing profitability by about ₹25 crore in each of the first two quarters of FY27. Nuvama Institutional Equities highlighted that rising input costs across the industry pose challenges for margin sustainability, particularly for sugar-dependent brewers. These cost pressures, combined with state price controls and the urban-rural divide, are creating different paths for companies like United Breweries, Radico Khaitan, and Globus Spirits to navigate the current market environment.
