Alcoholic Beverages Sector Analysis: Navigating Premiumization, Diversification, And Regulatory Shifts

Small Summary

The Alcoholic Beverages sector in India is currently experiencing a dynamic phase characterized by robust growth, a strong push towards premiumization, and strategic diversification efforts by key players. Companies like Radico Khaitan, India Glycols, and Globus Spirits are demonstrating significant financial and operational improvements, driven by evolving consumer preferences, strategic brand investments, and favorable raw material dynamics. While premiumization in IMFL (Indian Made Foreign Liquor) and other spirits categories remains a central theme, the sector also benefits from the government's ethanol blending program, which provides a stable revenue stream for integrated players. Challenges include state-specific regulatory complexities, global trade uncertainties impacting exports and chemical segments, and intense competition. However, a strong innovation pipeline, expanding distribution networks, and a focus on operational efficiencies are positioning these companies for sustained, profitable growth. Debt reduction and strategic capital allocation are also key priorities, aiming to enhance shareholder value and support future expansion.

A. Industry Overview & Market Landscape

The Indian Alcoholic Beverages industry is a complex and highly regulated sector, characterized by diverse product categories, varying state-level policies, and a rapidly evolving consumer base. The extracted data provides insights into the operational and strategic landscapes of three significant players: Radico Khaitan Limited, a prominent IMFL manufacturer; India Glycols Limited, a diversified player with significant interests in potable spirits and biofuels; and Globus Spirits Limited, an integrated manufacturer with a growing consumer business.

Total Addressable Market Size and Growth Rates: While explicit total market size figures are not provided, the growth rates reported by individual companies indicate a healthy and expanding market. Radico Khaitan, a pure-play IMFL company, reported a +33.8% year-on-year growth in Net Revenue from Operations for Q2 FY26 and +33.2% for H1 FY26. This robust growth suggests a buoyant demand environment for alcoholic beverages. Similarly, India Glycols, with its Potable Spirits segment, saw a +24.5% year-on-year growth in Q2 FY26 and +23% for H1 FY26 in this segment's net revenue, further reinforcing the positive market trend. Globus Spirits, another integrated player, reported a +10% year-on-year growth in its Consumer Business Revenues for H1 FY26, with its Prestige & Above (P&A) segment growing at an even more impressive +55% year-on-year for H1 FY26. These figures collectively point towards a market that is not only growing in volume but also seeing significant value growth driven by premiumization.

Market Structure and Segmentation (by product, geography, customer type): The market is broadly segmented into:

1. IMFL (Indian Made Foreign Liquor): This category includes whiskies, brandies, rums, vodkas, and gins. Radico Khaitan's data shows IMFL contributing a significant portion of its net revenue, specifically 70.1% in Q2 FY26 and 70.6% in H1 FY26. Within IMFL, there's a clear distinction between Prestige & Above (P&A) and Regular & Others (R&O) segments.
   • Prestige & Above (P&A): This segment is a key focus for all three companies due to higher margins and evolving consumer preferences. Radico Khaitan's P&A segment contributed 68.6% of its total IMFL revenue in Q2 FY26 and 67.6% in H1 FY26. Globus Spirits reported P&A contributing over 15% of its total consumer revenues in H1 FY26, a significant increase from under 5% in H1 FY23.
   • Regular & Others (R&O): This segment, while offering lower margins per unit, contributes significantly to volumes and cash flows, especially for integrated players. Radico Khaitan saw an exceptional +79.6% year-on-year volume growth in Regular & Others in Q2 FY26, largely attributed to a route-to-market change in Andhra Pradesh. Globus Spirits' R&O revenues grew by +5% year-on-year in H1 FY26, and its R&O volumes reached 15.8 million cases in FY25 from 12.3 million cases in FY21.
2. Country Liquor: India Glycols and Globus Spirits are significant players in this segment, particularly in states like Uttar Pradesh and Uttarakhand. India Glycols maintains leadership in Country Liquor in UP and Uttarakhand. Globus Spirits notes that the UP market alone consumes almost 1 Crore cases of Country Liquor per month. This segment provides stable volumes and cash flows, often serving as a base for integrated manufacturing operations.
3. Non-IMFL / Other Beverages: This includes categories like beer and other spirits. Radico Khaitan's "Non IMFL" segment contributed ₹446.5 Crore in Q2 FY26, representing **29.9%