Analysing The Spirits: Top Alcohol Stocks In India

Partying with friends without alcohol is like dancing without music, isn’t it! Jokes apart, have you ever thought of investing in alcohol stocks. Yes, you heard it right! Raise your glass to your success of investment and have a look on some of the top alcohol stocks of India.

India’s alcohol market is a complex and dynamic landscape that offers distinct flavours and fulfils diverse consumer preferences.

India’s alcohol industry is expected to reach $64 billion over the next five years according to a report by ISWAI (International Spirits and Wines Association of India). Let us delve deeper and analyse India’s alcohol industry.

An Overview

India boasts the third-largest liquor market by volume, generating over $35 billion annually and is projected to grow at a CAGR (compounded annual growth rate) of 7% for the next decade. Factors like urbanisation, rising disposable income and changing social lives will drive the growth. Further, we produce over 48% of all whisky in the world.

Market Segment

1. Indian-Made-Foreign-liquor (IMFL)

IMFL is the official term that is used in India and refers to all types of liquor in the country except indigenous alcoholic beverages. It includes a wide range of beverages such as whiskey, rum, vodka gin, etc. IMFL signifies a historical difference from traditional Indian drinks and offers from affordable value brands to premium labels.

2. Indian-made-Indian Liquor (IMIL)

It is also a category of alcoholic beverages produced in India. The term encloses several locally produced alcoholic drinks using age-old recipes and ingredients such as grains, flowers, and fruits. IMIL is widely known as “Desi Daru”. The alcohol content in such drinks is around 30%. This category is often cheaper than commercially produced IMFL and can be easily accessed by the wider population.

3. Beer

This segment comprises all the beers produced in the economy and has witnessed rapid growth in recent years specifically among urban millennials and professionals.

4. Wine

The wine category in India is experiencing steady and consistent growth. The segment is dominated by domestic wines with 90% domestically produced and consumed. Indian wines are considered more affordable than imported wines and are expected to grow at a CAGR of 10.7% by the year 2027.

Top Companies of Alcohol in India

In India, we have more than 15 listed companies on NSE and BSE. Let’s discuss some of the top companies:

United Spirits

United Spirits Limited, a subsidiary of Diageo, is the largest alcohol company in India by market capitalisation. Further, it is the second largest alcohol company in the world by volume. It produces a wide range of products which houses an outstanding collection of premium brands, including but not limited to: Royal Challenge, McDowells, Black Dog, Johnnie Walker, Antiquity, etc. Currently, they have over 37 manufacturing facilities in India and boast a strong distribution network.

Sula Vineyards

Sula Vineyards is a leading wine producer in India. The company was founded in the year 1999 by Rajeev Samant in Nashik, Maharashtra. Sula’s distribution network covers India and several international markets. Sula Vineyards produces a diverse range of wines including red, white, rose, sparkling and dessert wines. Sula Vineyards is well-positioned for continued success.

United Breweries

The company was bought by the late Mr Vittal Mallya in 1947. Since then, it has consistently grown and never looked back. United Breweries is considered the largest manufacturer in India with over 60% market share in the beer market and is headquartered in Bangalore. The company was established in the year 1915 with five breweries in south India. The company owns numerous iconic brands like Kingfisher, McDowell, Royal Stag, etc.

Radico Khaitan

Radico Khaitan is a top Indian manufacturer of Indian-Made-Foreign-Liquor (IMFL). It was founded in the year 1943 as Rampur Distillery & Chemical Company Limited. It has now become a major bulk spirits supplier and bottler, now have over fifteen organically grown brands. Khaitan’s portfolio includes a wide range of IMFL products such as Black Magic, 8 PM, Magic Moments, Rampur, etc.

Radico Khaitan is the fourth largest company in India with a strong presence in North India and exports its products to over 30 countries. It has also created an international division, namely Radico International in the year 2003 and introduced brands such as Beck’s Beer and wines from E&J Gallo in the Indian alcohol market.

Tilaknagar Industries

Tialknagar Industries is a prominent Indian liquor company and is well-recognised for its assorted portfolio of IMFL and extra-neutral alcohol (ENA). The company was established in the year 1933 under the leadership of the Dahanukar family. Their journey began with the Maharashtra Sugar Mills and the company still holds a rich history in the Indian liquor market.

Tilaknagar Industries offers a wide range of products such as brandy, whiskey, vodka, gin, rum etc. The company has a strong distribution network and its products are also exported to international markets in East & South Asia, Europe, Africa, etc.

Globus Spirits

Globus Spirits was established in the year 1993 as Globus Agronics Limited. Today Globus Spirits is one of the largest manufacturers and sellers of IMFL in India. The company offers a variety of brands that cater the consumer preferences and include premium, value, and bulk alcohol. The premium segment includes GR8 Times, White Lace, Napoleon, Governors’ Reserve Blue etc. Value segment includes Winner Gold, Marvel Blue, Golden Grape, etc. The bulk alcohol segment includes Grain Neutral Alcohol, Fusel, Bioethanol etc. Globus Spirits operates four fully integrated plants across West Bengal, Bihar, Haryana, and Rajasthan.

Som Distilleries and Breweries

Som Distilleries & Breweries Ltd. (SDBL) is a prominent integrated AlcoBev, Bhopal-based manufacturer. The company was founded in the year 1993 and has established itself as a major player in the Central Indian Market, especially in the segment of beer and whiskey. Some of the widely sold products include beers like Hunter Strong Premium beer, Woodpecker Wheat, etc. And whiskeys like Pentagon, Milestone 100, etc. Vodkas like White Fox, rums, and other ready-to-drink beverages.

Factors Affecting Liquor Stocks

Several factors impact the performance of the liquor stocks. Let us look at some of the key factors that affect the performance of the liquor stocks.

1. Inflation – Rising inflation can increase the production cost of the alcohol companies squeezing the profit margins and stock prices.
2. Taxation & pricing – Liquor stocks are sensitive to changes in taxation policy. Higher taxes can lead to increased costs for companies and can discourage consumption.
3. Economic Growth – Strong economic growth of the economy results in increased disposable income in the hands of consumers and leads to a sudden rise in spending on discretionary items like alcohol.
4. Regulatory Procedures – Complex licensing & regulatory procedures can be a hurdle for liquor companies thereby increasing the operational costs. And negatively affecting their profitability.
5. Consumer Trends – Shifts in consumer preferences with people trying to adopt a healthy lifestyle can also affect the demand and sales of liquor. Companies need to adapt to the evolving trends of consumers and produce accordingly.
6. Currency Exchange Rates – Companies with international operations and exporting their products to other foreign countries can be deeply affected by exchange rate fluctuations affecting both producers and importers.

Market Capitalisation and Current Price

The table below shows the current market price and market capitalisation of the above-mentioned alcohol stocks (as of 15 January 2024):

Conclusion

Each alcohol company in India comes with its own set of strengths and weaknesses. Indian liquor industry offers a wide range of products and people can choose according to their tastes and preferences.

Remember that the alcohol industry is always subject to various regulations and concerns. Taxation & Alcohol Bans can significantly affect the alcohol industry.

Frequently Asked Questions (FAQs)

1.   What is the full form of IMFL?

Ans. Indian-Made-Foreign-liquor.

2.  Mention the top alcohol stocks of India.

Ans. United Breweries, Globus Spirits, Sula Vineyards, Radico Khaitan, Tilaknagar Industries, etc.

3.  What factors can affect the alcohol stocks?

Ans. Factors like inflation, regulatory changes, currency exchange rates, economic growth, etc.

4.  How many listed alcohol stocks are there on Indian exchanges, i.e., NSE and BSE?

Ans. As of January 2024, there are more than 15 listed alcohol stocks in India.

5.  Who manufactures “Rampur” whiskey which recently won the best world whisky award in the prestigious John Barleycorn awards?

Ans. Rampur is manufactured by Radico Khaitan Limited.

Disclaimer: The securities, funds, and strategies mentioned in this blog are purely for informational purposes and are not recommendations.