15/12/2022

AB InBev partners on a celebrity-backed ultra-premium vodka in India – why?

IWSR analyses the premium-and-above vodka market in India

Premium-and-above vodka sales in India are poised for a bright future, buoyed by strong consumer confidence, as well as widespread premiumisation and diversification in the country’s spirits scene.

The news in December 2022 that Aryan Khan – son of Bollywood actor Shah Rukh Khan – is launching an ultra-premium vodka in partnership with brewer Anheuser-Busch InBev reflects growing demand for higher-priced products from India’s increasingly affluent urban middle class.

The Polish single grain, single estate vodka, D’yavol, will be available in the states of Maharashtra, Goa and Karnataka, with AB InBev handling the brand’s sales and distribution as it looks to expand its activities beyond beer.

The launch is symptomatic of a spirits market in India that has emerged strongly from the challenges of the Covid-19 pandemic. According to IWSR data, the Indian beverage alcohol market is buoyant: trends are positive in the home-premise and the on-trade is enjoying significant growth, with premiumisation at the fore. The premium-and-above spirits market in India grew close to 65% in 2021.

“India’s urban middle-class alcohol consumers stand out for their enthusiasm at a time of caution in many other markets,” says Richard Halstead, COO Consumer Insights, IWSR Drinks Market Analysis. “This optimism is largely stoked by growing disposable incomes and more opportunities for socialising.”

IWSR consumer data from Q4 2022 shows that India’s affluent urban alcohol consumers are generally positive about life and their finances, and significantly more so than in 2021. The picture is also positive for recalled spend and on-trade usage.

As consumers look to spend some of the money saved during pandemic lockdowns on affordable luxuries such as alcohol, they have also expanded their drinking repertoires in a traditionally brown spirits-dominated market, with vodka and beer the main beneficiaries.

“Up-trading has persisted, as consumers have proved reluctant to forgo their more premium choices, and local players have joined international companies in catering to the increased demand,” says Thorsten Hartmann, Head of Custom Analytics, IWSR Drinks Market Analysis. “International and larger domestic players are increasingly focused on premium spirits, with notable success.”

Vodka sales across all price bands in India fell back in 2020, but premium-and-above products recovered strongly in 2021, surging up by 84% and surpassing the volumes sold in pre-pandemic 2019, according to IWSR data.

Growth is expected to accelerate in the years to come, with premium-plus vodka volumes forecast to increase at a compound annual growth rate (CAGR) of +10% between 2021 and 2026. By comparison, standard-and-below vodka volumes in India are expected to remain below 2019 levels by the end of 2022, before posting a CAGR of +7% between 2021 and 2026.

“With 2020 exposing some weakness in the vodka category in India, 2021 has witnessed renewed momentum as home-premise relevance has been emphasised by brand owners,” says Hartmann.

“In traditional vodka, premium-and-above imports were sought out during 2021, their collective volumes ahead by two-thirds year-on-year. Vodka offers Indian consumers an affordable luxury, sophistication and, in flavoured vodkas, variety – and it seems that many consumers are reconnecting with this both in the home-premise, and in the on-trade as it has reopened.”

You may also be interested in reading:

The luxury spirits market: key growth drivers
Consumers choose to drink less to save more
The 8 drivers of change for beverage alcohol in 2023 and beyond