INDIA – The International Spirits & Wines Association of India (ISWAI) has advocated for the implementation of an inflation-based pricing model by state governments to address the challenges posed by escalating raw material costs.  

According to ISWAI CEO Nita Kapoor, the current pricing structure has led to diminishing margins for industry stakeholders. 

Kapoor highlighted the imbalance in profit distribution, stating, “It’s like their back against the wall because if in the MRP, states share is roughly about 60 to 80 percent, then what is being left on the trail and the sub-manufacturer is to share 20 percent. The gross margins are diminishing.” 

With raw material prices witnessing a significant surge over the years, including a 53 percent increase in the price of Extra Neutral Alcohol (ENA) between 2018 and 2024, Kapoor emphasized the urgent need for an inflation-based pricing mechanism.  

She stressed that failing to adopt such a model would jeopardize the sustainability of the industry, which contributes approximately 2 percent to the GDP. 

ISWAI is urging state governments to balance revenue aspirations with industry sustainability.  

Kapoor urged policymakers, saying, “The industry has reached the bottom of the margins. You cannot kill it. It contributes 2 percent of the GDP. So you (state governments) need to balance ambitions.” 

Moreover, Kapoor outlined the evolving trends in the alcoholic beverage segment, noting a polarized growth pattern with premium products priced above Rs 900 (US10.87) to Rs 1,000 (US$12.08) per 750 ml bottle witnessing significant traction.  

Kapoor noted, “As per my estimates by the end of the year, the industry will grow roughly about 2 to 3 percent. The growth will be primarily polarising- Rs 900 (US$10.87) and above and the other will be cheap liquor, which will be roughly about Rs 500 (US$6.04) or Rs 600 (US$7.25) and below.” 

Reflecting on the industry’s future prospects, Kapoor projected substantial growth, estimating the industry to reach approximately US$63 billion within the next 3 to 4 years, up from its current valuation of US$50 billion to US$55 billion. 

ISWAI’s members, including global industry leaders such as Bacardi, Beam Suntory, Brown Forman, and Diageo-United Spirits, are aligning efforts to address the challenges faced by the spirits and wine sectors in India. 

 

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