New Delhi [India], May 17 (ANI): Alcoholic beverage (alcobev) manufacturers in the country will see revenue grow 8-10 per cent to Rs 5.3 lakh crore in fiscal 2026, keeping up momentum after a compound annual growth rate (CAGR) of 13 per cent over the three preceding fiscals, according to a report by market intelligence firm Crisil Ratings.
The market intelligence agency further added in the report that the operating profitability will increase 60-80 basis points (bps), supported by continuing premiumization.
Consequently, credit profiles will remain strong, driven by healthy accruals, deleveraged balance sheets, and absence of large debt-funded capital expenditure (capex), the report added.
The industry is dominated by spirits, which contribute 65-70 per cent of total revenue, with the remaining coming from beer, wine and country liquor. Spirits are alcoholic beverages produced through distillation, whereas beer and wine are made via fermentation.
The industry volume will grow 5-6 per cent, driven by urbanisation, increase in drinking population and rising disposable income.
Jayashree Nandakumar, Director, Crisil Ratings said, “This fiscal, healthy volume and ongoing premiumisation will support revenue growth despite the absence of major price revisions. Revenue from premium and luxury segments, priced at over Rs 1,000 per 750 ml, is expected to grow 15 per cent. The contribution from these segments will rise to 38-40 per cent of spirits revenue this fiscal compared with 31-33 per cent in fiscal 2023.”
The Crisil Ratings said that the higher volumes and realisations would support the profitability of players through better contribution and cost absorption, despite a marginal increase in input costs.
The main raw materials for making spirits and beer are extra neutral alcohol (ENA) and barley, which together make up about 60-65 per cent of total material costs. The rest mostly goes toward packaging, especially glass bottles.
Furthermore, the report added that ENA prices are expected to go up by 2-3 per cent in the current year because of higher demand from the ethanol blending program, even though supply is also rising.
As per the report the barley prices are likely to rise by 3 to 4 per cent due to tight supply and strong demand. Glass bottle prices are expected to stay firm as demand increases and supply remains steady, the report added.
However, alcohol companies are expected to raise prices by 3-4 per cent due to a shift toward premium products, the report added.
The steady growth in volumes has encouraged manufacturers to expand capacities by 15-20 per cent in the past two fiscals.
The industry is currently operating at 70-75 per cent utilisation, leaving enough headroom for meeting demand. Therefore, no major debt-funded capex is expected this fiscal, Crisil Ratings added. (ANI)
Disclaimer: This story is auto-generated from a syndicated feed of ANI; only the image & headline may have been reworked by News Services Division of World News Network Inc Ltd and Palghar News and Pune News and World News
HINDI, MARATHI, GUJARATI, TAMIL, TELUGU, BENGALI, KANNADA, ORIYA, PUNJABI, URDU, MALAYALAM
For more details and packages
