India’s Alcobev Market Splits Into A K-Shaped Growth Story

With India emerging as a rare bright spot in the global alcohol market, the country’s alcobev industry is witnessing a “K-shaped consumption” pattern. Industry estimates reveal that premium and super-premium spirits have grown about 9-12% in volume and value in 2025, even as lower-price segments show uneven demand conditions. 

Industry players say the divergence is becoming more visible across urban and rural markets, driven by shifting incomes, evolved tastes and changing consumption behaviour.

“The K-shaped consumption trend in India is real in alcobev, where premium categories are significantly outpacing mass segments in growth. But premiumisation should not be overinterpreted as a universal consumer trend across all segments of the economy,” said Shalini Sharma, marketing head, Piccadily Distilleries.  

The market is further projected to grow at 4-4.5% CAGR in next 10 years. The growth will be driven by rising incomes, urbanisation and a young consumer base. 

Premium Demand Outpaces Mass Market 

Across the industry, premiumisation is being driven by a combination of upgrading by existing consumers and direct entry of Gen Z buyers into premium brands, according to industry executives.

“Existing consumers are trading up, while younger consumers are entering directly at premium levels,” said Arundeep Singla, Chairman & MD, Alcostar Group. Brands like Indri, Camikara and Cashmir are benefiting from this shift due to rising aspirations, global exposure and evolving consumer preferences.

Sharma also echoes similar sentiments, saying a growing section of consumers is actively trading up, seeking quality, authenticity and experience-led consumption. She also added that premium brands are also seeing traction beyond metros into tier 2 cities.

Industry estimates suggest India’s premium spirits segment is growing significantly faster than the mass category, which still dominates in volume but is facing slower momentum in value expansion.

At the same time, global data shows a broader slowdown in premiumisation trends, with consumers globally becoming more cautious on discretionary spending, reinforcing India’s outlier status in select categories.

K-Shaped Visible Across Consumption Layers

While premium demand remains resilient in cities, lower-price segments are experiencing greater sensitivity to disposable income pressures. “There is some strain in lower-price categories, especially in rural-linked markets, but demand has not collapsed,” Singla said.

Abhinav Jindal, founder & CEO of BeeYoung, added that the split is also behavioural. “Urban consumers are prioritising experience and lifestyle, while value segments remain cautious on discretionary spends,” he said.

The result is a market where premium categories are expanding in value terms, while mass consumption grows more slowly and unevenly, reinforcing the K-shaped structure.

Industry data also shows that India’s alcohol consumption remains highly skewed: while premium categories account for a relatively small share of volumes, they are driving a disproportionate share of value growth, particularly in whisky and craft spirits segments.

Can Premium Grow Alone?

Each year, over 20 million Indians are expected to enter legal drinking age, making the country one of the most important growth markets for global alcobev players. Many global brands now rank India among their top three strategic priorities.

For industry giants like Diageo and Pernod Ricard, India is already their largest market by volume. Both companies are increasingly shifting focus toward premium products, aiming to improve margins rather than rely on volume-led growth.

Despite strong momentum at the top end, companies caution that long-term market stability cannot rely solely on premium consumption.

“Premium demand can sustain in the near term, but long-term growth needs a balanced recovery across segments,” Singla said, pointing to the importance of mass-market stability for overall industry depth.

Sharma echoed the view, noting that while premiumisation is structurally strong, India remains a “value-conscious and highly diverse market” where mass consumption still drives the bulk of volumes.

They agree that the K-shaped trend is not a replacement of one segment by another, but a simultaneous divergence of consumption behaviour — one that reflects income inequality, aspiration shifts and changing lifestyle choices.