Organised Liquor Industry To Log Robust Growth In Revenue On Strong Demand: CRISIL

The organised liquor industry is estimated to see its revenue grow by 12-13 per cent to Rs 4.45 lakh crore, and the overall operating profitability to rise by 100-150 bps in the current fiscal year.

The organised liquor industry is witnessing growth in revenues owing to strong demand and premiumisation, a report revealed. The report by CRISIL Ratings stated that the operating profitability of distillers and brewers is expected to grow as input costs dampen. 

As per the rating agency, the organised liquor industry is estimated to see its revenues grow by 12-13 per cent in the current fiscal year to touch Rs 4.45 lakh crore, relative to a growth of 15-16 per cent in the previous fiscal year. As such, the operating profitability of distillers and brewers is projected to grow by 100-150 basis points (bps) amid dampening of input costs, reported PTI. 

The report found that the findings indicate a positive reflection on the credit profiles with strong balance sheets, due to deleveraging in the last three fiscal years. Notably, the report is based on the largest 33 liquor firms, which together account for about 15 per cent of the revenue in the organised liquor industry. The liquor industry can broadly be classified into distillers and brewers, where distillers manufacture Indian-made foreign liquor (IMFL), and brewers produce beer. IMFL contributes to 65-70 per cent of the revenue for the industry, while beer accounts for 25-30 per cent of the overall revenue. 

Rahul Guha, one of the directors at the ratings agency, noted, “Higher revenue growth will be driven by a rebound in tourism and hotel industries, rising disposable incomes and premiumisation trend. The premium segment, which is over Rs 1,000 per 750 ml bottle, is expected to register over 20 per cent growth albeit on a lower base. On the other hand, the price sensitive mass consumer segment comprising liquor priced below Rs 700 per 750 ml bottle and contributing to over three fourths of the industry revenue will see volume growth of 5-7 per cent, as prices in this segment have remained largely unchanged.”

With favourable input costs and robust revenue growth, brewers can expect profitability to increase by 250 bps, while distillers can expect to see gains of 70-80 bps in the current fiscal, added Jayashree Nandakumar, another director at the agency. He stated that the industry can collectively expect a joint growth of 100-150 bps in operating profitability in the fiscal.