Article by – Angelika Nelson, Food Technologist, PhD Scholar
The scope for starting a new distillery in India highlights the growing demand for alcoholic beverages and spirits in the country. The Indian Alcoholic Beverages Market is projected to achieve a value of USD 76.5 billion by 2032, with a compound annual growth rate (CAGR) of 7.74%. The Indian vodka and gin market, a subset of the broader distillery industry, was valued at USD 1,450.6 million in 2022 and is anticipated to experience a notable CAGR of 9.34% from 2023 to 2029, ultimately reaching a valuation of USD 2,478.06 million.
The distillery sector plays a crucial role in the Indian economy, contributing to 2% of the country’s nominal GDP and providing employment opportunities for over 800,000 individuals, both directly and indirectly. The distillery industry in India is experiencing robust growth, driven by premiumization, changing consumer preferences, regulatory reforms, and investments in capacity expansion by both domestic and international players. To start a distillery in India, the legal framework governing the establishment of distilleries varies across states, and compliance with state-specific regulations is crucial. Additionally, it is necessary to have the necessary documents and approvals in place, such as licenses from the State Excise Department, manufacturing licenses, and other permits required for the production and distribution of alcoholic beverages.
The essential raw materials for an Indian distillery unit include molasses, grains (such as rice, maize, millet, sorghum, wheat, and barley), sugarcane, sugar beet, potatoes, and rice straw (used as fuel). Distillery units in India can use different raw materials depending on availability and cost-effectiveness. Some units are designed to handle multiple raw materials, allowing them to switch between producing ethanol and extra neutral alcohol (ENA) easily.
The primary obstacles faced by distillery industries in terms of social promotions include stringent regulations on alcohol advertising and promotion, the difficulty in establishing trust and authenticity, standing out in a competitive market, complying with local laws, and balancing promotion with responsible messaging. To address these challenges, distilleries should prioritize storytelling and showcasing their unique brand identity to create emotional connections with consumers. User-generated content can also be utilized to build trust. Additionally, effective branding, visual marketing, and digital strategies are essential to differentiate their products and stories from competitors.
In conclusion, the scope for starting a new distillery in India is promising, given the growing demand for alcoholic beverages and spirits in the country. However, it is essential to comply with the legal framework governing the establishment of distilleries, which varies across states, and to have the necessary documents and approvals in place. The expenses associated with establishing a distillery unit in India can vary depending on several factors, and the primary obstacles faced by distillery industries in terms of social promotions include stringent regulations on alcohol advertising and promotion, the difficulty in establishing trust and authenticity, standing out in a competitive market, complying with local laws, and balancing promotion with responsible messaging.