Alcobev manufacturers in India to see 8-10% revenue growth in FY26: CRISIL

Alcoholic beverage (alcobev) manufacturers in the country will see revenue grow 8-10% to Rs 5.3 lakh crore in fiscal 2026, keeping up momentum after a compound annual growth rate (CAGR) of 13% over the three preceding fiscals, said a Crisil report.

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).


A study of 25 liquor companies, accounting for about 12% of the organised alcobev industry revenue, indicates as much. The industry is dominated by spirits, which contribute 65-70% 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%, driven by urbanisation, increase in drinking population and rising disposable income, it said.

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%. The contribution from these segments will rise to 38-40% of spirits revenue this fiscal compared with 31-33% in fiscal 2023.”

Higher volumes and realisations would support the profitability of players through better contribution and cost absorption, despite a marginal increase in input costs. The major raw material input for the spirits and beer segments are extra neutral alcohol (ENA) and barley respectively, which together account for 60-65% of the total material cost, while the rest is towards packaging, primarily glass bottles.

ENA prices are expected to rise 2-3% this fiscal due to higher demand from ethanol blending program, notwithstanding expected higher supplies. Barley prices are expected to increase 3-4% this fiscal due to tight demand supply situation. The prices of glass bottles will remain firm given increasing demand and steady supplies.

That said, a 3-4% increase in realisation due to premiumisation, along with continuing volume growth, will help in cost absorption and improve operating margins.

“We expect operating profitability to rise 80-100 bps in the spirits segment and 50-70 bps in the beer segment this fiscal. The blended operating margin for the industry is expected to grow 60-80 bps, marking an expansion for the second year in a row,” Sajesh KV, Associate Director, Crisil Ratings, said.

The steady growth in volumes has encouraged manufacturers to expand capacities by 15-20% in the past two fiscals. The industry is currently operating at 70-75% utilisation, leaving enough headroom for meeting demand. Therefore, no major debt-funded capex is expected this fiscal.

The absence of large capex plans and a steady working capital cycle indicates the credit metrics of alcobev manufacturers in the Crisil Ratings portfolio will remain solid, with interest coverage ratio healthy at 21 times this fiscal.