Expensive spirits—bottles can cost as much as ₹2,000—are becoming more and more popular in major cities. This indicates an increasing level of aristocracy in India’s alcohol consumption patterns. The growing cost of drinking out and a younger generation of consumers who prefer to drink less but better—such as a steady increase in drinking better—at home are two factors that have influenced this shift in premiums, according to industry experts.As per the Confederation of Indian Alcoholic Beverage Companies (CIABC) data, the spirits market for over ₹1,000 experienced a growth of 48% year-over-year (y-o-y) in 2022–2023, whereas the market for less than ₹500 grew at a rate of only 12%.  Further evidence of a notable rise in customer preference for Indian premium brands comes from the fact that the percentage of Indian offerings in the above-₹1,000 category increased from 18% in 2021–2022 to 20% in 2022–2023.Managing director of Kyndal Group Siddharth Banerji explains that the premiumization trend in the Indian spirits market is a complex phenomenon. A larger story of consumer behavior and marketing strategy is involved in this move towards premium alcoholic beverages, which goes beyond simply charging more.

Banerji Elucidates the Dual Facets of Premiumization in Indian Spirits Market

Banerji discusses the superior tendency in two separate parts. First, more and more companies are positioning themselves in the high-priced category. This increase reflects both changing consumer preferences for more expensive and premium spirits, as well as rising costs. The younger generation of Indian consumers is increasingly attracted to brands that exude exclusivity and luxury. This change reflects both an increase in disposable income and a growing desire for a sophisticated lifestyle that includes expensive alcoholic beverages.As Banerji notes, the introduction of new products with innovative and better packaging represents the second aspect of this trend. Businesses are concentrating on improving the whole customer experience in addition to raising prices. This calls for careful consideration of the packaging, which is increasingly important in determining how consumers perceive and select brands. Packaging that is both creative and beautiful can greatly improve a brand’s reputation and attract customers looking for high-end goods.

Innovation also extends to the product itself, not just packaging. Distillers and producers experiment with unusual flavors, blends and production methods to produce distinctive and excellent spirits. As a result of this innovation, consumers are increasingly inclined to try new and unusual brands, especially in categories such as gin, which are growing in popularity.Products like Cutty Sark Blended Scotch Whisky and Bols Premier X.O. from his own company serve as prime examples of Banerji’s insights into the premiumization of the Indian spirits market. Providing not only a product but also an experience that appeals to today’s sophisticated consumer, these brands are the epitome of premiumization.Buzz is being generated around these premium categories by the emphasis on quality, innovation, and packaging. The experience it provides and the tale it conveys are just as important as the drink itself. The Indian spirits market is seeing a premiumization trend that is largely driven by word-of-mouth and social media chatter, which is influencing consumer perceptions and choices.

Indian Spirits Market Sees Surge in Premium Offerings and Sales Growth

Several spirit manufacturers and importers have expanded their premium offerings as a result of the premiumization story. Spaceman Spirits Lab Pvt. Ltd (SSLPL), for example, the company behind the luxury Indian craft gin brand Samsāra, has launched its SĪTÄRĀ rum this month. It will retail for between ₹1,350 and 2,000 per bottle (depending on the state). Tilaknagar Industries is the company’s backing actor. The extremely expensive Don Julio tequila varieties, which retail for more than ₹9,300, were introduced to India by Diageo (formerly United Spirits Ltd., USL). In addition to a UK-sourced Garam Masala gin priced at ₹2,000, Tandon Enterprises will start offering ultra-premium vodka Alpha from Uzbekistan as part of its portfolio. Likewise, Piccadily Distilleries introduced a cane juice rum, Camikara 3 Years Old, last month (in various states), for ₹1,400-2,400 per bottle.In the second quarter of 2023–24, sales of Radico Khaitan’s prestige-and-above portfolio increased by almost 22%. Radico Khaitan is a manufacturer of spirits, including Rampur Indian Single Malt. In the category, it outsold all other categories with 2.8 million cases sold. Diageo India reported a rise in its bottled-in-origin and bottled-in-India imported spirits segment during its second-quarter earnings call, despite a slowdown in the premium and prestige segments overall. The luxury market continued to see strong demand, and overall, the prestige and above segment saw a 12.8% annual growth.

Together with growing costs for drinks and cocktails in big-city bars, experts attribute this new trend primarily to drinking more at home. Bar closures during the pandemic caused this consumer behavior to initially surface, but it now seems to have become a long-term trend.This pattern has ended. This is a behavior that is essentially here to stay. International Spirits and Wines Association of India CEO Nita Kapoor stated, “This is mainly being represented by the bottled-in-India and bottled-in-origin categories (international spirits).”Those who would rather host at home are doing so in part due to the increase in drink and cocktail prices in pubs and clubs.Cocktail prices in the major metropolises range from ₹600 to ₹1,000, sometimes even higher, at the majority of specialty restaurants. Over the prices of 2019, that is a clear 30% premium.

Rising Trend of Premium Spirits in India: A Focus on Youth, Affluence, and Diversity

In addition, a player stated that the premiumization narrative might be totally contingent upon the location of the high-end spirit consumption. Certain states with high per capita incomes have found success with it. Gurugram is one of these mini-markets in Haryana, for example.Another major factor driving this growth is the younger generation Z and millennials living in larger cities, who are drinking better but in moderation.States like Haryana (Gurugram), Chandigarh, Rajasthan, Maharashtra, and Punjab have displayed better retail establishments, higher per capita incomes, and a rise in the number of female drinkers.However, will this persist? Add one extremely high-end spirits producer, please. Paul P. John, John Distilleries’ chairman. But it’s unclear how long this trend toward high-end spirits will last. Changes in consumer preferences, changes in tax laws, and economic fluctuations could have an effect on this market segment in the future. The premiumization trend, which is transforming the Indian spirits market and could lead to long-term growth in the premium segment, is being driven by a younger, wealthier, and more diverse consumer base.The premiumization of the Indian spirits market is being driven by younger consumers in major cities who value quality over quantity.

John Distilleries Witnesses Surge in Premium Spirits Amid Shift in Indian Drinking Culture

The trend toward upscale drinking, mostly in cozy settings at home, is having a big impact on the way the Indian spirits market is developing. Paul P. John, chairman of John Distilleries, has noted that this change reflects a greater understanding and appreciation of premium spirits among Indian consumers. He observes that the focus on “drinking better” is growing among people, a trend fueled by a greater understanding of the various types of spirits.One major player in this market, John Distilleries, has seen a 40% year-over-year volume increase in its ultra premium products. This remarkable rise, even from a smaller base, highlights India’s growing demand for premium spirits. The business’s success story reflects a wider trend in the market where consumers are moving away from Indian-made foreign liquor (IMFL) and toward more upscale options like single malts. This shift is especially noticeable in larger metropolitan areas. This movement reflects not only a shift in consumer preferences but also a cultural evolution in India’s attitudes toward and use of alcohol.Approximately 10% of John Distilleries’ sales and volume now come from the premium spirits category, which includes gins, brandy, and single malts. This statistic, which has doubled from before the COVID-19 pandemic, illustrates how the pandemic has affected consumer purchasing patterns and how the market for premium spirits has grown more quickly. Given the ban on social events and travel, there’s a chance that the pandemic has encouraged people to spend more money on enjoyable at-home drinking experiences.

India’s Alcoholic Beverage Market Trends Towards Quality and Premiumization

India’s shifting consumer mentality, which is more in line with worldwide trends of thoughtful and sophisticated consumption, is reflected in the country’s preference for premium spirits. Spirits manufacturers’ effective strategies in meeting this new demand are also demonstrated by the growth in the premium segment. These businesses are striking gold in a profitable market niche and molding consumer preferences and tastes at the same time by increasing the scope of their premium offerings and emphasizing quality.This look at the Indian alcoholic beverage market suggests that this trend is more than just a short-term shift. In India, the future course of the spirits industry is expected to be shaped by a persistent focus on premiumization, quality, branding, and premium product offerings as the market continues to mature.

Also Read: Narayana Murthy now claims to have put in 85–90 hours of work: But does it actually produce anything?

Final Thought

Rising out-of-home drinking expenses and a younger generation that prioritizes quality over quantity are two major factors driving the premiumization trend in India’s alcoholic beverage market. Consumer preferences are shifting significantly in favor of premium spirits. A significant 48% year-over-year growth in the spirits market for bottles priced over ₹1,000 is revealed by data from the Confederation of Indian Alcoholic Beverage Companies (CIABC), suggesting a growing preference for premium brands. Enhancements in product quality and creative packaging are just two more examples of how premiumization goes beyond price.Two important features of this trend are emphasized by Siddharth Banerji, managing director of Kyndal Group: a rise in high-end brands and an emphasis on creative product offerings and packaging. Consumer behavior is changing as a result of businesses improving customer satisfaction while simultaneously raising prices. New and distinctive spirits are also being introduced, which is a hallmark of the premiumization trend and draws customers looking for novelty and exclusivity in their drinks. Spirit importers and manufacturers have benefited greatly from this trend by growing their premium product lines.As a result of bars closing as a result of the pandemic, people drank more at home, but the premiumization trend seems to be here to stay. Decanting the traditional bar scene, more and more people are enjoying fine spirits in comfortable home settings.

In the process of founding Infosys, co-founder Narayana Murthy stated that he put in seventy hours a week of work and advised young Indians to do the same. Till 1994, Murthy worked over eighty to ninety hours a week, he told The Economic Times.”In the past, I would arrive at the office at 6:20 am and leave at 8:30 pm, working six days a week,” he said in an interview with ET. “I know every nation that became prosperous did so through hard work.”He learned from his parents that the only way out of poverty was to work hard. The report went on to say that this is the time when he gets the most out of each hour.

“During my entire 40-plus years of professional life, I worked 70 hours a week,” he insisted. “I used to put in at least 85 to 90 hours a week of work when we had a six-day workweek, which ended in 1994. That hasn’t been a waste, according to Economic Times. To compete with China and Japan, Murthy had earlier in October advised Mohandas Pai, the former CFO of Infosys, that India needed to increase work productivity. With more than forty years of experience in the field, Narayana Murthy asserted that he put in seventy hours a week of work, and even ninety to eighty during the six-day workweek years until 1994. He advised former Infosys CFO Mohandas Pai that in order to compete with China and Japan, work productivity must rise.

Does productivity correlate with the number of workdays?

A trial conducted in the UK found that “less work” increased employee productivity and work-life balance. This was reported by Mint earlier in the year. In an experiment, nearly 3,000 workers in more than 60 companies in Britain were given the option to work one fewer day a week without losing pay. According to the survey, a greater than 90% of businesses plan to implement or will continue to implement a shortened workweek as a result of higher productivity and efficiency.A 4-day workweek is also becoming more and more popular in India in the meantime. An employee who works twelve hours a day, for example, is entitled to three days of paid leave per week under a bill that the Karnataka Assembly approved.

Microsoft Japan tested offering paid holidays to its staff every Friday beginning in August 2019, as reported by Sora News 24. Productivity increased dramatically as a result. Based on sales per employee in August 2019, labor productivity increased by nearly 40% over the previous year.”Increasing productivity isn’t just about working longer hours,” Indian businessman and film producer Ronnie Screwvala stated in a post on social media platform X, refuting Murthy’s assertion. Upskilling, creating a happy work atmosphere, and receiving just compensation for the work completed are all important components of improving at what you do. work completed with greater quality than more hours worked.”

Also Read: India Leads the Charge in Global Energy Shift with Major Russian Crude Oil Acquisitions

FINAL THOUGHT

Drawing on his own experience at Infosys, Narayana Murthy continues the ongoing debate about work hours and productivity by supporting long hours as a means of success. On the other hand, fewer workdays may boost employee productivity and work-life balance, according to recent research and experiments, including the one carried out in the UK. India is joining the global trend of shorter workweeks. Whereas Ronnie Screwvala, an Indian businessman, emphasizes the value of upskilling, a positive work environment, and fair compensation, Murthy places more emphasis on hard work. Rather than just putting in more hours, these factors are essential to producing work of a higher caliber. The correlation between work hours and productivity is not straightforward. Some promote long hours, while others emphasize the value of productivity and maintaining a work-life balance. Ultimately, finding the right balance and considering individual and cultural factors are necessary for optimizing productivity in today’s evolving work environment.

In the dynamic landscape of global energy, IndianOil has emerged as a pivotal player, securing its position as the world’s largest buyer of discounted Russian seaborne crude oil. This strategic move, particularly notable in October when IndianOil acquired over 500,000 barrels per day (bpd), has placed it well ahead of its closest competitor, Reliance Energy. The backdrop of this shift traces back to the geopolitical upheaval following Russia’s invasion of Ukraine in February 2022. Western nations, in response, ceased purchasing Russian oil, leading to a significant dip in its market value. Seizing this opportunity, Indian companies like IndianOil, Reliance Energy, and Nayara Energy quickly adapted their procurement strategies.Reliance Energy’s remarkable transition from not buying any Russian oil in February 2022 to acquiring 136,000 bpd in March 2022 exemplifies this shift. 

Similarly, IndianOil, traditionally not a buyer of Russian crude, swiftly changed course, purchasing 132kbd (thousand barrels per day) in March 2022. Nayara Energy, partly owned by Russian oil giant Rosneft, also joined the trend, increasing its intake from zero to 81kbd in the same month. This development aligns with the global sanctions imposed to reduce Russia’s revenue streams, funding its military actions against Ukraine. These sanctions included a $60-per-barrel price cap on Russian oil, significantly below the average market price over the preceding year. Indian refineries, which have historically relied on Middle Eastern countries like Iraq, Saudi Arabia, Kuwait, and the UAE for their crude oil needs, found the Russian option financially attractive despite the longer transit time of approximately 30 days compared to five days from the Middle East.

The strategy shift by Indian companies significantly altered the global crude oil market. India’s increased procurement of Russian oil, accounting for over 60% of its seaborne exports according to London Stock Exchange Group figures, coincided with similar buying patterns from China, another major purchaser. Throughout 2022, IndianOil and Reliance Energy aggressively increased their Russian crude oil imports. While the lead fluctuated between the two, with Reliance Energy outstripping IndianOil in some months like July and December, IndianOil made a substantial leap in March, purchasing 724kbd compared to Reliance’s 475kbd.

The impact of these shifts extends beyond the immediate context. Bharat Petroleum (BPCL), another significant Indian purchaser, although trailing behind IOC and Reliance, has also increased its Russian oil intake. PetroChina, a major Chinese player, remains the largest overall buyer of Russian crude, primarily through pipelines rather than seaborne routes. This shift in procurement patterns has not only affected the global oil market but also the tanker business. The longer journey to India necessitates more tankers, altering the dynamics of this sector. Additionally, the Western sanctions, intended to deplete Russia’s war chest, have been less effective than anticipated. Bloomberg reports that Moscow’s monthly income from oil exports is now higher than before the Ukraine invasion. India’s emergent role as a major buyer of Russian crude has potential long-term implications for the global oil market. This shift could permanently alter market dynamics and has already led to significant changes in the oil tanker business, with the increased need for vessels due to the longer journey times to India.

Navigating Global Market Shifts and Economic Implications

IndianOil’s position at the forefront of purchasing Russian crude oil marks a significant shift in global energy markets. This move, driven by the geopolitical scenario following Russia’s military actions against Ukraine and the ensuing Western sanctions, has not only reshaped procurement strategies but also brought forth economic implications.

Strategic Procurement and Market Dynamics

IndianOil’s rapid adaptation in response to the discounted Russian crude reflects a keen strategic awareness. By leveraging the opportunity presented by the Western sanctions, which aimed to economically isolate Russia, IndianOil and other Indian refiners like Reliance Energy and BPCL have capitalized on the situation to enhance their economic viability. This shift has also been facilitated by the global sanctions agreement, which set a price cap on Russian oil, making it an economically attractive option for these companies.

Global Influence of Indian Refineries

The substantial increase in Indian refineries’ intake of Russian oil has positioned India as a key player in the global oil market. This significant procurement not only supports the Indian economy by reducing import costs but also influences global oil price dynamics. The increased demand from India has helped sustain the global market prices of crude oil, even amidst volatile conditions.

Impact on the Oil Tanker Industry

The shift to Russian crude oil has also had a notable impact on the oil tanker industry. The longer transit times from Russia to India, compared to traditional Middle Eastern sources, necessitate a larger number of tankers. This increase in demand for oil tankers has implications for shipping costs and the global shipping industry’s capacity and operations. India’s role as a major buyer of Russian rough challenges the viability of Western assents pointed toward reducing Russia’s monetary power.Due to a limited extent to the formation of “shadow armadas” and the rerouting of its oil products to countries, for example, India, Russia has had the option to save and at times even upgrade its oil income despite the sanctions. This scenario fills in as a sign of the troubles in executing monetary approvals and the complexity of world geopolitics

Future Market Trends

The ongoing situation suggests potential long-term changes in the global oil market. India’s increased reliance on Russian crude, along with similar trends in China, could lead to a reconfiguration of global oil trade routes and dependencies. This shift may also prompt other countries to reassess their energy procurement strategies, potentially leading to more diversified sourcing and a reevaluation of global energy alliances.

Emerging Trends in Energy Procurement

IndianOil’s pivotal move to become the world’s largest buyer of discounted Russian crude oil is indicative of emerging trends in the global energy sector. These trends reflect a broader narrative of adaptation and strategic realignment in response to changing geopolitical landscapes. As Indian refineries, including IndianOil, Reliance Energy, and BPCL, significantly increase their procurement from Russia, they are not only capitalizing on economic benefits but also redefining traditional energy procurement patterns.

Geopolitical Shifts and Market Responses

The geopolitical shifts, primarily triggered by Russia’s military actions and the subsequent Western sanctions, have led to a reevaluation of energy sources by major global players. IndianOil’s strategy, mirroring this global trend, showcases the agility and responsiveness of energy companies in navigating complex international dynamics. This approach has allowed Indian refineries to maintain a competitive edge while contributing to the broader narrative of energy security and diversification.

Impact on Traditional Oil Suppliers

The increased intake of Russian oil by Indian companies also raises questions about the future role of traditional oil suppliers from the Middle East. Historically, these countries have been primary sources of crude oil for Indian refineries. However, the shift towards Russian oil could potentially alter these longstanding relationships, prompting Middle Eastern suppliers to explore new markets or adjust their pricing strategies to remain competitive.

Sustainability and Future Energy Needs

While the current focus is predominantly on economic and geopolitical aspects, there is an underlying need to consider sustainability and the future of energy needs. The global shift in energy procurement, including India’s increasing dependence on Russian crude, occurs in the broader context of a global push towards renewable energy and sustainability. This juxtaposition of immediate economic gains against long-term sustainability goals presents a complex challenge for energy companies and policymakers alike.

Also Read: RBI MPC Updates: Flexibility in Liquidity Reversal Permitted on Weekends, Announces Governor Das

At the last

In the intricate tapestry of global energy dynamics, IndianOil’s ascent as the premier buyer of Russian seaborne crude oil underscores a significant realignment in the sector. This strategic shift, catalyzed by geopolitical turbulence and economic pragmatism, not only reshapes procurement strategies but also reflects the adaptability of the energy market in the face of unprecedented challenges. The saga of IndianOil and its peers, navigating through the complexities of international sanctions and market fluctuations, exemplifies a broader theme in global energy: the relentless pursuit of economic viability amidst geopolitical strife. The Indian refineries’ pivot towards Russian crude, driven by lucrative discounts, has illuminated the intricate interplay between global politics and economic interests. This move, while bolstering India’s economic stature, also questions the efficacy of global sanctions and highlights the resilience of the Russian economy against attempts to curtail its revenue streams.

As IndianOil leads this charge, the repercussions extend beyond immediate economic gains. The shift signifies a potential reconfiguration of traditional energy alliances, challenging the dominance of Middle Eastern oil and possibly altering longstanding trade routes. This transition, while economically beneficial in the short term, also invites introspection on sustainability and environmental responsibilities. The increasing reliance on fossil fuels, particularly in a time where the global narrative is pivoting towards renewable energy, poses a paradox that needs addressing. Moreover, the Indian example sets a precedent for other nations, suggesting a future where energy procurement is more diversified and aligned with national interests, yet potentially at odds with global environmental goals. The challenge for IndianOil and its global counterparts lies in balancing these economic imperatives with a commitment to sustainable energy practices.

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