Indian alcohol cos can raise a toast to higher sales, better margin: ICRA
alcohol beverages industry is poised for margin improvement and higher sales in the fiscal year 2025, according to ICRA, a credit rating agency.
ICRA projects a revenue growth of 8-10% for its sample set of domestic alcohol beverages (alcobev) companies in FY2025. Indian made foreign liquor (IMFL) companies are anticipated to witness revenue expansion of 11-13%, driven by a preference for premium products alongside a volume growth of approximately 3-5%.
Beer companies are expected to experience a revenue increase of 9-11% year-on-year, primarily due to a 4-6% rise in volumes.
“In addition to the healthy demand, the industry is expected to benefit from the moderation in input costs, especially packing material (such as glass bottles), which accounts for ~60-65% of an alcobev manufacturer’s cost, even though grain prices, particularly non-basmati rice, are not depicting a favourable trend,” said Kinjal Shah, Vice President and Co-Group Head – Corporate Ratings, ICRA.
ICRA foresees a promising season for beer in Q1 FY2025, anticipating warmer weather compared to the previous fiscal year, which encountered unexpected rainfall.
“The OPM for ICRA’s sample set companies is expected to increase by ~50-100 bps in FY2025, owing to moderation in packaging material costs, coupled with price hikes approved by the state governments, partly offset by the increase in grain prices,” Shah added.
Despite potential challenges such as the increase in minimum support price (MSP) and higher procurement rates for recent crop
