Emerging trends and market dynamics in the alcobev market

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Rajibur Rahaman
Rajibur Rahamanhttps://www.hospitalitycareerprofile.com/
Rajibur Rahaman is an experienced journalist with a focus on hospitality news, executive appointments, biographies, and industry updates. Having worked with prestigious hotel brands such as Marriott, Taj, and others, Rajibur brings a deep understanding of the hospitality industry to his writing. His expertise and dedication to delivering insightful and accurate stories make him a valued contributor to the Hospitality Career Profile.
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In 2024, the alcobev sector reached a valuation of USD 55 billion, driven by an annual growth rate (CAGR) of more than 6 percent. The market promised an evolution that is shaped by changing consumer preferences, and emerging market opportunities. As we gear to reach 8-10 percent growth in FY2025, this sector holds immense potential for sustainable growth, provided regulatory frameworks keep pace with industry needs.

Premiumisation of spirits
The industry will see a consumer-centric shift this year. Consumers are no longer indulging in alcohol to be intoxicated but rather to have unique experiences. The bars and drinking establishments in India will move beyond just offering beverages, they are on the path of becoming experiential spaces. Drinking has emerged to be a sensory and social experience. Consumers, especially younger demographics, are drinking to savour the craft. Thus, the cocktail culture in India is undergoing a transformation. Gone are the days of overly sweet, syrup-based mixers. Today’s consumers demand local, fresh ingredients that reflect regional flavours. This trend aligns with the rising preference for authenticity and sustainability. To engage with this, many homegrown brands are stepping up to offer premium, locally inspired spirits that resonate with Indian palates.

Tequila, for instance, has seen an uptick in popularity. Initiatives like tequila-focused events have demystified the spirit for new audiences. While whisky remains the undisputed leader in the Indian market, craft beverages from small-batch cocktails to artisanal gins, are carving out a niche. Indian brands are creating spirits that are steeped in local identity and storytelling. This evolution is a result of the growing demand for products that prioritise quality over quantity. Rye and Irish whiskies, however niche, are finding an audience among consumers looking to explore less conventional options. These spirits, along with premium aged rums, are expected to cater to India’s growing base of high-spending, adventurous drinkers. Role of technology in the industry
Technology is playing a pivotal role in shaping the alcobev landscape. Augmented Reality (AR) is emerging as a key trend, offering consumers immersive experiences that go beyond just taste. Brands are leveraging AR to tell their stories allowing consumers to interact with the product through virtual tastings, gamified experiences, and storytelling that enhances their connection to the brand.

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AI, on the other hand, is transforming how bars and brands operate. Data-driven insights are helping curate personalised menus tailored to individual preferences. AI tools are being used to analyse consumer behaviors, predict trends, and recommend cocktails or spirits based on specific tastes. This personalisation not only enhances customer satisfaction but also fosters loyalty.

Emerging interest in sustainability
Sustainability is more than just a buzzword for the alcobev industry in 2025. Over 60 percent of major players in the alcobev sector have adopted recyclable packaging, water conservation techniques, and renewable energy in production. With climate consciousness influencing consumer choices, brands are actively working to reduce their carbon footprints. India’s biodiversity provides a rich palette for crafting unique spirits. From artisanal gins infused with regional botanicals to whiskies made with indigenous grains, brands are exploring innovative ways to stand out. This approach not only reduces the reliance on imports but also strengthens the local identity of products.

Homegrown spirits brands, in particular, are crafting products that are not only premium but also deeply rooted in regional authenticity. This resonates with consumers who prioritise ethical and sustainable consumption.

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Road ahead in 2025
Despite its impressive contributions to state revenues, the alcobev sector faces significant hurdles, including regulatory inconsistencies and complex tax structures. Fragmented policies across states hinder innovation and market efficiency. Standardised pricing and a unified regulatory framework could unlock the industry’s true potential, creating a more transparent and streamlined marketplace.

Additionally, global trade agreements, like effective Free Trade Agreements (FTAs), can open new export opportunities for Indian spirits, placing them on the global map. Policymakers have a critical role to play in creating a supportive ecosystem that encourages both local and international growth.

The Indian spirits market is poised for robust growth, with projections placing its value at USD 64 billion by 2028. Whisky will remain the cornerstone of this growth, but emerging categories like gin, tequila, rye whisky, and aged rums are expected to drive premiumisation. E-commerce, currently a small but growing channel, is likely to account for 15 percent of overall alcobev sales by 2028.

In 2025, the Indian alcobev industry is not just growing but evolving, setting new benchmarks for creativity, sustainability, and global recognition.

An interest in 0-proof alcohol brands is also picking up in the western world, where consumers don’t want to lose the essence or taste of the original drink or cocktail but don’t want alcohol to be present in it. For more health cautious consumers this would grow into a sizeable market in the near future.

The author, Sree Harsha Vadlamudi, is founder & CEO, Loca Loka. The views expressed in this article are those of the author and do not necessarily represent those of

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