New Delhi: India’s alcoholic beverage industry is expected to achieve 10–12 per cent year-on-year (YoY) revenue growth in FY26, driven by steady demand, premiumisation trends, and price increases by various state governments, a report said on Wednesday. Volume growth is expected to range from 1 to 2 per cent in FY26, according to a report by ratings agency ICRA.
The beer segment is projected to outperform spirits, with volumes forecast to grow by 4-6 per cent in the same period, continuing the trend from the previous year due to steady demand, the report said. In contrast, spirits, including Indian-made foreign liquor and country spirits, are expected to decline due to higher taxation and increased selling prices.
ICRA projected that operating profit margins for its sample set of companies to remain stable at 13-14 per cent in FY26 supported by largely stable input costs, following a 100 basis point increase to 13.9 per cent in FY25. In FY25 price hikes granted by various state governments helped offset the increase in non-basmati rice prices, one of the feedstocks for spirits manufacturing.
Capital expenditure, currently at 3–4 per cent of operating income in FY25, is expected to increase to 4–5 per cent in FY26 and FY27 as companies expand capacity, the report added. Despite the rise in capital expenditures, leverage and debt coverage metrics are projected to remain healthy, with total debt/ OPBDITA of 0.5-0.7 times and interest coverage ratio of 19-21 times for FY26, supported by robust cash accruals, the report noted.
Although alcohol itself remains outside the GST framework, the changes under GST 2.0 have affected related inputs. Packaging materials such as bottles, caps, labels, and cartons are now taxed at 18 per cent, compared to the earlier 12 to 15 per cent. Similarly, transportation and logistics services have also been brought under the 18 per cent tax bracket.
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