Alco-Bev Start-ups and Their Potential to Grow Globally

From traditional drinks to contemporary, the Indian market for alcoholic beverages has been growing steadily. While established players have dominated the industry for decades, the past few years have seen the emergence of a new breed of entrepreneur alco-bev start-ups. These start-ups are disrupting the traditional market by introducing innovative products and catering to the changing preferences of the Indian consumer. The potential for growth in this market is immense, and India is already the third largest market in the world.

According to a report by Indian Council for Research on International Economic Relations (ICRIER), the Indian alcoholic beverages market is one of the fastest-growing globally, with an estimated market size of USD 52.5 billion, it also contributes more than 15 lakh jobs and is expected to grow at a CAGR of 6.8 per cent. This growth can be attributed to several factors, including a burgeoning middle class, the growing acceptability of social drinking, migration from rural to urban areas, and increasing disposable incomes.

Trends driving the growth of Alco-Bev Startups in India

As consumers increasingly prioritize health and natural ingredients in their alcoholic beverages, startups have emerged to meet these changing preferences. Many are creating low-calorie beer, craft spirits using organic ingredients, and alcoholic kombucha, all catering to the growing demand for low-sugar, natural options. Alongside these innovations, startups are also introducing a variety of flavoured alcoholic beverages, including raspberry, peach, and apple, and experimenting with locally sourced ingredients to create unique and distinctive flavours in the craft spirits category. One such process of making MEAD (using fermented honey mixed with fruits, spices, grains or hops or just water), traditionally MEAD was produced in ancient times across Europe, Africa and Asia. The earliest written record of MEAD was possibly the SOMA mentioned in Rigveda around 1700 – 1100 BCE. This trend underscores how Alco-Bev startups are not only innovating but also reimagining the past to create new, compelling offerings.

Another trend pushing the growth is the demand for sustainable and eco-friendly products. Consumers are becoming increasingly aware of the impact that their purchasing decisions have on the environment. They are looking for products that are made from sustainable materials and have a low carbon footprint. It has led to the rise of start-ups that are creating products like biodegradable packaging, spirits made from locally sourced ingredients and products made from recycled materials. Also, the funding ecosystem for alco-bev start-ups in India is growing and presents a significant opportunity for entrepreneurs. According to industry reports, the Indian alco-bev start-ups raised over USD 200 million in funding in 2020. The increasing availability of funding has made it possible for start-ups to disrupt the traditional market and expand their reach globally.

Riding the Wave of International Market Growth

The alco-bev start-up industry has the potential for international growth. The market for alcoholic beverages is expected to grow at a CAGR of 7.98 per cent to reach USD 52.5 billion in revenue during the forecast period 2023 to 2025. This growth is being driven by several factors, including increasing demand from markets like India, China and Brazil. In India, the alco-bev start-up industry is still in its early stages, but it is growing rapidly. Some of the most successful start-ups in India include Bira 91, which creates craft beer, and Nao Spirits - Hapusa, which creates craft gin amongst others.

Challenges Faced by Alco-Bev Start-Ups in India

There are several challenges that alco-bev start-ups in India face. One of the biggest challenges faced by alco-bev start-ups in India is the complex and often difficult to navigate regulatory environment. The Indian government has strict regulations on the production and sale of alcoholic beverages, and state governments are also actively engaged in the manufacturing and distribution of alcoholic beverages, each with their own taxes that vary from state to state. This can make it challenging for start-ups to enter the market and navigate the various regulatory requirements. Additionally, alco-bev start-ups require significant investment to develop and market their products, and many start-ups struggle to raise the necessary funds. Despite these challenges, the potential for growth in the alco-bev start-up industry in India is immense, with a growing market for alcoholic beverages and evolving consumer preferences creating a huge opportunity for innovative start-ups.

Despite these challenges, the potential for growth in the alco-bev start-up industry in India is immense. As the market for alcoholic beverages continues to grow globally, and as consumer preferences continue to evolve, there is a huge opportunity for start-ups to create innovative products that meet the needs of consumers.

Conclusion

For start-ups in the alco-bev industry in India, the key to success lies in creating innovative and quality products, building strong brands and expanding globally. The industry presents a significant opportunity for entrepreneurs, but it is also highly competitive. Start-ups must therefore focus on differentiating themselves from their competitors and providing unique value propositions to consumers. Start-ups must be open to collaborations and partnerships with other players in the ecosystem. While the industry does face challenges, such as the complex regulatory environment and the need for capital, the potential rewards for successful startups are significant.