Yangdup Lama, the co-founder of the Delhi based Sidecar Bar, shares his observation about the changing preference for alcoholic beverages. Lama, whose bar has earned a place in Asia’s 50 Best Bars and the World’s 50 Best Bars, states that the popularity of vodka has declined in recent times. As per Lama’s initial expectations when inaugurating Sidecar, vodka was anticipated to be the favored choice for patrons, but surprisingly, the position has been usurped by the gin. Lama adds that the demand for gin has consistently grown despite vodka’s decline.

Lama recalls that a decade ago, his bar orders included equal numbers of whisky and vodka bottles, with gin making up a small portion. Presently, the orders for whisky remains constant, but gin’s demand has seen an upward trend, while the demand for vodka observed a decrease.

These changes in alcohol preference are not confined to Lama’s bar. Even various party hosts, such as 37-year-old Vir Kapoor from west Delhi, have witnessed a similar trend. Kapoor notes that more of his friends are now opting for gin over vodka, which was a popular choice for people who preferred white spirits rather than darker ones like whisky and brandy. Kapoor’s bar generally caters to these trends and stocks brands like Bombay Sapphire, Greater Than, Stranger, and Sons to keep up with his gin-drinking guests. Interestingly, there has also been a growing interest in high-end sipping tequila among his friends.

Even though vodka had a long reigning supreme status in India’s white spirits scene, recent trends point to a juniper-infused revolution, with gin replacing low-tier vodka. Consultants confirm that the shift in preferences has even modified entrepreneurs’ business choices, with many reconsidering entering the vodka industry. Ultimately, vodka faces a new competitive market being inundated by premium gin, high-tier tequila, agave-based spirits, and white rum.

Gin has been a component of India’s overall alcoholic beverage collection for over a century. Despite its longstanding history and prevalence, it has largely remained on the fringe in terms of market presence and acceptance. For a long while, gin lacked innovation and remained static, with its consumption by Indians being nearly negligible.

However, around 2017, gin began to make a name for itself. New players like Nao Spirits and Third Eye Distillery, the producers of Greater Than and Stranger & Sons gins respectively, emerged and started producing high-end gins that were both easy on the palate and expensive. Before long, gin overtook entry-level vodka.

As per industry calculations, the gin sector in India has ballooned from a mere 12,000 cases in 2017 to about 320,000 cases currently. Typically, a case consists of nine 750ml or 1,000ml bottles, depending on the category.

Spotting this surge in demand, nearly half a dozen companies, including Radico Khaitan, Spaceman Spirits, Third Eye Distillery, and NV Distilleries & Breweries, introduced new brands and variants of gins, as well as some white and golden rums in 2023.

Today, many other larger companies have also jumped onto the white spirits bandwagon with much gusto. Allied Blenders and Distillers (ABD), which is primarily a brown spirits whisky maker, launched a premium gin, Zoya, this month. Associated Alcohol & Breweries Ltd has launched its own premium gin, Nicobar.

Indian gins priced above ₹1,000 have been growing rapidly, and are outpacing imported premium gins. They accounted for just over a quarter of the premium segment four years ago but today, the number has risen to over 40%, said the Confederation of Indian Alcoholic Beverage Companies (CIABC), noting that the share of imported gins has fallen from 74% to 59% in just four years.

Clearly, this shift within the white spirits world isn’t just about taste. It’s a story of premiumization, where consumers are increasingly willing to pay more for quality and experience. Gin, with its versatility and burgeoning craft spirits scene, has capitalized on this trend. “10-15 years ago, vodka was the most sought-after spirit, but gin and craft spirits came in. What the dark-spirit making companies did was capitalize on the craft market, which vodka couldn’t,” said Lama.

Siddharth Banerji, owner and managing director of Kyndal Group, the spirits manufacturer behind well-known scotch brands such as Cutty Sark and The Famous Grouse, said the premiumization of higher-quality spirits is the backbone of the growth of the white spirits sector, specifically gin. The sheer number of brands in the premium segment has gone up across many spirit categories. The biggest beneficiary of this has been gin, since all these spirits come with appealing packaging and innovation.

“All this has resulted in people trying a lot of new brands. This was not the case some years ago, when people were completely inflexible about the brands and categories they consumed. Today, there is also huge growth in per capita income and that is clearly reflected in India’s ‘premiumization’ story. Also, more people are consciously drinking better quality over quantity since the pandemic,” Banerji added.

His company is in the process of adding an international tequila to its portfolio. In his view, India’s biggest spirit growth story will be in the premium drinking segment, in the ₹1,000–2,000 per bottle range. To be sure, while a battle is raging within the white spirits universe, brown spirits still command a staggering 97% share of the overall market, which is largely driven by mass-produced value offerings.

And while gin is reporting the fastest growth, vodka’s volumes are still four times larger—it has maintained growth momentum, but only in the much larger economy category. Premium vodka, however, has seen only a modest increase in market share. According to IWSR, a drinks consultancy, in calendar year 2021, volume-wise, growth across the overall vodka segment was higher, at 35%, while gin trailed behind at 28%. However, that same year, in the ‘premium and above’ category, it was gin that grew faster than the vodka segment, surging 177% versus just 66% growth for vodka.

It isn’t just gin that is making waves in the white spirits market. Competition is hotting up from other white spirits, with tequila, agave-based spirits and even white and golden rum becoming popular in the market, especially among young upwardly mobile Indians. This segment has seen new players such as Allied Blenders, Himmaleh Spirits, Associated Alcohol & Breweries wade in and experiment with a range of drinks for tipplers. The trend also led Diageo to launch its Don Julio tequila two months ago.

Vikram Achanta, the co-founder and CEO of Tulleeho, an independent beverage training and consulting firm, revealed that tequila has been trending significantly recently. “Interestingly, while agave consumption has plummeted in the US – traditionally one of its biggest markets – in India it’s popularity has exploded in the past six to eight months. Newly emerging Mexican and Spanish-themed restaurants and bars are fostering this rising demand,” Achanta stated. “Also, home consumption plays a role. The US’s decreased consumption has liberated the allocation of this spirit to markets like ours. Therefore, the supply of agave spirits is unlikely to present an issue now, and we might witness more companies entering and innovating in this sector.”

Indeed, Diageo and Bacardi, two of the world’s major liquor companies, are now concentrating on promoting their tequila brands Don Julio (Diageo) and Patron (Bacardi) in India, with ambitious plans to expand the market extensively here. DesmondJi, an Indian enterprise cultivating agave on home soil, has emerged and is providing to companies wishing to produce the agave-based spirit here. Their clients include Maya Pistola Agavepura, a venture that was launched by Indian restaurateur Rakshay Dhariwal last June.

“Tequila, especially sipping tequila, is currently extremely appealing from a consumer standpoint and there’s substantial interest from both genders because it’s believed to provide a ‘clean’ high. Though the validity of this claim is uncertain, it is nonetheless stimulating demand,” he added.

All things considered, it’s a prosperous time for the white spirits sector. Premium white rums, gins, and agave encompass over a million cases per year, Achanta declared, with the total white spirits sphere accounting for approximately four to six million cases.

“It (white spirits) is a very, very exciting category right now with a lot of innovation going on in some spirits,” said Alok Gupta, ABD’s managing director. “Gin has had this astounding growth because it offers new experiences. Globally, today, the only two white spirit categories spoken of are gin and tequila. There is a lot of curiosity around mezcal- and agave-based spirits and Indians really want to know what the hype is all about.”

The industry is yet to put out any official data for this fiscal year, but Gupta estimated the market for tequila to be about 75,000–80,000 cases per annum, growing at a rate of 40%.

Meanwhile, vodka, said some aficionados, appears to be suffering from a bit of an identity crisis. It has been stuck in the ‘value’ spirits rut, and is struggling to keep up with gin. While its volume growth continues, that growth is primarily in the lower-priced segments under ₹1,000, according to data from CIABC.

Indeed, Indian brands haven’t made any significant inroad in the premium vodka segment, leaving the space dominated by foreign players, such as Diageo’s Smirnoff, Absolut and Grey Goose. A few players such as NV Distilleries & Breweries, which sells the Smoke brand of vodka, and has innovated with flavours such as saffron and mango, are the exception. Somewhere, this lack of homegrown innovation has hindered vodka’s appeal.

Gupta said India needs to introspect as to how to grow the vodka category again. “We believe there is a gap in the super-premium vodka segment and we will launch something in the higher-end category soon,” he said.

The expectation from vodka was always that it was “clean” and delivered the same standard experience every time it was consumed, said Gupta. But with other white spirits, it has become more about who is offering newer flavours. “I don’t think gin is taking away the consumption of any other white spirit. The biggest share of white’s growth is possibly from someone who normally drinks brown; women and other newer age drinkers,” he added.

Anand Virmani, co-founder of Nao Spirits, appears to concur with Gupta. “To my mind, it is not a vodka versus gin debate. There is some migration from other categories. Some are beer drinkers, some are new drinkers. In fact, India is adding 20 million new drinkers each year. New drinkers generally begin with lighter spirits,” he said.

While the battle for India’s white spirits market is far from over, one thing is crystal clear: Premiumization is the name of the game today.