New Delhi: Yangdup Lama, co-founder of Sidecar Bar in Delhi, has noticed a shift in alcohol consumption trends. Lama states that vodka’s popularity has declined, being superseded by gin — a trend he did not anticipate when opening Sidecar five years ago. He notes, “Gin consumption has been consistent, unlike vodka.”

A decade ago, Lama would order an equivalent number of vodka and whisky bottles, alongside a small quantity of gin. Nowadays, the count of whisky remained unaltered, but gin increased to eight bottles, while vodka decreased to merely four.

The same trend is observed by regular party-host Vir Kapoor, 37, living in west Delhi. According to Kapoor, gin has become increasingly popular among his friends, who previously turned to vodka as a default white spirit. Now, gin is a staple in Kapoor’s bar, with bottles such as Bombay Sapphire, Greater Than, or Stranger and Sons regularly featured at his parties. Furthermore, his friends have also expressed interest in premium sipping tequila. Both Greater Than and Stranger and Sons are Indian craft gins.

Similar transformations can be seen all over India. Vodka, once the leading white spirit of India and a peer to whisky, now faces stiff competition. Factors behind this phenomenon include the growing popularity of gin. This preference change is discouraging for those considering entering the vodka market, as gin — specifically premium gin, with its characteristic juniper taste — is now the favored beverage. Vodka also competes with high-end tequila, agave-based spirits, and white rum in the crowded white spirits space.

Gin has a history stretching back over a century in India’s liquor market. Despite this, it was often overlooked in favor of other spirits, relegated to the sidelines and largely untouched by innovation. This led to a somewhat stagnant market, with gin consumption in India remaining low.

However, a shift began to occur around 2017. New companies like Nao Spirits and Third Eye Distillery entered the scene, introducing premium gin brands like Greater Than and Stranger & Sons. These were not only high-quality, but also came with hefty price tags. Before long, gin had overtaken entry-level vodka in popularity.

Industry figures indicate that India’s gin market has experienced phenomenal growth in the past few years. In 2017, only about 12,000 cases were sold, but this figure has climbed to roughly 320,000 cases today. It’s important to note that a case typically contains nine bottles, each holding either 750ml or 1,000ml, depending on the specific category of liquor.

Recognizing this burgeoning demand, several companies decided to capitalize on it in 2023. Close to a half dozen companies, among them Radico Khaitan, Spaceman Spirits, Third Eye Distillery, and NV Distilleries & Breweries, launched new gin brands and variants. Some even ventured into the rum market, introducing new white and golden varieties.

Today, numerous other large companies have also enthusiastically joined the trend of white spirits. Allied Blenders and Distillers (ABD), a brown spirits whisky maker primarily, has just launched a premium gin named Zoya. Meanwhile, Associated Alcohol & Breweries Ltd has also introduced its own premium gin brand, Nicobar.

Indian gins that are priced over ₹1,000 have been growing rapidly, outperforming imported premium gins. While four years ago they only accounted for just over a quarter of the premium sector, today this figure has risen to above 40%, as reported by the Confederation of Indian Alcoholic Beverage Companies (CIABC). They also noted that the portion of imported gins has decreased from 74% to 59% in the same timeframe.

This shift in the world of white spirits is not merely about taste, it’s a tale of premiumization. Consumers are more than ever willing to pay higher for quality and experience. Capitalizing on this trend is gin, a versatile spirit with a thriving craft scene. As Lama states, “10-15 years ago, vodka was the most trendy spirit, but gin and craft spirits came in. Dark-spirit making companies have managed to capitalize on the craft market, unlike vodka”.

Siddharth Banerji, who is the owner and Managing Director of Kyndal Group, the spirits manufacturer behind well-known scotch brands such as Cutty Sark and The Famous Grouse, expressed that the trend toward premium, higher-quality spirits is the growth engine for the white spirits sector specifically gin. In different spirit categories, the number of brands within the premium segment has increased. Gin has benefited most from this, since these spirits are presented in impressive packaging with innovation attached.

“All of this has led to individuals exploring a multitude of new brands. This contrasts heavily with previous years where folks were rather set in their ways regarding the brands and categories they preferred. In addition to this, there has also been a significant rise in per capita income. This is evident in India’s surge of ‘premiumization’. Moreover, people have been prioritizing quality over quantity when it comes to consumption since the pandemic,” said Banerji.

The firm he works for is currently in the process of integrating an international tequila into their range of products. Banerji believes that the most rapid growth in India’s spirit industry will be in the premium segment, specifically in the 1,000–2,000 rupees per bottle price range. That said, it is worth noting that despite the intense competition among white spirits, brown spirits still own an impressive 97% of the total market share. This is largely propelled by mass-produced, cost-effective offerings.

Gin, while it is showing extremely quick growth, has volume figures that are still merely a quarter of vodka’s. Vodka has managed to retain its growth momentum, primarily in the bigger economy category. Premium vodka, however, has only experienced a slight nominal increase in its market share. According to IWSR, a consultancy specializing in drinks, in the previous calendar year, the overall growth in the vodka segment was higher than gin’s at 35%. Regardless, in the ‘premium and above’ category, gin managed to grow more rapidly than vodka, with growth rates of 177% in comparison to vodka’s 66% for the same year.

Competing in the white spirits market isn’t exclusive to gin. There is increasing competition from other varieties of white spirits, such as tequila, agave-based spirits, and even white and golden rum. These have become increasingly popular, especially amongst the young, upwardly mobile Indian demographic. We’ve seen new entrants like Allied Blenders, Himmaleh Spirits, and Associated Alcohol & Breweries dabbling in and experimenting with a broad array of beverages for drinkers. This trend was a factor in Diageo’s decision to release its own Don Julio tequila a couple of months back.

Vikram Achanta, the co-founder and CEO of beverage consultancy Tulleeho, has noticed a significant swing in the popular preferences for spirits. Tequila, has recently grabbed attention. “Although agave consumption is falling in the U.S., it has gained substantial popularity in India in the past half year. This trend can be attributed to the rising popularity of bars and restaurants with Mexican and Spanish themes, and to an increase in home consumption. Thanks to lower consumption in America, we have more available for markets like ours. The supply of agave spirits is not likely to become an issue soon, and we expect to see more companies investing and innovating in this sector,” Achanta explains.

Internationally renowned beverage producers like Diageo and Bacardi, are now turning their focus onto to their tequila lines Don Julio (Diageo), and Patron (Bacardi) for the Indian market. Locally, companies like DesmondJi that cultivate agave in India, are rising, supplying businesses keen on creating their own signature agave spirits in the Indian market. These notably include Maya Pistola Agavepura, launched by Indian restauranteur Rakshay Dhariwal in the last year.

“Premium tequila is currently enjoying a favorable image among consumers, with a notable rise in interest observed from both genders due to its reputation for providing a ‘clean’ high. Irrespective of the truth of this belief, it certainly has been boosting demand,” Achanta remarked.

In his opinion, now is a good time to be in the clear spirits industry. White rum, gin, and agave spirits account for over a million cases sold annually according to Achanta, with the entire white spirits industry accounting for sales between 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 expressed that India needs to reconsider how to revive the vodka category. He stated, “We believe there is a void in the super-premium vodka segment and we are planning to introduce something in the high-end category soon.”

According to Gupta, vodka was always viewed as “clean” and offered a consistent standard experience each time it was consumed. However, with other white spirits, it has evolved to be more about who introduces new flavors. He argued, “Gin is not replacing the consumption of any other white spirit. The majority of the growth in white spirits is possibly from regular brown spirit drinkers, women, or newer of-age drinkers.”

Anand Virmani, co-founder of Nao Spirits, seems to agree with Gupta. He argued, “It’s not about vodka versus gin. There’s a shift from other categories. Some are beer drinkers, others are new to drinking. India adds approximately 20 million new drinkers each year. Typically, new drinkers begin with lighter spirits.”

Even though the competition for India’s white spirits market is still ongoing, one thing is evident: Premiumization is the current trend.