Gin is more popular than ever, by 2015 this market grew 2.2% globally, an important increase despite of the global economic crisis. The international consumption of Gin represent an average of 0,44 liters per person, which is less than Vodka, Rum and Scotch Whisky global consumption, but the interesting fact is that last year all these sectors shrank but the Gin maintains its growing according to the IWSR (International Wine and Spirits Research). In this post we make a review of the situation of the Spanish Gin Industry and why Spanish producers should think on India as a potential market.
The strength of the Gin sector and the Spanish Gin Industry
The power of the sector is based on Premium (column distilled gin) and Super Premium (compound gin) products. These type of gins are more popular in BRICS countries like Russia, India and China. In fact, in those regions, the wealth increase is creating a rise of demand in premium products from a sector of the population. However, it is interesting to say that one of the biggest consumer of Gin is Philippines, followed by United States and Spain. By far, United States is the largest gin market and United Kingdom is the most important exporter of gin in the world. The recent data shows how the Gin reborns as a trend and is making its way to be on the top of spirits beverages.
Spanish Gin industry is one of the most relevant in global level, mainly because it is the third largest consumer per person in the world. The importance of the Gin has increased during the last years while the sales of the other spirit drinks were decreasing. For example in 2013, the Gin was critical in order to stop the fall of the consumption of spirits beverages. Here appear several reasons why we think the Indian market could be very attractive for the Spanish gin firms such as Sikkim, Siderit, Rives or Puerto de Indias, in order to be introduced into new markets and be expanded. By now, the communities that produce more Gin brands in Spain are Cataluña, Andalucía, Comunidad Valenciana and Galicia.
India’s Gin Market and its attractiveness
India’s market, as the third largest economy of the world and fifth position of Asia spirits importers, offers many opportunities for the sector, this is motivated by a rising in urban population and a critical demographic change. The change includes a shift in the status of urban society, mainly because the population with higher income is increasing. In addition, growing prominence of cocktail bars culture in urban cities mixed with the advent of novel food and beverage culture foresees a growth of the Indian gin market. As a result, the Gin market for this country seems to have good expectations. Only by 2013, India’s has became the fifth largest gin-drinking nation in the world.
Besides, the competitors in this country are not such develop. Even considering that some craft gin distillers are importing a lot of their supplements and materials from India, the market is not fully settle for local producers. Therefore, there are not many producers of gin in the region. This means that the market is centralized in the sense that there are very few competitors but also taking into account that the local producers have a minimum market share in gin due their products are stronger in another Spirits beverages. The main gin producers in India are: United Spirits Limited, Tilaknagar Industries Limited, Jagatjit Industries Limited, Radico Khaitan Limited Mohan Meakin Limited, Globus Spirits Ltd., SNHL India Private Limited and Deejay Distilleries Private Limited.
There are some entry barriers that we have to consider about the Indian spirits drink market.
- Legal age to drink: the legal age vary on the different Indian states from 18 (the majority) to 21 (Maharashtra) or even 25 (Delhi), nevertheless the age control that the retailers sellers do about it is quite scarce.
- Taxation: the high taxes applied to the alcoholic drinks are also a problem to enter in this market.
- Religion and cultural issues: The biggest problem found in India is the strong division of the society into castes. As for religious issues, neither Buddhism nor Hinduism, most popular religions in India, prohibit alcohol to the faithful followers, except those who choose to voluntarily follow these dogmas, like monks.
In reference to the substitutes, it should be consider other popular spirits beverages that Indians consume. For example, one of the products that Spain exports in considerable amount to India is wine. Also, another critical substitute is vodka, mainly because it is very popular among women and the Gin sector has a very huge target on ladies.
These are some reasons to show why this is a very attractive market, also taking into account that the industry life cycle is a mix from a product in growth and a shake out, mainly because present slower but considerable growth and low entry barriers for the India’s market.
Market potential and industry customers
Although there are some barriers, strong economic growth and rising incomes have increased the demand for alcoholic beverages in India. Statistics published by the Chamber of Commerce and Industry of India showed that the sale of imported spirits in India increased by 25% per year until 2015, reaching 55 million liters. Therefore, the country could be the new paradise for gin brands. Besides, nearly 25.8 million liters of spirit were purchased in 2012, this success may be due to the historical past of India and the UK.
Furthermore, by 2015, 30% of Indian population demonstrate to drink any type of alcohol, and according to The Indian Express, a range between 4% and 13% was drinking alcohol daily. This are very optimistics digits for Spanish exporters, who in 2014 exported 8.85 Millions of euros in alcoholic beverage to India.
Changes in social alcohol consumption and specially among women resulted in a growing demand for alcoholic beverages in India. This is because the old paradigms are changing and the image of the Indian woman is becoming more independent and free, especially in urban areas. The fact that the gin is lighter than other spirits drinks and you can combine it as you please, make it easier to expand itself in this new market.
Finally, income growth has transformed the purchasing power in the population, mainly in urban areas, this is aided by the mobility of people from suburbs to this sectors, improving their lifestyle and buying premium products. To this we add that the young part of the population in the country, especially in cities like New Delhi and Mumbai has created a rebound to growth of the gin market in India both in terms of volume and value. Also, the facility that this type of liquor provides to combine it in many ways drives its consumption.
Therefore, one can conclude that the India´s gin market is a very lucrative and important sector in which Spanish brands should be interested to enter due to the attractiveness and growing potential in the sector. Then, there is clearly business opportunity in this field that can be exploited properly with combining marketing business and proper international management. As spanish gin producers, the internationalization of the brands to this market can be a very accurate decision of expansion.