Radico Khaitan sees tier-2 cities, white spirits driving next phase of alcohol demand

BENGALURU: Tier-2 cities and rising demand for white spirits such as vodka and gin are emerging as key growth drivers for India’s alco-beverage industry, according to Radico Khaitan managing director Abhishek Khaitan, as changing consumer preferences reshape drinking patterns beyond metros.

The maker of Magic Moments vodka and Rampur Indian single malt reported its highest-ever annual revenue and profit for FY26. Total income rose 22.7% year-on-year to Rs 20,988 crore from Rs 17,103 crore, while profit for the period increased 74.9% to Rs 604 crore from Rs 346 crore. In the March quarter, total income rose 15.6% to Rs 5,188 crore from Rs 4,487 crore, while profit for the period nearly doubled to Rs 179 crore from Rs 92 crore.

Khaitan said demand for higher-end alcohol was no longer restricted to large cities, with smaller markets increasingly contributing to growth in the company’s Prestige & Above portfolio.

“It is the tier-2 cities which are showing huge Prestige & Above growth,” Khaitan told TOI. “In tier-1 markets, the premiumisation trend was already visible. Now tier-2 cities have also joined the party.”

Prestige & Above brands now contribute about 72% of Radico’s IMFL revenues and nearly half its volumes, according to the company. Khaitan said the company was also seeing a broader behavioural shift among younger consumers and affluent drinkers, with more people opting for lighter spirits, cocktails and experience-led consumption.

“People will consume fewer pegs, but they will go for the finest,” he said. He added that white spirits remain significantly underpenetrated in India compared with global markets and could emerge as a major long-term growth segment.

“Globally, vodka is 28% of the market. In India, it is about 4.5%,” Khaitan said. “There is no way it won’t grow.” The company is also betting on flavoured vodka variants to attract younger consumers. Khaitan said products such as mango and jamun-flavoured vodkas were seeing strong traction.

Industry executives have increasingly pointed to cocktail culture, premium bars and changing social consumption patterns as drivers of growth in categories beyond whisky, particularly in urban markets.

Khaitan said Karnataka’s recent excise policy changes could further accelerate premium liquor demand by making high-end products more accessible relative to earlier pricing structures.
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