Alcoholic Beverages Stocks

Over the past years, the Alcoholic Beverage sector in India has emerged as a significant player in the country’s economic growth. The recorded per capita consumption of pure alcohol in India has increased from 0.9 litres in 2000 to 3 litres in 2015, reflecting a CAGR of over 8%. The sector has managed to sustain growth, highlighting its strength and adaptability in spite of various challenges, such as state-specific regulations, fluctuating raw material prices, and high taxation.

The sector’s growth drivers include rising disposable income and urbanisation, changing consumer preferences and growth in events and weddings.

India is one of the fastest-growing alcohol markets among the top economies in the world. The percentage of the world’s drinking population is close to 41.7% and is projected to stabilise around 40% in 2025. India’s percentage of drinking population is projected to be close to ~39% in 2025. The outlook for the sector continues to remain positive due to the expanding middle class, rising disposable income levels, greater preference for premium food and drink experiences, as well as greater acceptance of alcoholic beverages in social circles.

Investing in the Indian alcoholic beverages industry can be promising, but it’s crucial to tread cautiously and consider these key factors before investing:

1. Company-Specifics:

• Financial Health: Look for companies with strong fundamentals and consistent performance. Analyse the financials, including revenue growth, profitability, debt levels, and dividend history.
• Brand Portfolio: Assess the strength and popularity of the company’s brands across different segments (IMFL, beer, wine, etc.). Consider companies with established brands and those actively innovating and diversifying their offerings.
• Market Share and Competition: Understand the company’s position within its segment and in comparison to its competitors. Consider companies with strong market share or those gaining traction in growing segments.
• Management Expertise: Evaluate the experience and track record of the company’s management team. Look for a team with proven success in navigating the industry’s complexities.

2. Industry-Level Factors:

• Regulatory Landscape: Be aware of the varying regulations across different states, which can impact production, distribution, and pricing. Focus on companies adept at navigating this complex environment.
• Taxation and Duties: Understand the impact of high taxes and excise duties on the industry and individual companies. Choose companies with efficient cost structures and pricing strategies to mitigate these pressures.

To invest in sector stocks via Angel One, follow these steps:

• Log in to your Angel One account.
• Click on the search icon and look for your desired sector stock.
• Now, place your buy order. Simply click on the ‘Buy’ button, enter your desired quantity, and select the order type.
• To complete your transaction, click on the ‘Buy’ button.

You can track the status of the purchase from the ‘Positions’ section in the ‘Orders’ module. Once the stock is delivered, you can track its gains and losses from your ‘Portfolio.’