The alcohol industry is set for a boost, with beer sales outpacing other spirits, as events and weddings bounce back to pre-COVID numbers, according to Nuvama Institutional Equities.

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In their report, Nuvama notes a recovery in the liquor sector, highlighting improved margins in FY23 due to strategic enhancements in the product mix.

Abneesh Roy, ED at Nuvama Institutional Equities pointed out that pre-COVID beer was growing faster than spirits, partly due to its perception as a healthier option. Globally, beer's market size surpasses that of spirits, he said, adding that in India, the taxation approach for beer and spirits differs from global norms.

"But now what we see is going ahead, beer should grow faster from a one-year, two-three-year timeframe,” he said in a discussion with CNBC-TV18.

JK Arora, Chairman at Som Distilleries believes demand for both beer and Indian-made foreign liquor (IMFL) is improving due to the changed consumer behaviour post-COVID.

"Before COVID, the approach was to spend some and save some. But after COVID I think most people have the approach as if there is no tomorrow. So, people have started spending more on travel, on the holidays, on vacations, drinks, food, all these sectors,” he said.

The positive stance is reflected in Som Distilleries' financial projections, with revenue expected to surpass the ₹1,200 crore mark this year.

“If you look at the volume, the initial guidance was we will do ₹1,000 crore this year, but I am sure that we will cross ₹1,150 crore or maybe reach up to the ₹1,200 crore. So, on both sides on the turnover and the profit both are looking bright for this year,” he said.

Roy anticipates beer companies' margins to bottom out as the lower-priced inventory of barley will kick in. Nuvama expects USL and Radico Khaitan to lead the pack with gross margins of around 43.6%, while UBL closely follows at 40.6%.

Shares of liquor manufacturers like United Spirits, Radico Khaitan, and United Breweries have gained 12-28% over the last six months.

(Edited by : Shweta Mungre)