Why Gen Z’s Shift To Premium Alcohol Is Boosting Liquor Industry Growth

Gen Z is drinking less alcohol than previous generations, but India's liquor industry is continuing to benefit from a shift towards premium products, according to industry data and executives cited in the report. The trend suggests that lower drinking frequency does not necessarily translate into weaker demand for higher-priced alcoholic beverages. Instead, premiumisation, product experimentation and changing consumer preferences are emerging as important drivers of growth in India's alcobev market.

Research cited in the report indicates that younger consumers are increasingly conscious of the health risks associated with alcohol and are more likely to take breaks from drinking. In India, surveys among young adults in Mumbai and Pune have identified health concerns, mental health awareness, financial considerations and social media influence as factors behind more cautious drinking habits. Nearly half of respondents had reportedly tried a dry month, while many said they combined alcoholic and non-alcoholic beverages rather than consuming only alcohol during social occasions.

Despite these behavioural changes, India's alcohol market has continued to expand, particularly at the premium end. The report cites industry data showing that alcohol volumes in India rose 7 per cent year-on-year to more than 440 million cases during the first half of 2025. The premium-and-above segment grew faster, recording 8 per cent growth in both volume and value. Radico Khaitan's quarterly profit also increased 73 per cent amid strong demand for premium products, while United Spirits recorded growth in its premium portfolio, including brands such as Johnnie Walker and Tanqueray.

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Industry executives quoted in the report attribute part of this shift to changing preferences among younger consumers. Anant S Iyer of the Confederation of Indian Alcoholic Beverage Companies said premiumisation remained a major growth driver, while Indian single malts reportedly grew around 22 per cent in 2025. Radico Khaitan executive Sudhir Upadhyay pointed to growing interest in flavoured vodka, with the company's Magic Moments brand recording significant year-on-year growth. Other industry representatives cited greater interest in distinctive flavours, provenance, craftsmanship and products offering a differentiated experience.

The shift is also being reflected in how consumers discover and evaluate products, according to executives quoted in the report. Varun Jain, founder and CEO of Smoke Lab, pointed to digital discovery, social influence and interest in provenance and flavours as factors shaping purchasing decisions. Rupi Chinoy of South Seas Distilleries similarly described growing interest in products associated with originality and a sense of place. These observations suggest that premiumisation is increasingly linked not only to price but also to branding, product characteristics and perceived uniqueness.

The resulting picture is more complicated than the idea that Gen Z has simply abandoned alcohol. The report indicates that younger consumers are becoming more cautious about alcohol consumption, while a segment of the market is simultaneously showing interest in premium products. For liquor companies, this has created an opportunity to focus on higher-value products even as broader drinking habits change. The industry's growth therefore appears to be increasingly tied to premiumisation and changing consumer preferences rather than simply higher consumption volumes.

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