Consumer Discretionary Sector Update : AlcoBev: Premium Growth Intact, Margin on Watch by Choice Institutional Equities Ltd
Premium Mix to Drive Growth, Margins to Stay Under Pressure
We expect Q2FY27 to deliver mix-led growth with flat-to-lower margin and see RDCK, ABDL and TLNGR outperforming on faster P&A share gains and company-specific margin levers. Karnataka's new excise regime (premium whisky and beer 15–23% cheaper) gets its first full quarter, lifting P&A and beer volumes. Maharashtra's duty hike has had a base reset, turning the growth neutral. Tamil Nadu's INR 90-per-case IMFL levy and West Bengal's advance-duty rule weigh on margin and working capital. The UK trade deal (Scotch import duty cut from 150% to 75% from 15th July) will benefit key bulk scotch imports. Key monitorables are – Telangana's pending 12–15% price hike (positive for ABDL, TLNGR and UBBL) and further price increases to offset packaging inflation.
RDCK, ABDL and TLNGR are our High-conviction Investment Ideas
We believe RDCK, ABDL and TLNGR will be key beneficiaries from the ongoing premiumisation and margin expansion trends into FY29E. RDCK is supported by margin expansion and white spirits volume growth (#1 in Vodka). Similarly, ABDL's new launches and backward integration thesis continue to play out, whereas TLNGR's superior deal execution for Imperial Blue is expected to generate outsized rewards.
State-wise Updates: Tailwinds Outpace Headwinds
* Karnataka: Q2 is the first full quarter of the new alcohol-content excise regime, under which premium whisky and beer became 20–25% cheaper, while entry-level IML turned costlier.
* Tamil Nadu: New excise duty has been levied (INR 90/case IMFL, INR 40 beer, INR 20 wine), which was effective from 21 July. TASMAC started buying evenly from suppliers instead of favouring the bestsellers. Further, INR 10 container cess, announced on 23rd September, replaced the bottle deposit, without impacting MRP.
* Telangana: The price committee is weighing increases of INR 90–120 per bottle against 12–15% sought by the industry. No revision has taken place in the last 3 years.
* Andhra Pradesh: The 2026–27 retail policy, notified on 11th September, became operational on 1 st October. It makes permit rooms mandatory, the permission for which is provided by paying a fee of INR 5–7.5 lakh. The policy also lets existing licensees renew their permits by paying a fee of 38% of the annual retail excise tax.
Delhi's New Excise Policy: prices Set to Rise
Delhi's new excise policy draft is in its final stage and awaits the approval of the Cabinet and the Lieutenant-Governor’s approval. The policy is expected to be notified this month, ahead of the festive season. It proposes higher excise duty slabs and revised retail margin, because of which the shelf price is forecast to rise. Liquor will continue to be sold only through the ~700 government-run shops, and more premium stores will be opened to improve availability of higher-priced brands. With prices set to rise, volume drops cannot be ruled out in case of excessive price hike; however, some demand may persist via neighbouring states. The policy remains a key monitorable as we enter Q3FY27E.
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