Luxury consumers gravitating towards flavoured alcohol

A most interesting trend has emerged: the discerning palate of luxury consumers is increasingly drawn to the realm of flavoured alcohol. Going one step beyond the segment of traditional spirits, this portfolio offers a fusion of opulence and innovation, catching on to the premiumisation trend that is coming up in all areas of retail.

Stéphanie Durroux, chief executive officer, The Absolut Group, tells Fortune India that apart from the growth of unflavoured vodka, there has been a huge demand for flavoured spirits in India in the past few years.

The portfolio of Absolut Flavour has nearly doubled over the past three years, surging from 8% to 17% of Absolut's total volumes between FY2020-2023.

Durroux feels that it is the increased investment in 'creativity through flavours' that's driving the growth of this segment in India. She says, "People now want to experiment with different flavours, especially through cocktails and mixed drinks."

While, at the moment, India is the 7^th largest market for Absolut globally, she expects it to become part of the top three in a few years.

"India is one of the biggest opportunities for us. The number of potential consumers is increasing consistently while there’s also a strong trend of premiumisation, along with a huge openness towards global trends," Durroux says. She also notes that the consumers here localise the trend and make them relevant for Indian consumers.

Absolut is shaping the premium vodka category in India and according to the IWSR report, it has a value market share of 92%. The business is clocking a net sales CAGR (compound annual growth rate) at constant foreign exchange 35%. Meanwhile, globally sales in FY22-23 grew 10%, with a record 12.7 million 9-litre cases sold worldwide.

Although vodka is still considered to be the more versatile spirit, gin is slowly but gradually picking up. The brand's premium product category in India has several gins like Monkey 47, Beefeater KiNoBi, and Malfy but the premium vodka category still occupies 90% of the market share.

IWSR report says the gin industry has boomed in India with a growth in value of more than 81% per year between 2017 and 2022. The vodka market in India is projected to grow 2.13% between 2024-2028.

Interestingly, the trend of flavoured spirits is being observed across other markets in the world as well. Absolut is currently experiencing robust growth in several European markets, including Germany and France. Additionally, Latin America is also witnessing significant expansion, with Mexico and Brazil standing out as the largest markets in the region.

"The cocktail culture is probably the thing that you will find in many markets with different levels of sophistication. But in general, cocktails are really a global trend. That's what drives a lot the growth of the brand," says Durroux.

Nevertheless, vodka remains the top-selling product for the brand. On the manufacturing footprint, Absolut has no plans to set up operations in India for the foreseeable future. With the distillery being present only in Sweden, there is one source for Absolute everywhere in the world. "The craft and premiumisation of the brands come from the fact that we have one place of origin which is one distillery, and we buy the wheat from 300 kms around the distillery. The bottling is also close. It's what we call one source," shares the CEO.