A significant shift is underway in Maharashtra’s liquor market. This week, the state government approved sweeping changes to its excise policy, potentially transforming the alcoholic beverage landscape by favoring homegrown products over foreign-label bottles.
Homegrown beer, wine, and Maharashtra-Made Liquor (MML) are positioned to gain market share from Indian Made Foreign Liquor (IMFL), which has been the dominant force in the state’s alcohol trade for decades. This is not just a minor policy adjustment; it could lead to a major change in consumer preferences across India’s wealthiest and most influential alcohol market.
For years, IMFL — including whiskies, vodkas, and rums from national and multinational brands — has shaped drinking habits in Maharashtra, especially in urban areas. However, with tax rationalization, local incentives, and simplified market access for domestic producers, the tide is turning.
The Potential Impact on IMFL
IMFL brands, especially whiskies and rums, have historically held over 60% of Maharashtra’s liquor market. However, this dominance is now facing its toughest challenge in years. As beer, wine, and MML start to capture market share, IMFL’s market percentage could decrease by 5-7 percentage points over the next two to three years, potentially falling to around 55-58% by FY27. This shift could result in a loss of ₹2,500-3,000 crore in potential sales to other categories.
The most vulnerable segment is lower-end IMFL, particularly entry-level whiskies and rums, where price sensitivity is greatest. In semi-urban and rural areas, MML’s lower price points (often ₹10-20 less per bottle) could sway consumer preferences significantly. According to a senior excise department official, “MML offers that affordability edge, and with smoother logistics, we’re expecting significant volume gains.”
Additionally, beer could regain popularity among millennial consumers in cities who had switched to spirits due to previous taxation quirks. Wine is expected to attract aspirational urban drinkers seeking lighter alternatives for social gatherings.
Premium IMFL Remains Protected
On the other hand, premium IMFL brands are likely to remain insulated from this shift. High-end whiskies and premium vodkas continue to have strong appeal among affluent urban drinkers, who are less sensitive to price changes. To protect their market share, major IMFL producers may introduce discounts, regional campaigns, and localized packaging innovations.
The policy overhaul is based on recommendations from a government committee led by then Additional Chief Secretary Valsa Nair. Formed in January to explore ways to enhance liquor revenue, the committee submitted its report in April, leading to cabinet approval this week. The government anticipates that these changes will increase excise collections by ₹1,000 crore over the next two years, providing a fiscal boost as Maharashtra approaches a politically sensitive period.
For the state’s beer and wine producers, these reforms signify a long-awaited correction. Until now, beer has been taxed more heavily than spirits on a per-unit alcohol basis, which has priced many consumers out of the category. As a result, whisky and vodka often became the preferred drinks, especially among younger consumers.
With no change in excise duties on beer and wine and IMFL becoming more expensive, the tide is all set to turn
“This finally gives beer a fighting chance to reclaim market share from cheap spirits,” stated the CEO of a leading Aurangabad-based brewery. The change is expected to drive demand in major cities like Mumbai and Pune, where younger urban consumers are increasingly leaning toward lighter beverages.
Why Maharashtra’s wine & Local brewers will benefit
The benefits for Maharashtra’s wine industry may be even more pronounced. Nashik, India’s wine capital, has already positioned the state on the wine map, but domestic consumption has lagged due to licensing barriers, stocking restrictions, and ineffective retail outreach. The new policy alleviates these obstacles, making wine more accessible and promoting tasting events to support local producers like Sula Vineyards and York Winery.
The most significant change may arise from Maharashtra-Made Liquor (MML), which is distinct from IMFL as it is produced entirely within the state using local raw materials, typically molasses. MML is generally priced lower, with much of its consumption occurring in rural and semi-urban areas.
By simplifying distribution for MML bottlers across districts and reducing compliance burdens, the excise reforms could significantly impact the lower price segments of IMFL sales.
