Strong demand for premium beer from tier II cities, Rs 600 crore capex to support growth: SOM Distilleries

Time of India

06-05-2025

With planned investments of Rs 600 crore,
SOM Distilleries
& Breweries Ltd says
premium beer
in the country is seeing strong demand and growth in smaller cities in India.
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'While tier 1 cities in the country continue to contribute heavily to the consumption, which is roughly about 35% to 40% of the total, the tier-2 towns are in many ways aping the consumer in tier- 1. The mushrooming of premium walk-in stores, premium on-premise outlets and the availability and growth of various premium beer brands is a big indicator. We are seeing a phenomenal growth in consumption of premium beers in tier 2 cities, which in many states far exceeds the state average,' says Diwakaran Suryanarayana, Chief Operating Officer (COO) of SOM Distilleries.
Diwakaran Suryanarayana says the Indian beer market is undergoing a clear shift. Traditionally dominated by mild and strong lagers, the category is now being redefined by consumers who are more aware, curious, and quality-conscious. There is a growing preference for premium beers that offer richer, more diverse taste profiles.
This transformation, Diwakaran Suryanarayana says, aligns with global trends that emphasise quality, variety, and consumer experience. According to Future Market Insights, the premium lager segment, for instance, is projected to grow at a CAGR of 5.7% from 2025 to 2035, reaching a market value of $209.1 billion by 2035. This trend reflects a broader consumer inclination towards premium products that offer unique taste experiences and align with lifestyle choices.
Imarc Group says the beer market in India is projected to grow at a CAGR of 6.72% from 2025 to 2033, reaching Rs 802.5 billion by 2033. 'This growth is fuelled by rising disposable incomes, urbanization, and a cultural shift towards social drinking. The emergence of brewpubs and microbreweries in metropolitan areas has introduced consumers to a variety of beer styles, fostering an appreciation for premium beers,' says Diwakaran Suryanarayana.
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To cater to this shift, SOM has already launched premium beers like Woodpecker Glide and Woodpecker Crest. 'Our approach combines industry-first innovations such as cross-malt brewing, a 30-day maturation process, twist-open bottle caps, and pre-printed bottle labels with a strong focus on both taste and convenience,' says Diwakaran Suryanarayana.
Diversification
The COO adds that the summer and festive seasons account for over 50% of its business and the company is geared to meet the demand. 'These periods consistently witness a surge in demand, as consumers are more inclined to enjoy beer during social gatherings and celebrations. Warmer weather naturally boosts beer consumption, while festivals further amplify sales. Having said that, we are seeing flattening of the consumption pattern through the year in a few cities and towns, which augurs well for a brand owner and manufacturer as the capex deployed is better utilised,' says Diwakaran Suryanarayana.
Diwakaran Suryanarayana says that with over 22% CAGR growth in volume and revenues over a period of last four years, the brand is focusing its efforts to grow the traditional lagers—both in mainstream and premium—and ensuring there is enough capacity available to cater to the rising demand for its brands. 'This will be our priority. Having said that, we are observing the presence and performance of the non-beer Alcobev like seltzers, wine-based RTD etc., which in our view is extremely niche now. However, we do not rule out the opportunity for SOM to venture into it,' says Diwakaran Suryanarayana.
To support growth, SOM says it has significant infrastructure investment underway. The company's subsidiary, Woodpecker Green-agri Nutrients Private Limited, is setting up a greenfield project in Khimsepur, Farrukhabad district, Uttar Pradesh. This Rs 600 crore investment will include a modern brewery, distillery, and manufacturing facilities. 'The project is a key part of our expansion strategy to strengthen our presence across India. Uttar Pradesh offers strong market potential and a supportive business environment, making it an ideal location. Along with enhancing our production capabilities, the project is expected to contribute to local economic development and job creation,' says Diwakaran Suryanarayana.