Tamil Nadu consumes one in every six alcohol bottles sold in India. The state is India’s second largest liquor market, after Karnataka. Given all the recent buzz about privatisation of sales, a report by brokerage firm JM Financial detailed what this could potentially imply for listed spirit companies. They see Radico, Tilaknagar and United Spirits as beneficiaries of any privatisation initiatives.
Although no formal policy has been announced by the CM Joseph Vijay-led government, multiple media reports suggest that Tamil Nadu might follow what Andhra Pradesh succeeded in and what Delhi failed at with liquor: Privatisation.
In FY26, the state generated nearly Rs 50,000 crore from alcohol sales via Tamil Nadu State Marketing Corporation (TASMAC). It consumes around 65 million cases a year, which is 16% of the country’s total volumes.
Tamil Nadu liquor market: A large but tightly controlled market
Within Tamil Nadu, Brandy accounts for 70-75% of what is drunk in the state. This is followed by Rum, which stands at around 15%, while Whisky and Vodka combined make up around 5-6 million cases.
Roughly 4,000 TASMAC outlets, of which 2,500 are in urban areas, are the sole buyers of liquor sold in the state. National brands currently sell through a royalty model wherein they supply their formulations to local bottlers, who handle production while TASMAC controls procurement and ordering. This has allowed regional bottlers and their own labels to hold on to the bulk of the market, leaving pan-India brands with barely any presence.
Premium liquor segment remains underpenetrated in Tamil Nadu
The premium and above segment, the higher-priced, branded end of the market, makes up only about 10% of sales in Tamil Nadu, a low number given how dominant regional and local brands are in the state. National spirits companies currently account for less than 1% of overall volumes there, far below their share in other large states.
How Andhra Pradesh’s liquor privatisation changed the market
As per JM Financial, Tamil Nadu will likely follow Andhra Pradesh’s game plan when it comes to privatisation. That state overhauled its liquor retail structure in 2024, and industry volumes rose from 35-36 million cases to about 42 million cases afterwards. The premium and above segment’s share climbed 500-600 basis points to 33%, growing at close to 30%.
The gains were uneven but widely felt. United Spirits, which barely had a presence in Andhra Pradesh before the change, built up a market share of 6-7% afterwards.
Radico Khaitan‘s share in the state rose by about 1,000 basis points. Across the sector, volume growth for listed spirits makers picked up through the third quarter of the last financial year, tracking the shift in Andhra Pradesh’s retail model.
Which liquor companies could benefit from Tamil Nadu’s policy shift?
Tilaknagar Industries and Radico Khaitan are best placed to benefit, given their strength in brandy, the category Tamil Nadu drinks the most.
Tilaknagar’s Mansion House brandy holds a 45-50% share of the premium brandy category across India, but sells under 0.6 million cases in Tamil Nadu, just 7-8% of the state’s roughly 5-million-case premium brandy market. Radico Khaitan sells Old Admiral brandy in the regular segment and Morpheus in the premium segment, and stands to gain similarly.
A rise in whisky and vodka consumption, likely if the market opens up, going by the Andhra Pradesh experience, would widen the benefit further, helping companies such as United Spirits that have stronger portfolios in those categories.
A margin opportunity too
There is also a profitability angle. Earnings per case in Tamil Nadu currently run well below levels elsewhere, a result of the royalty-based operating model. A shift to direct retailing would likely improve margins for spirits makers in the state, on top of any gains in volume.
What happens now?
For now, all of this hinges on an announcement that hasn’t come. Media reports have kept the privatisation talk alive for weeks, but until the state government puts out a formal liquor policy, brokerages and companies alike are working off precedent rather than confirmation.
For consumers, a shift away from the TASMAC-only model would likely mean easier access to a wider range of branded whisky, vodka and premium brandy in a state where such choices have stayed limited for a long time. As long as companies are concerned, the policy could open up a huge market with potential.
However, what changes on the ground will depend on whether the policy comes into effect. If it follows Andhra Pradesh or Delhi, we can only wait and watch.