Extraneutral Alcohol – Indian Market Analysis

Demand Vs Supply
Application Development
Macro Economics
 Extra Neutral alcohol, or ENA, is a colourless food-grade alcohol without any impurities.
 It has neutral smell and taste, and typically contains 96% alcohol by volume (ABV). ENA is
derived from various sources – sugar cane molasses, grains, etc. It is used in the production of
alcoholic beverages such as whisky, vodka, gin, cane, liqueurs, and alcoholic fruit beverages and
aperitifs.
 Apart from this, it also serves as an essential ingredient in the manufacturing of several
cosmetics and personal care products, such as perfume, toiletries, cologne, hair spray, air
fresheners, detergents, etc. As a good solvent, it is used in the production of some lacquers,
paints and ink for the printing industry, besides being used in pharmaceutical products in
products such as antiseptics, drug, syrups, medicated sprays, etc. Report finds that the ENA
market in India reached a volume of 2.7 Billion Litre in 2017, exhibiting a CAGR of around 6.1%
during 2010-2017.
 The market for ENA has gained momentum in the past few years majorly as a result of increasing
consumption of alcohol in the region. In India, almost 90% of ENA is used for potable alcohol,
which accounts for an annual production capacity of nearly 2.7 Billion Litres.
 These figures are further expected to increase owing to a rise in the demand for potable alcohol
due to increasing disposable incomes, changing attitude towards drinking, western influence,
and a gradual shift from country liquor to Indian Made Foreign Liquor (IMFL). According to the
report, the market is further projected to reach a volume of 3.8 Billion Litres by 2023.
Application Portfolio of ENA

 Potable Alcohol
 Flavours, Fragrances
 Pharma Industry
 Ethanol Blending (Molasses Based ENA)
Demand Vs Supply Landscaping
 Current 2.9 Bn litres of production is enough to meet the requirements to the extent of 93.4% of Demand (This
shows a deficit of 6.6% of overall production capacity)
 Currently, month-on-month, industry is facing a shortage of around 20 Million Litres and this gap is expected to
go up further
 Acute demand has sharpened for Grain Based ENA – on account of
 Availability of Molasses
 Sugarcane Crushing Availability (8 Companies declared insolvency and there’s a shortage of Sugarcane for
Process Conversion into ENA)
 Farmer Protest against the MSP
 Farmer’s loans to the tune of 5500 Cr that is to be repaid & rebate fixation on that is creating an impact
 Around 910 Million Litres of ENA is used for Ethanol Blending as part of the OMC Tender that was floated to
give a subvention advantage on the interest part to the tune of 3000 Cr against the overall loan of 12000
Cr (https://www.business-standard.com/article/economy-policy/omcs-float-fresh-tender-for-procuring-910-
million-litres-of-ethanol-119031200385_1.html)
 Monsoon Failure (https://www.cnbctv18.com/economy/increase-in-ethanol-price-is-positive-for-sugar-
companies-but-may-impact-liquor-companies-793021.htm)
 IMFL volume increases basis consumption by 5-6% year on year – while there is a shortage already that is
already witnessed, ENA rates are expected to raise.
Conversion from ‘bulk’ to ‘bottled’ to drive robust growth in profits and cash flows − Brand building to
propel growth in IMIL − Franchisee bottling business proxy play on IMFL industry
Market Dynamics – Indian Context
Future Perspective
 ENA – Landed costs have increased almost 15% over last year
 Ex-W prices are to the tune of INR. 55 on an average against the range of INR
49-INR. 50
 Wit the global shortage on supply to tune of 10% on an average & realization
of profitability conducve for points of sale in Flavour / Food / Cosmetic
Industry / Ethanl Blending, ENA Ex-W is increased to the levels of 55

What’s in store!
1. Growth in ALCOBEV Segment & Demand for ENA together has caused the price increases
2. Grain ENA Potentially will dominate in the event of non-availability of Molasses based ENA
3. Euromonitor Reports reveals that Grain ENA Prices will go up by 12% on the top of INR 55
per BL.
4. This will boost the profitability of GRAIN ENA Producers