Raw distillery wastewater (RSW) has the characteristics such as pH 4.0–4.6; chemical oxygen demand 85,000–110,000 ppm; total dissolved solids 85,000–110,000 ppm and biological oxygen demand 25,000–35,000 ppm. Anaerobic digestion is the widely used treatment process in distillery to reduce the pollution load by 65–70%. Further, the pollution load is treated by RO process. The operation of RO process becomes difficult due to high influent load. This research work suggests the positioning of an additional biotreatment step, called phycoremediation to retrofit into the existing effluent treatment plant (ETP). The wastewater from the nearby distillery is collected at the various treatment stages of ETP such as before and after anaerobic digestion, settling lagoons and RO process. The physico-chemical, thermal and spectroscopic characteristics of wastewater are studied and the analysis is made based on the stage-wise characterization. It is inferred from the analysis that the phycoremediation step needs to be retrofitted into the existing ETP after anaerobic digestion. Anaerobically digested distillery wastewater treatment with Oscillatoria sp. resulted further reduction in chemical oxygen demand up to 55%, which reduce the influent load to the reverse osmosis plant. Display omitted •Revealing the physico-chemical characteristics of wastewater at every stage of ETP operation.•Thermal characterization of wastewater using TGA & DSC.•Observation of major functional groups present in RSW & BMSW using FT-MIR spectroscopy.•Visualizing the variations of monitoring parameters in the individual operation.•Favoring conditions to include microalgae treatment step, is after anaerobic digestion.•Achieving zero liquid discharge through new clean ETP strategy.