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 The
country's beer market is estimated to be around 155 million
cases a year and growing at 15 per cent annually. This has
created a beeline of top brewers from all over the world keen to
get their labels on the shelves and into the hearts of
consumers. Here is a summarised report on the Indian beer market
and what the market leaders have to say about it.
Experimentation is the new watchword of a young and upwardly
mobile India and manufacturers are flooding the market with new
sub-categories like low alcohol content and fruit-flavoured
beers. Add to this the concept of beer gardens which are coming
to India in a big way, and you have more fizz than can be
handled!
With Multinational beer majors introducing newer categories in
the segment, not only has competition hotted up, but a new era
of brand loyalty in the beer segment has begun-especially with
premium beer catching on among the trendy. And it's not just the
upper echelons that are enjoying the fare. After all, it's been
a trickle down all the way to the common man.
Just a few years ago, who could have imagined an ordinary Mumbai
restaurant littered with Budweisers on the table as the ordinary
people drank an extraordinary beer. Budweiser, Carlsberg and
Heineken, once longingly stared at in foreign advertisements,
have now become staple fare for the Indian beer lover. If that's
not a success story-then what is?
With existing players like United Breweries and SABMiller
expanding their ranges, and players like Anheuser-Busch,
Carlsberg, Cobra and InBev also in the fray, the range of brands
is only getting wider.
The premium beer segment itself grew at 5-7 per cent last year.
This year, the expected rate of growth is over 15 per cent.
Of course there are still pitfalls along the golden path. As
Sundeep Kumar, Director Corporate Communications at SABMiller
points out. "Beer continues to be taxed higher than IMFL in all
states, which has no rationale. No preferential treatment is
being provided to beer, as done to wine as seen in Karnataka
recently despite the fact that its alcohol content is even lower
and linkages to agriculture even more. "Taxes on beer in India
tend to be relatively higher than spirits whereas in most parts
of the world, the reverse is true. Globally, on a per alcohol
basis, beer is taxed at 50% of hard liquor where as in India,
beer is actually taxed 70% more than hard liquor", laments
Kumar. The Beer industry is highly regulated. 26 different
alcohol specific taxes constitute about 50% of consumer price
which is the highest in the world.
Kumar adds: "The market infrastructure is inadequate in India
which is a cause of concern (over 21000 persons per outlet; in
China it is one outlet for 300 persons).
One key point the big league players are well aware of
distribution in India's vast, complicated market. And that's
something that Rob Newman, Sales & Marketing Director, India,
Anheuser-Busch International, Inc., makers of famous Budweiser,
knows only too well. While he says Budweiser may have come late
to the party, it's there to stay." Budweiser sales have exceeded
our expectations as Indian beer drinkers have shown a strong
appreciation for the brand's world famous taste. There is strong
growth in distribution as more and more consumers are asking for
Budweiser when they go out" says Newman.
For Newman, staying focused on growing distribution is the key
to marketing his world-famous brand.
On another front, says Kalyan Ganguly, President United
Breweries: "Regulations and Price restrictions remain in many
large markets remain a challenge for the Industry. Higher raw
material prices of Barley, Malt and Hops are resulting in a
continuous cost push on production. Also, the value eroding
posture of the new players through heavy discounting and
aggressive marketing campaigns has reduced not just their
margins, but also the overall profitability of the industry."
And while Ganguly outlines the ground realities for a domestic
player-the performance of UB's Kingfisher icon itself in the
beer market speaks volumes for the fertility of this segment in
the alcobev industry. Over the past 3 years UB has grown at an
average of about 18% (3 yr CAGR). This growth has been largely
driven by the Strong segment which grew at an average of 26% (3
Year CAGR). UB sales in 2007-08 crossed over 75 million cases.
"The growth for 2008-09 is likely to be in line with the growth
of the preceding years. Strong beer segment will continue its
dominant presence, despite the introduction of several new lager
brands (including international brands) over the next few
months", says Ganguly.
Proof that the local beer market is as competitive as ever, and
is trying hard to keep pace with the onslaught of
multinationals. However, the real indicator is that the new
globe-trotting Indian is now willing to pay the price for
quality products from the international brands.
To read this section in detail and access interviews of Kalyan
Ganguly, Sundep Kumar, Rob Newmann, Vivek Chhabra, Karan
Bilimoria and Poonam Chandel, Pradeep Gidwani subscribe to
Ambrosia:
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