Beer consumption in India
Executive summary
2009 was highly dynamic in terms of new brand launches, w ith United United Breweries Ltd and Carlsberg India Pvt Ltd expanding their domestic d omestic premium lager portfolios by launching Kingfisher Ultra and Tuborg, respectively. Brands such as T ennent¶s, Kingfisher Blue and Indus Pride, which were launched in late 2008, became available in outlets nationwide in early 2009. Moreover, brands such as Tiger, T iger, Carlsberg and Budweiser saw lower prices and greater availability in India, as their new domestically-produced domest ically-produced stock replaced imported SKUs in 2009. Niche products, such as dark beer, also saw greater availability, with the launch of ales from the Little Devil¶s and Coopers portfolios in 2009.
2009 total volume growth was t wo percentage points lower than the total vo lume CAGR recorded over the review period. Although 2009 volume growth was higher than that in 2008, growth rates did not bounce back to the highs seen in 2006 and 2007. While the long summer in 2009 buoyed the beer market in North and West India, sales growth in the key southern states, such as Karnataka, Andhra Pradesh and Tamil Nadu, was adversely affected due to taxationrelated price rises in Karnataka and the t he withdrawal of United Breweries Ltd¶s and SABMiller India Ltd¶s brands from Andhra Pradesh in first half of 2009.
Domestic premium lager witnessed the fastest volume growth in 2009. Both domestic and multinational players were very aggressive with brand launches and p romotional activities in 2009, and the t he category benefited from consumers trading down from imported premium lagers to domestic premium lagers. Moreover, brands such as T iger, Carlsberg and Budweiser, which were available as imports in several cities in 2008, saw a sharp rise in availability and accessibility as domestically produced SKUs of these brands were rolled out nationwide in 2009. These international brands created additi add itional onal buzz for this category in that year.
The average unit price pr ice of beer rose only marginally in 2009, by about 1%. Overall prices remained stable in most of the states in India. Nonetheless, fluctuations in taxation policy did drive up prices in some states, including Karnataka and Delhi-NCR.
Imported premium lager grew by 12% in 2009, which was significantly lower growth t han the review period CAGR of 18%. Imported premium lager growth was adversely affected by the dual effect of a rise in import t axes in key markets, such as Maharashtra and Karnataka, and the economic uncertainty in the first half of 2009, which resulted in depressed o n-trade sales. With major international brands, such as Carlsberg and Budwe iser, being priced on a par with domestic brands, such as Kingfisher, consumers had access to several aspirational international brands within domestic premium lager, thus growth in imported premium lager sales slowed down.
Domestic standard lager showed the slowest tot al volume growth in 2009, of 10%, as consumers shifted from regional standard brands, such as Thunderbo lt, towards more high profile and aspirational brands, such as Kingfisher.
81% of volume sales of beer are derived from off-trade sales, as beer consumption is most common during social and family gatherings at home. Moreover, beer is priced on a par with spirits in on-trade outlets, and many consumers prefer co nsuming spirits with mixers, which provides a quicker ³high´. I mported premium lager is dominated by on-trade sales, as these premium brands are not stocked by the majority of off-trade outlets. Draught beer is also restricted to niche premium outlets, due to t he low awareness of this format and higher costs involved in setting up draught facilities in outlets. With Haryana legalising the setting up of microbreweries in 2008, at least two such outlets were operational by mid-2009. The expans ion of the microbrewery format in the affluent towns is expected to raise the profile of draught beer in India.
Glass bottles of 330ml and 650ml are the dominant type of beer packaging available in India. However, canned beer continued to see strong volume growth in 2009. Canned beer volume sales grew by more than 20% in India in 2009. 500ml beer cans are more popular than 330ml cans. In February 2009, Rexam HTW, a joint venture between Rexam Plc and Hindustan Tin Works Ltd, signed an agreement with United Breweries Ltd to supply 500ml cans. In Ma y 2009, Can-Pack India Pvt Ltd started its operations in India, with the aim of supplying 65% o f its one billion can annual output to the beer industry, and gained contracts with most of the major beer players. Production, Imports and Exports
The domestic production of beer is on the rise, with official statistics reporting an 11% increase in domestic beer production in 2008, which is in line with the 12% growth in volume sales of domestic lager in 2008. In Octo ber 2009, Carlsberg India Pvt Ltd started work on its new greenfield brewery in Medak (Andhra Pradesh), which is expected to have a production capacity of 4 million litres per month and start operations in late 2010.
Exports of beer out of India declined marginally in 2007, while imports rose by 39% in volume terms. This reflected the robust growth in sales of imported premium lager in India. Major imported brands in the latter part of the review period included Heineken and Corona in imported premium lager, and Hoegaarden in dark beer. Domestically produced beer is mainly produced for local consumption and o nly a negligible amount is exported to neighbouring markets. In 2008 and 2009, imports are expected to show strong growth, as players have increased their push behind imported brands, such as Stella Artois and Peroni Nastro Azzuro.
Imported beer accounted for less than 1% of beer volume sales in 2009. Imported beer is only available in niche premium on-trade outlets, where it is sold at significantly higher prices than domestically-produced beer, due to high import duties. In addition to more widespread distribution and lower price points, domestic brands also have the benefit of higher brand recall, due to high-profile marketing activities.
Apparent consumption levels grew by 24% in 2007 over the previous year, to reach 390 million litres. This is less than one third of the repo rted market size of 1,193 million litres in the year. This discrepancy between the calculated apparent consumption and total market size is chiefly due to problems associated with data collection by government bodies. Companies often underreport actual production figures. In addition, many u nits will be sold via both official and unofficial channels, such as with the illegal imports of beer into prohibition states.
Beer
Demand: Past & Future Year 1990-91
Kls 201
1991-92 1992-93
208 224
1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02
305 272 362 391 422 456 493 528 565
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
632 676 723 770 820 875 930 985
2014-15
1320
Market Structure Market Segmentation Segment North
Share (%) 12
East West South Standard Beer Strong Beer Premium, Diet
2 37 49 45 54 1
Leading Brands
Kingfisher, Heywards 2000, Heywards 5000, Kalyani Black Label, Kalyani Strong, Golden Eagle, Black Knight, Pelican, London Diet, Thunderbolt, Kaiser, Pilsner, Haake Beek, Lal Toofan, Castle Beer, Hi-Five.
Market Growth Rates
1990-91 - 1996-97 1996-97 - 2001-02 2001-02 - 2006-07
11.70% 7.60% 7.70%
2004-05 - 2009-10
6.40%
2009-10 - 2014-15
6.00%
BEER MARKET : FEATURES Market Characteristics y
y
y
Trade
Beer packed in 650,750 & 1000 ml glass bottles; usage of (330 ml) cans minimal Preference in the Indian market for strong beer Promotions and sponsorships (sports, musical events) to promote brands
y
y y
y
States¶
prohibition policies govern trade sales for beer Multi layer trade channel structure Beer sold through the same outlets as IMFL Institutional sales of beer to star hotels, large restaurants, bars/ pubs
Regulations y
y
y
y
Subject
to licensing under Industrial (Development and Regulation) Act, 1956 Cap on licensed capacity; special license for expansion Beer policy; announced in 1994 to augment industry growth Plethora of duties and taxes from bottling to sales stage; varying from state to state.
