LANDSCAPE ASSESSMENT ASSESSMENT OF BEER MARKET M ARKET IN INDIA Executive Summary •
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>nand ;athi
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echnavio
Beer accounts for only 13%1 of the total alcoholic beverages market in India, however is expected to grow at the rate of ~1!"% to reach total market volume of ! billion liters # by #$1
Indi Indian an beer beer segm segmen entt is divid divided ed into into mass mass mark market et,, prem premiu ium m and and supe superr prem premiu ium m segments! &hile the premium beer segment comprises mostly of strong beers '" ( % alcohol), super premium segment is dominated by *mild+ beers '~"% alcohol)
outh outh India India accoun accounts ts for approx approxima imatel tely y -% of the beer beer consum consumpti ption, on, follow followed ed by &estern regions and .orthern regions with 3$% and 1#% of share, respectively!
/nited Breweries is the largest seller with a market share of ~"%! ab 0iller and arlsberg are other prominent players
uper premium beer category comprises of mostly imported beers with total market si2e of half a million cases! he target segment for this category from upper and middle class backgrounds, mostly in metro cities and urban centers
0arket entry is mostly through a 456distribution arrangement with an Indian importer and distri distribut butor or of alcoho alcoholic lic bevera beverages ges!! 0a7or 0a7or point point of sales sales includ include e premiu premium m pubs pubs and restaurants, five star hotels, high8end malls and beer8centric cafes
uper premium category is expected to grow at a faster rate compared to the other two categories 'premium and mass market)! his has led to launch of multiple brands like Indus 9ride, :ronenbourg and 0iller Ice in this category over the past couple of years
axation axation 'central and state taxes) remain prohibitive and ke y barrier to entry for imported beers! ustoms 'central) and excise 'state8level) duties for beer are amongst the highest in the world
;egula ;egulator tory y challe challenge nges, s, such such as changi changing6 ng6evo evolvi lving ng regula regulator tory y norms norms are a ma7or ma7or challe challenge nge for domest domestic ic and foreig foreign n manufa manufactu cturer rers! s!
s a result of the new guideline, many imported foods items, including beers such as orona, ?oegaarden, tella >rtois, and 5ictoria Bitter were impacted and led to reduced availability
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LANDSCAPE ASSESSMENT OF BEER MARKET IN INDIA Curre&t I&'ia& Mar%et( he Beer market in India was valued at ~/@ !13 billion in #$13 and is expected to grow at a >A; of 1%, to reach ~/@ C billion by #$1! otal beer sales by volume were ~#!3 billion liters, which is expected to grow at a >A; of ~1!"% to reach ~! billion liters by #$1! he Indian market is dominated by hard spirits, with beer accounting for only "% of the total alcohol consumed in India! Beer drinking in India is predominantly an all8male activity with the ma7or driver6intent to *get bu22ed+, as evident from the high market share '~"% of market) of strong beer '~"8% alcohol) in India! he beer market in India is divided into three categoriesD • • •
mass market '-"$ ml bottle priced less than I.;1$$), premium '-"$ ml bottle priced in the I.;1$$8#$$ range) super premium '33$ ml pint priced more than I.;1$)!
>mong these categories, super premium beers are expected to exhibit the fastest growth due to rise in the target segment of young middle class in metro cities! • •
Su"er
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"remi um #eer$
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Premium #eer$
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Ma$$ mar%et #eer$
•
Imported mild beers '~"% alcohol) >vailable in metro cities Includes orona, ?oegaarden, tella >rtois,
@omestically manufactured strong beers >vailable in metros and tier8# cities Includes uborg trong, vailable in all cities and suburbs Includes :ingfisher trong, hunderbolt, Hingaroo
Bee r co&$um "tio& #y re gio&
outh
30% East
.orth
&est
49% 1)*
9% +eo
gra",ic Tre&'$ ;egion wise, southern states account for roughly half of the beer consumption in India! he top beer consuming states in India are erstwhile >ndhra 9radesh, 0aharashtra, amil .adu, :arnataka and ;a7asthan!
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LANDSCAPE ASSESSMENT OF BEER MARKET IN INDIA
Mar%et $ ,are #rea%u"
/nited Breweries
,>B0iller
1arlsberg
4% 7%
0ohan 0eakins
0ount ,hivalik
4% 8% Ithers
54%
23%
Com"etitive La&'$ca"e he Indian beer market is dominated by /nited Breweries with a market share of ~"%! he company operates :ingfisher 'umbrella brand with offerings in both premium and mass category), Bullet, Hingaro 'both in mass category) and ?eineken 'premium) brands in India! >B0iller is the second largest player with ~#3% market share and operates 0iller ?igh Gife, Indus 9ride and 9eroni .astro >22urro brands 'all in premium)! ther ma7or players include arlsberg, which operates uborg 'mass) and arlsberg 'premium), 0ohan 0eakins and 0ount hivalik 'both selling mass brands)! La&'$ca"e A$$e$$me&t or Premium-Su"er Premium Beer Category ver the recent years, beer market has seen an advent of niche super premium category, primarily imported, beers! hese beers cost upwards of I.;1$ for a 33$ ml pint and the si2e of the market is nearly half a million cases! orona is the market leader '$% share) in the segment followed by ?oegaarden '1$8#$% share)! uper premium beer category targets the young consumers from upper and middle class backgrounds in metro cities who drink beer to sociali2e and refresh and not to get high! his target segment is well travelled around the world, has good exposure to global brands and high on aspirations! he expectations of higher growth in the premium beer category have led to a slew of global premium beers being launched in India and capacity6distribution expansion for the existing premium beer brands! Beer #ra&'
Com"a&y
Ty"e o actio&
Comme&t$
Indus 9ride :ronenbourg
>B0iller arlsberg
Gaunched in #$13 Gaunched in #$13
IndiaJs first specialty beer brewed with Indian spices arlsbergFs signature
0iller ?igh Gife
>B0iller
ompany plans to add 1$ thousand liters of incremental capacity @istribution capacity expanded in #$1
9eroni
>B0iller
apacity expansion in #$1 Expansion in #$1
:altenberg
04 Breweries
Gaunched in #$1
ompany has also set up manufacturing in India
0iller >ce
>B0iller
Gaunched in #$1
9remium beer from pale and caramel malt
Aiven below is a price comparison of beer brands available in the super premium category! Beer #ra&' >sahi .o! 1 orona Extra
Cou&try
.o/ume
Price 0i& INR
4apan 0exico
33$ ml 3"" ml
#" #$
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LANDSCAPE ASSESSMENT OF BEER MARKET IN INDIA orona Gight
0exico
3"" ml
#$
Aeist @ark
Belgium
33$ ml
#"$
:apittel &atou 9ater
Belgium
33$ ml
1-
Geffe Beer
Belgium
33$ ml
##"
Italy
33$ ml
1-$
t! Bernardus ripel
Belgium
33$ ml
#$$
tella >rtois 9remium
Belgium
33$ ml
#$#
?oegaarden
Belgium
@etails not available
Auiness
Ireland
@etails not available
Ireland
@etails not available
Aermany
@etails not available
9eroni .astro >22urro
0urphy tout Erdinger
ourceD nline websites '0adhuloka!com, Boo22r!com)
Mar%et E&try-Route to Mar%et 0a7ority of players in the super premium category prefer a 456distribution agreement with India8based importers of alcoholic spirits! he arrangement is more cost effective, allows the manufacturers to explore the market, and reduces regulatory re=uirements! Example of such companies includes Indospirit 'distributor of >sahi, ?oegaarden, Geffe Blonde and tella >rtois), 4orini ?ospitality 'distributor of Erdinger) and Brindco 'distributor of orona)!
Route to Co&$umer( he ma7or sales channels for the super premium beers are premium bars and restaurants, five star hotels and high end malls in metros! ff late there has been a rise in popularity of beer centric pubs and microbreweries in metros, these are also a prime sales channel for the super premium category of beers! he roadmap below highlights some potential channels and point of sales for the target consumer! Route to e&' co&$umer or $u"er "remium #eer$
Super premium beer brands (including Corona, Hoegaarden )*dis"ribu"ion agreemen"
ic-e beer brands are impor"ed direc"l6
!ocal impor"ers (#$ample &rindco, 'ndospiri"
+ie S"ar -o"elsHig-end (.beroi, '/C, malls !eela (mbience, remium -oeni$ pubs &eer mall and cen"ric res"auran"s caes*pubs (&eer Cae, in" oom
#nd consumer
Regu/atory c,a//e&ge$ axation and regulations on beer are the ma7or challenges for the industry players! axation on imported beer is done by both central 'customs duty and education cess) and state governments
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LANDSCAPE ASSESSMENT OF BEER MARKET IN INDIA 'excise duty and other state specific taxes)! ustoms duty on imported beer in India is set at prohibiting levels of 1$$% 'no difference between countries)! tate level taxes 'mainly excise duty) vary across states and are raised every year! he average rate of excise duty in India in
Co&$ta&t $urge i& average exci$e 'uty rate$ i& I&'ia
45%
42%
40%
40% 39% Excise duty
35%
38% 32%
30%31%
25% +72009
+72010
+72011
+72012
+72013
+72014
ourceD /nited Breweries
>lso unlike most other countries, taxation of high alcohol content and lower alcohol content drinks is not done differently in India! hus, there are lower taxes per unit of alcohol on hard spirits, making it more attractive for the Indian consumer! ther regulatory hurdle for imported beer in India is the heavily regulated movement of beer across the states! 0ovement of beer from one state to another in India attracts taxation from both origin and destination states and is permitted to a certain =uota of =uantity! herefore, it is advisable to import beer in the state of consumption! ther challenges for the imported beer 'and domestic beer) industry is the differences in alcohol distribution structure across India which dissuades a uniform distribution strategy on a pan8India level! Di$tri#utio& $tructure i& I&'ia Di$tri#utor 44 +over&me&t5 Retai/ 44 +over&me&t
Di$tri#utor 44 +over&me&t5 Retai/ 6 Free
Di$tri#utor 44 Free5 Retai/ 6 Free
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State$ t,at ,ave #a&&e' #eer 0a&' ot,er $"irit$
LANDSCAPE ASSESSMENT OF BEER MARKET IN INDIA :erala, amil .adu, @elhi
eemandhra, elengana, >ssam, &est Bengal rissa, /ttar 9radesh, Bihar @aman, 9ondicherry, ;a7asthan, :arnataka, Aoa, ripura, hattisgarh, /ttaranchal and 4harkhand L 0aharashtra Bihar
Au7arat, 0anipur, 0i2oram and .agaland
he advisable ports for import of super premium beer in India are 4awaharlal .ehru 9ort erminal '4.9), :ochi, 0ormugao, 5ishakapatnam and ?aldia ports for targeting ma7or metros! hese ports have spare container capacity 'beer is transported via container route) and are situated in the target states resulting in avoidance6minimi2ation of complicated state to state transfers! Port$ i& c/o$e "roximity to ma8or mar%et$ Port Ma8or mar%et :ochi .ational capital region 4.9 0umbai and 9une 0ormugao Aoa and Bengalore 5ishakapatnam ?yderabad ?aldia :olkata ther recent regulation which has impacted the sale of imported beer in India is the recent food labeling norms! >ccording to the new food labeling norms, companies must list on the label all the ingredients used in the product in the form of imprints and not stickers! >s a result of the new guideline, many imported foods items, including beers such as orona, ?oegaarden, tella >rtois, and 5ictoria Bitter went missing from the market!
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LANDSCAPE ASSESSMENT OF BEER MARKET IN INDIA O"tio&$ or e&try or a #eer 0or a&y ot,er a/co,o/ic $"irit im"orter >s noted earlier alcohol is a heavily regulated market in India with both central and state governments exercising their control over the market!
'ncorpora"ing "-e compan6
/o be regis"ered as a compan6 under "-e Compan6 c" o 'ndia :e"ailed procedure a" ;inis"r6 o Corpora"e
'mpor" ormali"ies
#$por"s under .pen >eneral !icence (.>!, no speci?c licence is re@uired "o impor" beer need "o be a compan6 regis"ered in 'ndia =i"- an 'mpor" #$por" Code ('#C
S"orage
&eer so impor"ed can be s"ored in cus"om bonded =are-ouses Can alo be sold "o du"6 ree ou"le"s in airpor"s
e"ail sales, clearance rom e$cise
Clearance and pa6men" o cus"oms du"6 re@uired a6men" o e$cise du"ies or "-e s"a"e o opera"ion
> beer brand6importer can thus look to enter Indian market via three routesD ie up with another established player for both import and distribution '
Pro$ a&' co&$ o eac, route o e&try
+ull "ieup ros Hassle ree op"ion =i"- "-e pla6er pigg6bacAing on e$is"ing inras"ruc"ure o an alread6 es"ablis-ed pla6er Cons Hea6 pro?" dilu"ion or "-e beer brand*impor"er
:is"ribu"ion "ieup ros la6er b6passes dealing =i"- di
+ull o=ners-ip ros +ull con"rol oer "-e brand and resul"an" pro?" Cons !eng"-6 regula"or6 process considerable managemen" band=id"- re@uiredB +i" onl6 or pla6ers =-o are "aAing a mul"i 6ear ie= o "-e marAe"
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LANDSCAPE ASSESSMENT OF BEER MARKET IN INDIA wing to regulatory challenges and multiple stakeholders involved foreign beer brands have opted for the full tie8up route in India! E$timate' co$t $tructure or im"orte' #eer he table below highlights some of the ma7or duties at central and state level! ther charges such as freight and operational changes would impact the price, thus uptake, in the local market! Co$t ,ea' <B cost
Nature o co$t Input price for the importer
Coro&a; Mexico E/;$!33
<B cost 'in I.;)
Input price in Indian currency
I.;##!C$
cean freight
ransportation charges
/@$!3$
ustom duty
Import tax '1$$%)
1$
%$Education cess
>ddition central level tax '3%)
3
Ganded price 'G9)
9rice at Indian port
I.;-"
Inland freight cost
ost of moving in India
I.;"
Excise duty 'E@)
>verage excise tax for all states
-%
Impo rter cost
ost paid by importer before distrib utio n
I.;C"
Im"orter "roit
Proit or t,e im"orter
INR3<
Im"orter margi&
Margi& o t,e im"orter
3)*
&holesale cost
&holesaler cost
I.;13-
&holesaler margin
0argin of the wholesaler
1#%
;etail cost
;etailer cost price
I.;1"#
;etailer margin
0argin of the retailer
1"%
;etailer price
9rice paid by consumer
I.;1"
he estimated cost table above illustrates that profit margin on import and distribution of foreign beer in India is ~$8"%! his margin will be shared by the beer brand6importer and local distributor in the ase 1 scenario (Please refer to the cost model for estimated price calculator and similar profit estimations for Leffe and Hoegaarden)
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