Monday, September 03, 2007


Indians love their booze, but beer, it seems, leaves them cold. The country ranks tops globally in consumption of whisky, but it's somewhere near the bottom in beer drinking. So why is just about everyone in the brewing industry scrambling to get a piece of the market?

Pretty small is putting it mildly. Although India boasts the world's second most populous nation, when it comes to beer it barely figures on the map—leaving plenty of upside for brewers who can get in early. Annual per capita consumption is very low estimated at 0.8 litres per annum. If you look at the statistics of other countries it tells a very different story.

Getting Indians to switch from liquor to beer won't be easy. Brewers must contend with a dizzying list of bureaucratic restrictions that make it tough and expensive to win customers and to build a national footprint. Steep tariffs render imports uncompetitive. And state excise taxes of as much as 150% can push the price of a pint of domestic brew up to more than $3, or about triple what a shot of local whisky might cost.

Ads for beer are banned. As a result, brewers have to be creative in building their brands on a national scale. SABMiller, for instance, sells a mineral water called Royal Challenge—not coincidentally the name of one of its lagers. Vijay Mallya, launched Kingfisher Airlines—named after United's flagship brew, India's top seller—and emblazoned the planes with its logo.

In short, international brewers will be charged with crafting a beer culture in India largely from scratch. In that, at least, they have demographics in their favor. Roughly 60% of the population is under 30. What's more, incomes are rising, powered by an economy that's growing at 9%-plus. These trends are expected to fuel growth in beer consumption of up to 15% a year through the end of the decade.

No comments: