BEER INDUSTRY IN INDIA

Presented by Group 2
 HISTORY & OVERVIEW

• Beer began to be exported to India in days of the early 1700s.

• Led to creation of a new style of beer by George Hodgson in his London
brewery — “India Pale Ale” also known as IPA.
• First modern brewery in India was set up in Kasauli
• Today no brewer in India makes India Pale Ale. All Indian Beers are
either:
 Lagers (4.3% alcohol)
 Strong lagers (15 % alcohol)

• Indian beer market was estimated to be 6.7 million hectoliters in 2002-

03
• Beer consumption is growing rapidly at a CAGR of 7% over last 9 years
 INDUSTRY OVERVIEW

• Indian beer market is valued at INR 35 bn with volume

sales of 172 mn cases for FY 2008-09
MARKET • The market is expected to grow at an annual rate of 17.2%
till 2011
• Foreign brewers are eyeing the Indian beer market which
is largely untapped and has growth potential

• Drivers:
– Huge market potential
DRIVERS & – Rising income levels
CHALLENGES
– Entry of international brands
• Challenges:
– Regulatory Environment
– High tax structure
 • With current duopoly situation and entry of foreign
players, beer industry in India will quickly witness
consolidation
• Premium beer segment is outpacing the mainstream
TRENDS beer market touching a growth rate of 40-50%
• Emerging new sub-categories of beer with consumers
in India open for experimenting
• Growing demand for barley and evolving contract
farming

• More than 80% of the market is controlled by two

major players United Breweries Limited (48%) and
SABMiller India (35%)
COMPETITION
• With InBev acquiring Anheuser-Busch, it has potential
to emerge as the third major player
• The market is set to flourish with 15 new breweries
and 10 international brands in next 3 years
Indian consumers prefer strong lagers which has higher alcoholic content

Categories of beer
Lager Brewed using bottom-fermenting yeast that ferments slowly at a
low temperature to create a smoother, mellow beer
Ale Uses top-fermenting yeast, is a more aromatic and fruity
product
Stout Dark and heavy, with roasted unmalted barley and, often
caramel malt or sugar
Mild Beer Developed as a sweeter and cheaper alternative to dark ales
Bitter Highly hopped for a more dry and aromatic beer. It is pale in
color but strong
Dark Beer Barley is kilned for a long period of time which creates richer
flavors
Fruit Beer Fruit, usually berries, is added either during primary
fermentation or later
Wheat Beer Malted wheat and barley are used for this German style beer
(Weizen)

Indian beer market is dominated by Lager and its various shades

HISTORY & OVERVIEW
 MAJOR PLAYERS

1) UB (United Breweries Ltd.) - Market

leader in the Indian beer market with a
47.5% market share. Its flagship
Kingfisher brand alone commands 25%
market share

2) SAB Miller - 38.3% market share; has

10 breweries located strategically
across India to serve the beer markets
efficiently

3) Carlsberg - At the end of 2006,

Carlsberg entered into a joint venture -
called Carlsberg India Private Limited
- to build a green field brewery in the
state of Rajasthan, India. 
UNITED BREWERIES
GROUP (UB)
 UNITED BREWERIES

• Based in Bangalore, is a conglomerate of different companies with a major focus

on the brewery (beer) & alcoholic beverages industry.
• India's largest producer of beer - market share of 48% by volume; headed by
Dr.Vijay Mallya
• UB Group today controls 60% of the total manufacturing capacity for Beer in
India.
• Brands:
– Kingfisher Blue
– Kingfisher Strong
– Kingfisher Premium
– Kingfisher ultra
– Zingaro
– Sand Piper
– UB Premium Ice
– Kalyani Black Label Premium
– Kingfisher Draught
• Kingfisher, most visible and profitable brand, made a modest entry in the
sixties.
 PORTER’S FIVE FORCE MODEL

• Model developed by Michael Porter, this model analyzes the nature

and intensity of competition

• In an industry through five forces (rivalry, customers, supplier, new

entrants, and substitutes). These five forces are explained as below –

1) Bargaining Power Of Suppliers

• With increasing cost of raw material and decreasing cost of

barley suppliers bargaining power was high
• Shifting their production of beer on malt company has
achieved a hold on its raw material and considerable reduced
the supplier strength and dependency
2) Rivalry Among Existing Firms - Means through which competitors
fight for position by using tactics such as price, competition,
advertisement battles, and new product introduction, to lower the
profits of competitors in the industry.

– CAGR of 11% is expected for beer in the next 5 years

– Currently the major rivalry for kingfisher premium is Budweiser,

Carlsberg, Foster and Tiger and for kingfisher strong it’s Hayward
2000, Hayward 5000, Palone.

– SABMiller’s who came to India by acquiring small breweries and

made its hold as Best-selling strong beer brand

– Still kingfisher being largest-selling strong beer brand (29%market

share) is currently being supplied in 55 country.

– There are also some small local players that are in the market but
does not provide much threat to kingfisher.
3) Threat Of New Entrance

– CAGR of 11%; sure makes attractive for the new players. But strong brands
like kingfisher and haywards which already have their brand recall and
extensive advertisement, new entrants are expected to struggle to expand
their consumer base as they try to penetrate the beer market in India

– Several international brewers have currently built brand associations and are
marketing their brands aggressively through various point-of-sale
promotions throughout their distribution networks.

– But with strong players in the market the new entrant will face problems as
following:
a) Economies of scale For example benefit associated with bulk purchases
and sales
b) Cost of entry For example investment in technology
c) Distribution channel For example ease of access for competitors
d) Government Legislations introduction of new laws might weaken
companies position
e) Differentiation For example certain brands that cannot be copied
f) Supplier power Possibility of forward integration by supplier
4) Bargaining Power Of Customers
– It is the extent to which customers are successful in forcing prices
down, or securing high quality or more service at the same price
– Customers tend to be powerful when the quantities they purchase
form a large portion of the seller's total sales.
– Buyer do not understand the quality of the beverages and as there
are not many players in the market the customers has less command
over price.

5) Threat Of Substitute
– India is predominantly a spirits market and beer is a minority
preference for those who consume beverage alcohol. So substitute is
biggest threat as preference for beer among beverage drinker is less
– But the low penetration in beer consumption in comparison to
international levels offers the expectation of substantial and
sustainable growth in demand for beer in years to come, particularly
given the youthful age of India’s population.
 SWOT ANALYSIS
STRENGTHS
 Strongest Worldwide Distribution
System
 Huge Finances backing from UB
Group
 Oldest & Largest Player In India
 Worldwide known Brand
OPPORTUNITIES
 Beer consumption is increasing
 Per capita beer consumption in India
-0.5 litres which is very low
 Brand Extension Benefits
 Changing lifestyles of middle class
 Increase in disposable income
WEAKNESS
 High Concentration on Strong Beer
Market
 Too much diversified
THREATS
 High Taxes & Regulations
 Prohibition on Advertising
 Indian Culture is a Major Hindrance
 Negative perceptions about alcoholic
beverages widely prevalent
 Many International Player Entering
In India
 This is a ‘regulated’ industry
 COMPETITIVE ADVANTAGE
• Management Team
– Professional Managed
– Seasoned Professionals with Significant Industry Experience
• Segment Market Presence
– Least Vulnerable to Policy Volatility due to Large Spread
• Local Sourcing
• Almost Completely Locally Sourced
• Manufacturing Technology
– Largest Manufacturing Space
– Maximum Capital Utilization
• Branding
– Value Chain Ownership
– Initiatives Planned for Integrating into Retailing
• Core Competency
– Strong brand image with continuous innovation and technology along
– with good marketing and distribution channel are the core strength of
the company
CARLSBE
RG
 OVERVIEW
• Danish brewing company founded in 1847 by J. C. Jacobsen

• Entered Indian market in 2006 & operates here through a joint venture
named South Asia Breweries. Positioned itself as a premium mild beer.
With the launch of its flagship brand, the company is trying to create a
premium, all-malt beer category.

• In 2009 Carlsberg is the 4th largest brewery group in the world.

Products are sold in more than 150 markets. In 2008 the Group sold
more than 120 million hectolitres of beer, nearly 100 million bottles of
beer a day.

• Carlsberg India Pvt. Ltd. headquartered in Gurgaon, National Capital

Region, India is a Foreign direct investment company formed to brew
and market Carlsberg beer in India.

• Brought Tuborg and Palone brands into India. Palone is sold as a

'strong' beer with 7.5% alcohol by volume. Strong beers dominate the
Indian market, estimated in 2008 to total approximately 17 million
hectolitres with over a 72% share.
 SEGMENTATION, TARGETING &
POSITIONING
 Segmentation

International beer companies have a good enough reason to tap

markets like India. That their main markets, North America and
Europe, are either flat or in a state of decline is no secret.

Carlsberg has segmented the Indian market in following ways:

a) Geographical
• Major consumer for alcoholic beverages is Southern India.
• Consciously chosen the north, east and west regions of the
country to set up its breweries
• Strategy adopted by Carlsberg is to concentrate on to the
untapped market of north and west India in the initial stage
of the production. Moreover, since it has positioned itself as
a premium product, it is only catering to the urban cities of
India.
 b) Demographic
• India is becoming younger. Population of youth is high in India. With
its international image as the sponsor of a football team, it has created
an impression in young ones’ mind.
• Rise in disposable income of the urban middle class
c) Psychographic- The culture, the lifestyle, the personality of an Indian is
changing which is good for international brands like Carlsberg

 Targeting
– Urban cities ; It may not be called a niche marketing because of the nature
of the product but yes the product is placed at a higher price because of the
image of the brand it wants to cash on.

 Positioning
– Carlsberg has positioned itself as a premium beer in the Indian market.
Most expensive beer compared with its competitors Budweiser, the UB
Group's Kingfisher and Tiger beer by Asia Pacific Breweries
– Betting on the shift in urban consumers to spend on quality.
– Under the process of test-marketing its strong beer brand Okocim Palone
from Poland. As its long-term strategy for the Indian market, it plans to
deploy a portfolio
 PESTEL ANALYSIS

 Political

– Different states have different rules for liquor. Some

states like Gujrat are Dry states where the sales of liquor
are completely banned. Some states have time limits
i.e., after 9 the sales of liquor are prohibited.

– Even the age limit for drinking in India is under

discussion. Right now it is 25, so Carlsberg has to be
very specific when targeting its consumer.

– As the advertisement of liquor is banned in India,

Carlsberg has cashed its international image to boost
its sales in the domestic market. They have targeted the
public houses and discotheques for their promotion
which is very apt.
 Economic

– Disposable income of people specially living in urban cities is also

increasing rapidly. The Carlsberg group has realized this potential
and thus has targeted only the urban cities of India in their early
stage to penetrate the market. According to the MD of the Carlsberg
Group, Mr. Gidwani, Carlsberg has aimed to grab a market share of
approx. 10 % by next 2 years, once that target is achieved, they will
expand their base to other cities and the rest of the country.

 Social

– Per capita income is rising, but at the same time the gap between
the haves and have-nots is also widening. Though we hope that this
gap will be narrowing in the near future, but the scenario is a bit
bitter right now. There is a school of thought against the so called
pub culture and then there are rest, but as they say change is
inevitable that’s why The Carlsberg Group is relying on the change
and has targeted the new Indian who is open to change.
 Technological
– Importing beer attracted heavy taxes from the government resulting
in higher prices of the same. Therefore to increase the base in the
Indian market, it was advisable to set up plant in India itself.
Carlsberg has set up four breweries in Rajasthan, Maharashtra,
Himachal Pradesh &West Bengal to reduce the cost. According to
the company sources, it is using an advanced technology to ensure
that the beer that gets out is of better quality and great taste.

 Environmental
– Environmental factors include the weather and climate change. As
the climate here is generally warm, Carlsberg increases the
promotions during summer time. As the company is new, we yet
have to see its effect on environment and vice versa.

 Legal
– Again The Carlsberg Group is very careful about the steps it takes
because of the political environment which could land it in trouble.
As the laws are different for different states, Carlsberg India has
played smart in making a social networking website so that its
purpose of marketing is also solved and it didn’t cross the line of law
as well.
 BRIGHT FUTURE FOR BEER INDUSTRY

a) Rising Income Levels

o India's 'very rich', 'consuming' and 'climbers' classes to grow at a
CAGR of 15%, 10% & 2% respectively.
b) Changing Age Profile
o Large proportion of the Indian population is in the age group of 20-34
years - most appropriate target for beer marketers.
c) Changing Lifestyles
o As urban consumers become more exposed to western lifestyles,
through overseas travel &media, their attitude towards alcohol is
relaxing. Social habits are undergoing a transformation as mixed
drinks are becoming more popular.
o More and more women are consuming beer – the penetration in
metropolitan areas is almost twice as high as the penetration in other
large cities – implying that the greater tolerance towards alcohol
consumption in metropolitan areas facilitates the consumption of
beer.
 BRIGHT FUTURE FOR BEER INDUSTRY

d) Reduction in Beer Prices

o Indian consumer typically values an alcoholic beverage on the basis of its 'kick' factor
versus its price.
o Most states do not have a differential tax structure based on the alcohol content. As
far as the Light beer segment goes, there is no existing competition in the market.
However, a number of well-established brands, especially lagers, have a significant
market presence.

In India the future of beer industry is very much optimistic because:

– India has predominantly a warm/hot climate.
– The beer-drinkers in the country are much younger than the average beer-drinker
elsewhere in the world. This makes them more likely to carry the brand with them for
a lifetime.
– Increasing exposure to beer and wine drinking, mainly due to media and consumer
mobility.
– All these factors combined make the scenario very promising for beer industry and are
'in sync' with their strategy for India.
THANK YOU!!
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