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Executive Summary

Beer accounts for only 13%1 of the total alcoholic beverages market in India, however is
expected to grow at the rate of ~14.5% to reach total market volume of 4.4 billion liters 2
by 2018

Indian beer segment is divided into mass market, premium and super premium
segments. While the premium beer segment comprises mostly of strong beers (5 – 8%
alcohol), super premium segment is dominated by “mild” beers (~5% alcohol)

South India accounts for approximately 46% of the beer consumption, followed by
Western regions and Northern regions with 30% and 12% of share, respectively.

United Breweries is the largest seller with a market share of ~54%. Sab Miller and
Carlsberg are other prominent players

Super premium beer category comprises of mostly imported beers with total market size
of half a million cases. The target segment for this category from upper and middle class
backgrounds, mostly in metro cities and urban centers

Market entry is mostly through a JV/distribution arrangement with an Indian importer and
distributor of alcoholic beverages. Major point of sales include premium pubs and
restaurants, five star hotels, high-end malls and beer-centric cafes

Super premium category is expected to grow at a faster rate compared to the other two
categories (premium and mass market). This has led to launch of multiple brands like
Indus Pride, Kronenbourg and Miller Ice in this category over the past couple of years

Taxation (central and state taxes) remain prohibitive and key barrier to entry for imported
beers. Customs (central) and excise (state-level) duties for beer are amongst the highest
in the world

Regulatory challenges, such as changing/evolving regulatory norms are a major
challenge for domestic and foreign manufacturers. For instance, recent change in
labeling norms required companies to label all the ingredients used in the product in the
form of imprints and not stickers. As a result of the new guideline, many imported foods
items, including beers such as Corona, Hoegaarden, Stella Artois, and Victoria Bitter
were impacted and led to reduced availability


Anand Rathi



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Karnataka and Rajasthan. Maharashtra. Carlsberg   Domestically manufactured strong beers Available in all cities and suburbs  Includes Kingfisher Strong. Zingaroo Be er cons um ption by region South 30% East North West 49% 12% 9% Geo graphic Trends Region wise. The top beer consuming states in India are erstwhile Andhra Pradesh. Miller High Life   Domestically manufactured strong beers Available in metros and tier-2 cities  Includes Tuborg Strong. The Indian market is dominated by hard spirits. Stella Artois.5% to reach ~4.13 billion in 2013 and is expected to grow at a CAGR of 17%. as evident from the high market share (~85% of market) of strong beer (~5-8% alcohol) in India. Hoegaarden. Page 2 of 8 . which is expected to grow at a CAGR of ~14. Beer drinking in India is predominantly an all-male activity with the major driver/intent to “get buzzed”. to reach ~USD 9 billion by 2018. Tamil Nadu. with beer accounting for only 5% of the total alcohol consumed in India. premium (650 ml bottle priced in the INR100-200 range) super premium (330 ml pint priced more than INR180). super premium beers are expected to exhibit the fastest growth due to rise in the target segment of young middle class in metro cities.3 billion liters. Foster’s. Thunderbolt.4 billion liters by 2018. southern states account for roughly half of the beer consumption in India. The beer market in India is divided into three categories:    mass market (650 ml bottle priced less than INR100).LANDSCAPE ASSESSMENT OF BEER MARKET IN INDIA Current Indian Market: The Beer market in India was valued at ~USD 4. Among these categories. Total beer sales by volume were ~2. Super premi um beers Premium beers Mass market beers   Imported mild beers (~5% alcohol) Available in metro cities  Includes Corona.

This target segment is well travelled around the world. has good exposure to global brands and high on aspirations. Bullet. Beer brand Company Type of action Comments Indus Pride Kronenbourg Miller High Life SABMiller Carlsberg SABMiller Peroni Kaltenberg Miller Ace SABMiller CMJ Breweries SABMiller Launched in 2013 Launched in 2013 Capacity expansion in 2014 Expansion in 2014 Launched in 2014 Launched in 2014 India's first specialty beer brewed with Indian spices Carlsberg’s signature French premium beer Company plans to add 10 thousand liters of incremental capacity Distribution capacity expanded in 2014 Company has also set up manufacturing in India Premium beer from pale and caramel malt Given below is a price comparison of beer brands available in the super premium category. beer market has seen an advent of niche super premium category. Beer brand Asahi No.LANDSCAPE ASSESSMENT OF BEER MARKET IN INDIA M ark e t s hare breakup United Breweries SABMiller Carlsberg 4% 7% Mohan Meakins Mount Shivalik 4% 8% Others 54% 23% Competitive Landscape The Indian beer market is dominated by United Breweries with a market share of ~54%. Mohan Meakins and Mount Shivalik (both selling mass brands). Landscape Assessment for Premium/Super Premium Beer Category Over the recent years. These beers cost upwards of INR180 for a 330 ml pint and the size of the market is nearly half a million cases. SABMiller is the second largest player with ~23% market share and operates Miller High Life. Other major players include Carlsberg. Zingaro (both in mass category) and Heineken (premium) brands in India. Corona is the market leader (40% share) in the segment followed by Hoegaarden (10-20% share). Super premium beer category targets the young consumers from upper and middle class backgrounds in metro cities who drink beer to socialize and refresh and not to get high. The expectations of higher growth in the premium beer category have led to a slew of global premium beers being launched in India and capacity/distribution expansion for the existing premium beer brands. beers. The company operates Kingfisher (umbrella brand with offerings in both premium and mass category). 1 Corona Extra Country Volume Price (in INR) Japan Mexico 330 ml 355 ml 245 240 Page 3 of 8 . primarily imported. Indus Pride and Peroni Nastro Azzurro brands (all in premium). which operates Tuborg (mass) and Carlsberg (premium).

Bernardus Tripel Stella Artois Premium Hoegaarden Guiness Murphy Stout Erdinger Mexico Belgium Belgium Belgium Italy Belgium Belgium Belgium Ireland Ireland Germany 355 ml 330 ml 330 ml 330 ml 330 ml 330 ml 330 ml Details not available Details not available Details not available Details not available 240 250 186 225 160 200 202 Source: Online websites ( Hoegaarden) JV/distribution agreement Niche beer brands are imported directly Local importers (Example: Brindco. Hoegaarden. Example of such companies includes Indospirit (distributor of Asahi. Boozzr. Route to end consumer for super premium beers Super premium beer brands (including Corona. Off late there has been a rise in popularity of beer centric pubs and microbreweries in metros. The arrangement is more cost effective. these are also a prime sales channel for the super premium category of beers. Leffe Blonde and Stella Artois). and reduces regulatory requirements. Indospirit) Five Star hotelsHigh-end (Oberoi. The roadmap below highlights some potential channels and point of sales for the target consumer. malls ITC. Premium Phoenix pubs Beer mall) and centric restaurants cafes/pubs (Beer Cafe. Jorini Hospitality (distributor of Erdinger) and Brindco (distributor of Corona). Pint Room) End consumer Regulatory challenges Taxation and regulations on beer are the major challenges for the industry players. Leela) (Ambience.LANDSCAPE ASSESSMENT OF BEER MARKET IN INDIA Corona Light Geist Dark Kapittel Watou Pater Leffe Beer Peroni Nastro Azzurro St. Taxation on imported beer is done by both central (customs duty and education cess) and state governments Page 4 of 8 . allows the manufacturers to explore the market. Route to Consumer: The major sales channels for the super premium beers are premium bars and Market Entry/Route to Market Majority of players in the super premium category prefer a JV/distribution agreement with India-based importers of alcoholic spirits. five star hotels and high end malls in metros.

taxation of high alcohol content and lower alcohol content drinks is not done differently in India. The average rate of excise duty in India in FY 2014 was 46% which is among the highest in the world. Retail -. there are lower taxes per unit of alcohol on hard spirits. Therefore. making it more attractive for the Indian consumer. Thus.Government Distributor -. Retail – Free Page 5 of 8 States that have banned beer (and other spirits) . State level taxes (mainly excise duty) vary across states and are raised every year.Government. Other regulatory hurdle for imported beer in India is the heavily regulated movement of beer across the states.Government.LANDSCAPE ASSESSMENT OF BEER MARKET IN INDIA (excise duty and other state specific taxes). it is advisable to import beer in the state of consumption.Free. Other 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 pan-India level. Customs duty on imported beer in India is set at prohibiting levels of 100% (no difference between countries). Retail – Free Distributor -. Cons tant surge in average e xcis e duty rate s in India 45% 42% 40% 40% 39% Excise duty 35% 30%31% 25% FY2009 36% 32% FY2010 FY2011 FY2012 FY2013 FY2014 Source: United Breweries Also unlike most other countries. Movement of beer from one state to another in India attracts taxation from both origin and destination states and is permitted to a certain quota of quantity. Distribution structure in India Distributor -.

Vishakapatnam and Haldia ports for targeting major metros. Chattisgarh. Stella Artois.LANDSCAPE ASSESSMENT OF BEER MARKET IN INDIA Kerala. Tamil Nadu. many imported foods items. West Bengal Daman. Mizoram and Nagaland The advisable ports for import of super premium beer in India are Jawaharlal Nehru Port Terminal (JNPT). Kochi. Uttaranchal and Bihar Assam. Goa. Telengana. Mormugao. including beers such as Corona. Bihar Rajasthan. Karnataka. Uttar Pradesh. According to the new food labeling norms. Hoegaarden. Pondicherry. and Victoria Bitter went missing from the market. As a result of the new guideline. Manipur. Page 6 of 8 . Ports in close proximity to major markets Port Major market Kochi National capital region JNPT Mumbai and Pune Mormugao Goa and Bengalore Vishakapatnam Hyderabad Haldia Kolkata Other recent regulation which has impacted the sale of imported beer in India is the recent food labeling norms. Delhi Seemandhra. These ports have spare container capacity (beer is transported via container route) and are situated in the target states resulting in avoidance/minimization of complicated state to state transfers. Orissa. Tripura. companies must list on the label all the ingredients used in the product in the form of imprints and not stickers. Jharkhand & Maharashtra Gujarat.

the following is a list of compliances required: Incorporating the company • To be registered as a company under the Company Act of India • Detailed procedure at Ministry of Corporate Affairs website Import formalities • Exports under Open General Licence (OGL).LANDSCAPE ASSESSMENT OF BEER MARKET IN INDIA Options for entry for a beer (or any other alcoholic spirit) importer As noted earlier alcohol is a heavily regulated market in India with both central and state governments exercising their control over the market. Fit only for players who are taking a multi-year view of the market Page 7 of 8 . the most painful regulatory step • Cons: First three steps still to be done by player Full ownership • Pros: Full control over the brand and resultant profit • Cons: Lengthy regulatory process considerable management bandwidth required. clearance from excise • Clearance and payment of customs duty required • Payment of excise duties for the state of operation A beer brand/importer can thus look to enter Indian market via three routes:  Tie up with another established player for both import and distribution (Full tie-up)  Owned import operations but tie up for distribution (Distribution partnership)  Own both import and distribution functions (full ownership) Pros and cons of each route of entry Full tie-up • Pros: Hassle free option with the player piggybacking on existing infrastructure of an already established player • Cons: Heavy profit dilution for the beer brand/importer Distribution tie-up • Pros: Player bypasses dealing with different regulations of individual states. no specific licence is required to import beer • need to be a company registered in India with an Import Export Code (IEC) Storage • Beer so imported can be stored in custom bonded warehouses • Can alo be sold to duty free outlets in airports Retail sales. For a foreign beer brand/trader willing to start operations in India.

90 Ocean freight Transportation charges USD0. Estimated cost structure for imported beer The table below highlights some of the major duties at central and state level.30 Custom duty Import tax (100%) 100% Education cess Addition central level tax (3%) 3 Landed price (LP) Price at Indian port INR65 Inland freight cost Cost of moving in India INR5 Excise duty (ED) Average excise tax for all states 46% Importer cost Cost paid by importer before distribution INR95 Importer profit Profit for the importer INR40 Importer margin Margin of the importer 42% Wholesale cost Wholesaler cost INR136 Wholesaler margin Margin of the wholesaler 12% Retail cost Retailer cost price INR152 Retailer margin Margin of the retailer 15% Retailer price Price paid by consumer INR175 The estimated cost table above illustrates that profit margin on import and distribution of foreign beer in India is ~40-45%. Mexico EUR0. Other charges such as freight and operational changes would impact the price. This margin will be shared by the beer brand/importer and local distributor in the Case 1 scenario (Please refer to the cost model for estimated price calculator and similar profit estimations for Leffe and Hoegaarden) Page 8 of 8 .33 FOB cost (in INR) Input price in Indian currency INR22. Cost head FOB cost Nature of cost Input price for the importer Corona.LANDSCAPE ASSESSMENT OF BEER MARKET IN INDIA Owing to regulatory challenges and multiple stakeholders involved foreign beer brands have opted for the full tie-up route in India. in the local market. thus uptake.