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Alcoholic Beverages Industry
A Report BIMTECH
AayushMardikar Akshat Gupta Gaurav BV Haresh L Harsh Agarwal JiteshKhanna Jojan V Jose Nataraj K Saravanan D Susmita Dash
About the Industry
The global alcoholic beverage industry is a multi-billion dollar a year business. Like many other industries it is seeing a growing shift away from mature markets in North America and Europe to newer developing regions such as China, India and Russia. Consolidation is also having a huge impact on what we drink and where we drink it. From Diageo and PernodRicard to SABMiller and Fortune Brands, who are the major players, what are they selling and who's buying what where. The USD 900 billion global market for alcoholic beverages is experiencing a period of unprecedented change. While much of the market is still in the hands of small, local enterprises, truly global players are steadily emerging. There are high-performance businesses and although they have yet to command the premium from investors that other high-performance consumer goods companies enjoy, they are well positioned to do so, thanks to highly focused M&A strategies in key, value-growth markets. The lion¶s share of future value will go to a select group of companies whose product portfolios encompass all three major categories of alcoholic beverage² beer, spirits and wine. Plainly, the path to future success lies in being global²but with a focus on the right markets and the right categories. The alcoholic beverages industry offers few opportunities for organic growth. The notoriously high costs of distribution and brand building have created huge barriers to entry²hence the importance of acquisitions. Consolidation continues apace as aggressive acquirers seek to demonstrate that they can wring value out of the companies they buy, especially if they have paid a premium. Yet the market remains very fragmented. Diageo, which is by far the biggest spirits company globally, accounts for less than 10 percent of the total industry. Like many others, the alcoholic beverages industry is also feeling the effects of dramatic shifts in demography and lifestyle. Today¶s drinkers are more affluent and
Meanwhile. among other countries. has struck a deal with the Mexican brewer FEMSA Cerveza to gain an edge in that market. Aspiring urban. Eastern Europe and parts of Latin America are also slowly trading up and will account for an increasing share of value growth in the future. Moreover. which combines high growth with rising levels of disposable income. middle-class drinkers in several Asian countries. These consumers demand premium products²preferably products they can customize²and they are willing to pay a premium for them. . to be sure. Argentina and Spain. Some leading businesses have created partnerships and alliances with other companies in the industry to build the critical mass necessary for distribution scale and efficiency in key markets. which will allow the company to increase its leadership in the import segment. offers the potential for both. Brazil¶s giant InBev and Mexico¶s Modelo among them. Yet Brazil and Mexico are already among the largest and most profitable markets for beer and spirits in the world. where aging populations and a high number of financially independent female drinkers power the premiumization trend. The trend to drinking less but paying more is not restricted to developed markets. And Anheuser-Busch uses third parties²including Heineken companies²to brew and sell its leading brand. must be managed for value. With few exceptions. wide variations globally in these megatrends. the region is home to some of the key emergent global brewers. rather than volume growth. they also are increasingly health conscious. premiumization has yet to make much impact in Latin America. as does much of Asia. Heineken USA. Eastern Europe. There are. Russia.sophisticated. Encouraged by restrictive legislation. Heineken USA will benefit from greater scale and from the broader portfolio of brands. under license in Italy. Western Europe. for example. Budweiser.
creating a global market of key local brands that deliver high market share and drive profitability. liqueurs and vodka²in which it has critical mass. is a top brewer in 35 of its 50 markets. nightclubs. Made from fruits. since profitability in brewing is so highly correlated with scale. it . restaurants). gin. tequila. for example. for example. highperformance businesses are distinguished by their ability to control the route to the consumer. supermarkets. SABMiller.Leading businesses are also keenly aware that in-market scale is even more important than global scale in delivering economic profitability and that they need relevant capabilities to achieve it. Constellation Brands has been rapidly building up its premium wine portfolio through acquisitions that include California¶s Ravenswood Winery and Australia¶s largest wine producer. In an industry where distribution costs are inordinately steep and so much consumption takes place outside the home. Meanwhile. For brewers this means." which literally means "burned wine. Thus. in effect. convenience stores) or on-trade (bars. ensures that consumer-centric brands like Smirnoff underlie each of the spirits categories² whiskey. by building a strong portfolio of premium brands that can be tailored to consumers in each market. leading distillers derive a similar advantage. These leaders ensure the availability of their products and brands to target consumers in the outlets of their choice²whether off-trade (hypermarkets." Brandy originated in the Mediterranean region in the seventh century. Ownership of the principal high-value local brand also captures the universal drift to premium products. Diageo. BRL Hardy. And they can do so because they can connect directly with their customers. most of which are dominated by one brewery²a powerful position indeed. Types of Alcoholic Beverages (Major Products) Brandy The word "brandy" comes from the Dutch word "brandewijn. rum.
There are nine basic types. not crushed. pomace brandy is made from pressed. which is all brandy that is made from fruits other than grapes. For such a liquor to be denominated "vodka´ governments establish a minimum alcohol content. and without an "e"--"whisky"-everywhere else) covers a broad range of distilled spirits. the European Union established 37. and each type has dozens of varieties with various flavors. Vodka Vodka is a distilled beverage and one of the world's most popular liquors.) Brandy has an alcoholic content of about 40 to 50 percent. (Fruit-flavored brandy is not the same--it is a grape brandy flavored with another fruit. which is a unblended whiskey from a single batch. which is a blend of multiple malts (anywhere from six to 30 or more). skins and stems left over after the production of wine. Finding your perfect whiskey can be quite an adventure. Lithuanian.is broken down into three categories: grape brandy is made from fermented grape juice from crushed grape pulp or skins. It is composed primarily of water and ethanol with traces of impurities and flavorings. and Polish vodkas are 40% alcohol by volume (80 proof).5% alcohol by volume as the minimum alcohol content for European vodka. grape pulp. the standard Russian. and blended whiskey. Scotch Whiskey (spelled with an "e" in Ireland and the United States. and fruit brandy. Vodka¶s alcoholic content usually ranges between 35-50% by volume. Scotch whiskey comes in two types: single malt. Vodka is made from the fermented substances grain and potatoes. Vodka is traditionally drunk neat in the vodka belt ² Eastern Europe and .
such as the bloody Mary. is then usually aged in oak and other barrels. However. the Manhattan and the Whiskey Sour. such as Dominican Republic. the White Russian. and since the regulations do not apply there. and the vodka martini. the vodka tonic. The other ingredients can be corn and/or malted barley. Rye whiskey is used in many cocktails. new oak barrels Rum Rum is a distilled alcoholic beverage made from sugarcane by-products such as molasses and sugarcane juice by a process of fermentation and distillation. a clear liquid. Bourbon Bourbon is another distilled spirit whose content is regulated by law. Rye is also made in Canada. be at least 80 proof. Guatemala. the sex on the beach. The distillate. be made from at least 51 percent corn and be aged in charred. Bourbon must be a minimum of two years old.Nordic countries ² and elsewhere. Rye Rye whiskey is a distilled beverage with a minimum of 51 percent rye grain. It is also commonly used in cocktails and mixed drinks. these regulations only apply to rye whiskey made in the United States. The majority of the world's rum production occurs in and around the Caribbean and in several Central American and South American countries. the screwdriver. such as the Old Fashioned. . Canadian Whiskey does not have to contain any rye at all. Most rye whiskey is made in Pennsylvania and Maryland.
Colombia. the brewing industry is a global business. It is produced by the brewing and fermentation of starches. Venezuela. Rum has also served as a popular medium of exchange that helped to promote slavery along with providing economic instigation for Australia's Rum Rebellion and the American Revolution. Today. Mauritius. consisting of several dominant . Belize. Trinidad and Tobago. although wheat. Puerto Rico. Guyana and Cuba. or for cooking. and "The Hymn to Ninkasi". Premium rums are also available that are made to be consumed straight or with ice. Jamaica. Brazil. whereas golden and dark rums are also appropriate for drinking straight. and rice are widely used. Some of humanity's earliest known writings refer to the production and distribution of beer: the Code of Hammurabi included laws regulating beer and beer parlors. it is the third most popular drink overall. maize (corn). and elsewhere around the world. Beer Beer is the world's most widely consumed and probably the oldest of alcoholic beverages. mainly derived from cereal grains²most commonly malted barley. which add bitterness and act as a natural preservative. There are also rum producers in places such as Australia. Reunion Island. Rum plays a part in the culture of most islands of the West Indies. after water and tea. Most beer is flavored with hops. though other flavorings such as herbs or fruit may occasionally be included. a prayer to the Mesopotamian goddess of beer. Light rums are commonly used in cocktails. and has famous associations with the Royal Navy (where it was mixed with water or beer to make grog) and piracy (where it was consumed as Bumboo). India. Fiji. the Philippines. served as both a prayer and as a method of remembering the recipe for beer in a culture with few literate people.
Beer forms part of the culture of beer-drinking nations and is associated with social traditions such as beer festivals. Yeast consumes the sugars found in the grapes and converts them into alcohol. as well as a rich pub culture involving activities like pub crawling and pub games such as bar billiards. the resultant wines are normally named after the fruit from which they are produced (for example.. The natural chemical balance of grapes is such that they can ferment without the addition of sugars. and the regionally distinct ales. In these cases. the use of the term "wine" is a reference to the higher alcohol content. stout and brown ale. enzymes or other nutrients. are made from starch-based materials and resemble beer and spirit more than wine. Others. The basics of brewing beer are shared across national and cultural boundaries. while ginger wine is fortified with brandy. Beers are commonly categorized into two main types²the globally popular pale lagers. typically made of fermented grape juice.e. Although other fruits such as apples and berries can also be fermented.multinational companies and many thousands of smaller producers ranging from brewpubs to regional breweries. The commercial use of the English word "wine" (and its equivalent in other languages) is protected by law in many jurisdictions. which are further categorized into other varieties such as pale ale. acids. rather than production process. sake). apple wine or elderberry wine) and are generically known as fruit wine or country wine (not to be confused with the French term vin de pays). . Different varieties of grapes and strains of yeasts are used depending on the type of wine being produced. such as barley wine and rice wine (i. Wine Wine is an alcoholic beverage. Wine is produced by fermenting crushed grapes using various types of yeast.
and the drink is also used in Catholic Eucharist ceremonies and the Jewish Kiddush. coriander. frankincense. savory. Distilled gin is crafted in the traditional manner. and is not as highly regarded.Wine has a rich history dating back to around 6000 BC and is thought to have originated in areas now within the borders of Georgia and Iran. as well as a subtle combination of other spices. gin is broadly differentiated into two basic legal categories. cinnamon. London dry gin may not contain added sugar or colorants. The Greek god Dionysus and the Roman equivalent Bacchus represented wine. baobab. nutmeg and cassia bark. water being the only permitted additive. grapefruit peel. There are several distinct styles of gin. Compound gin is made by simply flavoring neutral spirit with essences and/or other 'natural flavorings' without re-distillation. . Thrace and Rome. Gin Gin is a spirit whose predominant flavor is derived from juniper berries (Juniperuscommunis). lime peel. Wine has also played an important role in religion throughout history. licorice root. and was very common in ancient Greece. a type of distilled gin. with the most common style today being London dry gin. dragon eye. including any of anise. In addition to the predominant juniper content. London dry gin is usually distilled in the presence of accenting citrus botanicals such as lemon and bitter orange peel. Although several different styles of gin have existed since its origins. orris root. angelica root and seed. by re-distilling neutral spirit of agricultural origin with juniper berries and other botanicals. saffron. Wine first appeared in Europe at about 4500 BC in the Balkans. cubeb.
especially at festivals such as Deepawali and Holi. At the moment the use of alcohol is infrequent among women who also tend to resist the habit among male family members. Of what is actually consumed.Regulations on Alcohol in India The Alcohol Situation in India Alcohol is one of the commonly consumed intoxicating substances in India. It has traditionally been drunk in tribal societies. Taxes on alcohol Alcohol is a significant contributor to government revenues in many states. This translates into about five million people addicted to alcohol. According to The Hindustan Times. It is easily available and widely used. In most states this accounts for over 10 per cent of total state tax revenues. Between 15 and 20 per cent of Indian people consume alcohol and. although it has won increasing social acceptance among other groups. . the number of drinkers has increased from one in 300 to one in 20. The state of Kerala stands first in per capita consumption of liquor at 8. followed by Punjab 7. the Intake of Indian Made Foreign Liquor (IMFL) is growing at the considerable rate of 15 per cent a year. over the past twenty years.9 litres. whilst in the Punjab this accounts for over one third. urban males being the prime example. it is estimated that of these 5 per cent can be classed as alcoholics or alcohol dependent. The Hindustan Times says that 65 per cent of the Indian liquor market is controlled by whiskey manufacturers.3 litres.
the efficiency of enforcement has not been studied. was introduced and then withdrawn in Haryana and Andhra Pradesh in the midi-1990s). although it continues in Gujarat. So far. Increasing taxes as a means of reducing alcohol consumption is problematic as it has been shown to be unresponsive to price change. and the production and consumption of illegal liquor. for example. be an increase in corruption. crime. It has. has dry days. completely prohibits cigarette and alcohol advertisements. The legal minimum age to purchase liquor ranges from 18 years in some state to 25 years in others.Policy measures in India Alcohol policy is under the legislative power of individual states. 2000. been shown that an increase in the age of legal drinking from 18 years to 21 years achieves nearly 60 per cent of the effect of prohibition on alcohol consumption. Legislation: alcohol advertisement The Cable Television Network (Regulation) Amendment Bill. however. An important aspect of policy is to delay initiation among youth. Tax increases will further add to economic hardship for consumers and have little or no impact on the reduction in other negative impacts. with partial restrictions in other states ± Delhi. One way of doing this is to enforce age limits. There would. however. The government controlled channel. enshrined as an aspiration in the Constitution.Prohibition. in force September 8. Delhi has minimum age limit of 25 years. . There was an earlier failure of Prohibition in Tamil Nadu.
At the time of its birth. Madhya Pradesh. and the Student Health Action Network (SHAN). In 1985-86 it urged the establishment of a reduction programme. Bihar. Besides. The Ministry of Social Justice and Empowerment. Youth for Christ India (YFC). has launched three major initiatives for alcohol and drug demand reduction. ten state associations have also been on stituted in Maharashtra. does not broadcast such advertisements but satellite channels however are replete with them. Health Related Information Dissemination Amongst Youth (HRIDAY).Doordarshan. Tamilnadu. in partnership with the United Nations International Drug Control Programme (UNDCP) and the International Labour Organisation (ILO). Karnataka. The ministry co-operates with media and youth organisations and collaborates with the Ministry of Health and Family Welfare and with NGOs involved in the problem. The constituents of the association control more than 80% of the total distillation capacity of the country. Gujarat. Non-Governmental efforts have been led by the Indian Health Organisation (IHO). the association had a membership of only fifteen whereas the fraternity has now swelled to close to two hundred. During the Intervening four decades this association has not only grown in size but has also widened its sphere of activity. Efforts to counteract the problem Ministry of Social Justice and Empowerment has been active in this field. Andhra Pradesh. ALL INDIA DISTILLERS¶ ASSOCIATION In 1953. an all India body of distillers was constituted which was baptized All India Distillers¶ Association. Uttar Pradesh. Punjab and .
and other spirits such as rum and vodka that is attracting the MNCs to India. which are all affiliated to the parent body. AIDA is the leading business support organizations for the alcohol & liquor industry in India and maintains the lead as the proactive business solution provider through continuous interaction at the constituent members¶ level and various government agencies level. They reckon that India is a big and growing mark et with a weakness for spirits. industry ± Government.Society partnership and to enhance the quality and productivity of the distillery/ alcohol industry on the whole. in the country. AIDA today espouses the shared vision of the Alcohol / Distillery industry in the country and speaks directly or indirectly for the entire industry. This is not surprising considering that in the wake of the reforms. as the social transformation gathered momentum and global consumption patterns get increasingly . It is indeed a matter for gratification that ours is the sole representative body of the alcohol industry and distilleries. We visualize a bright future for the industry and a much stronger association in very near future. The advent of Ethanol as an ideal blend for admixture 16 with Motor fuel/ petrol has provided further boost to importance of this industry and the association. POTENTIAL OF LIQUOR MARKET IN INDIA It is India's potential for whisky -. to the extent that it is now a force to reckon with as far as the alcohol and distillery industry is concerned.Haryana. especially whisky. in the country¶s industrial scenario.. It is therefore now the largest and the oldest apex organization of Indian Alcohol Industry which stands for quality.it accounts for about 60 per cent of the Indian Made Foreign Liquor (IMFL) market -. The Association has been carrying out a pioneering work with regard to catering to interest of the alcohol industry and has gone from strength to strength through out all these 54 years.
and already accounts for 55 per cent of beer consumption. This should promote growth in the organized sector. Drinking liquor has rapidly gained acceptance and is no more taboo -. but pronounced. But the emerging trends are interesting. has been growing at about 15 per cent in India for t he last two years. women and middle-class -. GroupePernodRicard. Thus. a category non-existent in developed countries.assimilated. maturing tastes and preferences are making the Indian liquor market more brand-led. the youth. A good example of this potential is the per capita beer consumption placed at half-a-liter for India. which accounts for two-thirds of the liquor consumption in India.even among the conservative middle-class but whose attitudes have changed with improved standard of living has improved. the e world's fifth largest producer of alcoholic beverages.. However. the country's moral fabric is loosening. once the e regulatory environment is relaxed. there is significant latent demand and vast scope for growth in liquor consumption. This trend is slated to continue. Liquor companies have been quick to latch on to this trend. The Indian market has traditionally been inclined towards the unorganized sector. It is also hardly comparable to the very high levels of per capita beer consumption on in the developed and some of the developing countries. In fact. Strong beer (alcohol content in excess of 5 per cent). in contrast to the Czech Republic's consumption of half-a-liter a day. both in the urban and prosperous rural areas. A little noticed factor pertains to the gradual. shift of liquor consumers to the organized sector. a 100-year-old company in the liquor business and a part of the UB . INDIAN MNCs IN MARKET McDowell & Co. will be introducing new brands for the growing middleclass market.overlapping segments ± are being targeted by the liquor companies looking for growth.
and the company is setting up dedicated and model retail outlets to take advantage of the unrestricted point-of-purchase advertising. In recent years. six of which are millionaire brands. local companies are sharpening their focus on the personality and imagery of their brands with the help of international agencies.group. processes and practices to international standards. commands 34 per cent of the liquor market. the MNCs have slowly gained a 10 per cent share in the whisky market. 25 MNCs are able to leverage the price-quality relationship and the intensive investment in brand-building through advertising and sampling better than local companies. and the label -. Peter Scot (Khoday) and McDowell Premium. and both bottled-in-India Scotch and duty-free Scotch account for about one lakh cases . Most Indian companies effectively meet competition from the MNCs by restructuring and upgrading products. perception of blend and investment in brand-building. UB has considered all the elements of the product -. and Brown and Forman's Southern Comfort have overtaken Royal Challenge (SWC). Seagram 's Royal Stag and Oaken Glow. together with sister company. it cannot be overlooked that the local Scotch industry is small. there has been a spate of product launches and relaunches to improve perceived value through the up gradation of physical appearance. the bottle. However. the company's brands. This is expected to further boost brand growth. Herbertsons. 18 crores on brand relaunches. the cap. The local firms appear to exploit the distribution dynamics more. In 1998-99. It plans to spend Rs. grew 24 per cent to 14. Thus.for a revamp. McDowell brands are available in 90 per cent of the retail outlets in the country.5 million cases. Yet. The local brands have a wide reach too and are focusing on strengthening the network and logistics to minimize costs. In their efforts to imp art an international look to their products. What is not revealed is the MNCs success in carving out higher shares of about 55-60 per cent and 30 per cent in the super-premium and premium segments respectively.the carton.
like the IDI. The beer market. It has been a valuable experience for them.which is about four times costlier than molasses-based liquor produced by Indian companies. which did not have a significant presence in the deluxe whisky segment.000 kl (kiloliters) which some companies. They maintain that the ``Made in India'' tag of their export consignments acts as a barrier. unlike many other MNCs. launched a DSP Black Whisky to fill this gap. SWC. It is consider ring an expansion. MNCs also face the problem of unfulfilled export obligations arising from the imposition of the foreign exchange neutrality norm at the time of the FIPB approval and are lobbying for the relaxation of this condition. the MNCs are confined to the premium segment and denied a level playing field. have cleverly sidestepped by contract manufacture from across the country since there is no ban on outsourcing. which launched its beer in 1998. can be partially attributed to these advantages. On the other hand. has introduced Gilbey's Green Label whisky in the regular segment. Thus. had sales 26 exceeding expectations in a low growth market right from the start. Has it discouraged MNCs that entered India later? Not really. IDI. MNCs will come under increasing competitive pressures and have to be alert. Under the norms. It is reported to be growing in market share. IDI's smooth entry into India and its success as a profit-making venture. Being licensed to produce only grainbased liquor ± the exception being International Distillers India -. Fetters MNCs face numerous hurdles.each. The Foreign Investment Promotion Board (FIPB) subjects the MNCs to a capacity ceiling of 10. the MNCs will have to enter the regular segment which accounts for over 40 per cent of the total market and also contain the forays of local majors into the premium segment. a 60:40 joint venture between the International Distillers and Vintners (IDV) and Polychem Distilleries. the MNCs are required to counter the imports of alcoholic concentrates and export liquor products in equal amounts. estimated at around . to grow in value and volume. Fosters from Australia.
while that of lager beer has been sluggish at 5-6 per cent. India has 28 states and 3 union territories. Each state levies taxation on alcohol at its own determined rates and excise duties. so you need breweries in the different states. the strong beer (alcohol content over 5 per cent) market has been growing at 15 per cent. The reason there are so many is the legislation. In the last four years. A tangled web of tax and regulations across Indian states remains a major barrier to market growth in the country. Operators of . This makes it essential to have production centers in different states. and controls distribution channels in its own way. Local and foreign companies have lost no time in adjusting to this change in the consumption pattern. Differing regulations on pricing and distribution. Strong governance is clearly vital for companies to ensure the integrity of their organizations. It is a state by state market and not a national market. on all alcoholic products crossing the state borders. Strong beer is becoming popular due to its value for money. Taxes are levied. foster inefficiency in the alcohol sector and make it harder for brewers to attract consumers. often at higher rates in relation to world prices. is growing at 8-9 per cent. Transporting beer is expensive. as well as fluctuating excise charges. Challenges facing the industry A typical challenge in the Asian beverage sector¶s fight against corruption is the complex interrelationship between politics and the private sector. relationships with consumers and government authorities to avoid corrupt business practices. One could easily produce the amount of liquor drunk in India with two to four breweries.67 million cases.
distribution. 2000. and local environmental protection laws. credit. container characteristics. In a free market economy this has no rationale. Inadequate Market Infrastructure. bars and restaurants.Price restrictions in many large markets remain a biggest challenge for the industry. trade and pricing practices. state. and other similar charges and may require bonds to ensure compliance with applicable laws and regulations. Some of the regulations imposed at the federal and state level involve production. unlike most developed countries where beer and wine are not regulated in grocery/ retail stores. Specific alcohol taxation (as opposed to more general sales taxes) is primarily a federal and state right although some states permit some additional local taxation. license fees. retailers. for instance the figure is 300. leaving the manufactures with no say in determining the price of the beer. and bonded warehouse operators must be licensed and should pay the varying state license fees. The government controlled channel. The Government decides the End Consumer Price (ECP). state and local governmental entities also levy various taxes.The market infrastructure for alcohol in India is inadequate. Price Restrictions. in force September 8. The brewing industry must also comply with numerous federal. For every 21000 persons there is one outlet hampering the availability of beer. In China. Marketing regulations with advertising: The Cable Television Network (Regulation) Amendment Bill. The highly regulated market hampers beer sales. as well as regulation by a variety of local bodies. does not broadcast such advertisements but . completely prohibits cigarette and alcohol advertisements. Government Regulations and Issues The brewing industry is subject to extensive government regulations at both the federal and state levels. advertising. and alcoholic content. Federal. Doordarshan. labeling.outlets like wholesalers.
000 per year will pay the same amount of tax on a 12 pack of beer as someone who makes $35. Sin taxes are often used to by governments to help pay for the damage that society faces due to the perceived effects that long term use of these products can have on people. usually alcohol and tobacco products. In this case a person who makes $100. Most often these sin taxes are similar to a sales tax and are added to the price of the item by the retail agency selling the product. Sin Taxes Sin taxes is a term used to describe taxes that are place on items.000 per year. Typical use of sin tax funds include: Funding of efforts to educate the public about the effects of use of these products. Many see sin taxes as a regressive form of taxation because it has a much larger effect on those that are of a lower income level. or balance a budget. need for increased policing to protect society from criminal activity possibly associated with drinking. and for the medical costs that governments face from the treatment of alcohol related conditions. To many this . Further there is ban on telemedia advertisements of alcoholic beverages. Funding of health agencies Promotional materials Funding of facilities for health purposes y y y y Sin taxes are not seen as universally good even with their potentially positive effect on a Government¶s ability to provide services. When it comes to the alcohol industry advocates of sin taxes on alcohol often like to point out that the negative effects of drunk driving. improve infrastructure. Sin taxes are used by governments for a number of different reasons.satellite channels however are replete with them.
This opposition to the use of alcohol traditionally stemmed from a moral or religious opposition to the consumption of alcohol." intended to turn people away from God and forget . Social & Cultural Issues Throughout history there has consistently been opposition to the sale and use of alcohol. In addition to this many feel that the choice to drink alcohol is a personal choice and society should not have to pay for peoples choices. At first. it¶s the negative medical effects that abuse of alcohol has been shown to have on the human body. In light of that statement. as an attempt for government to find a ways and means to profit from the sale and consumption of alcohol. but the evil is greater than the good (2:219). Religion Society has long had people who because of their beliefs feel that the consumption of alcohol was immoral and should be outlawed. one of the few religions that has come out and stated that alcohol consumption is forbidden is Islam. increasingly it isn¶t a moral or religious reason that prompts this opposition. Finally. Very few faiths have come out and made the blanket statement that the consumption of alcohol is not permitted however. it is because of this that Sin Taxes have been levied on alcohol. Today however. Then a later verse was revealed which said that alcohol contains some good and some evil. we will examine some of the issues that are challenges to the beer industry. it was forbidden for Muslims to attend to prayers while intoxicated. Society is also feeling the effects of alcohol abuse.seems to be wholly unfair. ³Intoxicants were forbidden in the Qur'an through several separate verses revealed at different times over a period of years. This was the next step in turning people away from consumption of it. "intoxicants and games of chance" were called "abominations of Satan's handiwork. Below.
70 000 to 80 000 million y y . Annual loss due to alcohol was estimated to be Rs. various cancers. 15 to 20% of traumatic brain injuries were related to alcohol use. Health and safety: Trauma. In Middle East alcohol as a whole will always have a very insignificant market. unsafe sexual practices.about prayer. This is very significant because a large part of the population of India. premature death and poor nutritional status of families with heavy drinking fathers are associated with alcohol use. and Muslims were ordered to abstain from it. y y Seventeen point six percent of psychiatric emergencies were caused by alcohol Thirty four percent of those who attempted suicide were abusing alcohol y Work place: Twenty percent of absenteeism and 40% of accidents at work place are related to alcohol. with a growing population and growing emphasis on incorporating more of western society into a very diverse society there is great opportunity for expansion into that market. one the fastest growing beer markets in the world practices Islam. However any company that looks to expand in India and other countries in that region needs to understand and be prepared for significant resistance from the Islamic communities. In addition to Islam here in America there are factions and groups that are still advocating against the sale or consumption of alcohol. y Hazardous drinking was significantly associated with severe health problems such as head injuries and hospitalizations. organ system damage. violence. Thirty seven percent of injuries in a public hospital was due to alcohol. However in India.
number of workplace accidents reduced to lesser then one fourth of the previous levels after alcoholism treatment. The effect on a body when extensive use of alcohol is discontinued is well documented and it is these efforts that persuade science and medicine to continue to educating/pushing for people to discontinue the use of alcohol. As long as people continue to abuse alcohol and use it to excessive amounts there will be continued efforts by the medical and scientific community to encourage people to decrease their consumption or to quit using alcohol overall. and liver failure. heart disease. y 3 to 45 % of household expenditure is spent on alcohol. y Alcohol abuse leads to separations and divorces and causes emotional hardship to the family. diabetes. y . Family: Eighty five per cent of men who were violent towards their wives were frequent or daily users of alcohol. Use of alcohol increases indebtedness and reduces the ability to pay for food and education.y In a public enterprise. An assessment showed that domestic violence reduced to one tenth of previous levels after alcoholism treatment. More than half of the incidents were under the influence of alcohol. Science and Medicine Long term alcohol use has been linked to a number of medical conditions including cancer. The emotional trauma cannot be translated in terms of money but the impact it has on quality of lives is significant.
Opportunities and future growth prospects Alcoholic Drinks in India The alcoholic drinks market in India registered strong double-digit volume growth for the second year in succession in 2007. Domestic manufacturers embark on global plans Even as international players set their sights on developing markets such as India for the next phase of growth. Favorable demographics in the form of a strong economy. UB Group consolidates its lead even as multinationals step up competition . West Bengal and Chandigarh further increased the affordability and accessibility of alcoholic drinks. For example. Champagne Indage acquired Australian wine company Tandou Wines. Increasing deregulation in the form of lower taxes and greater retailing opportunities for beer and wine through supermarkets/hypermarkets in certain states such as Maharashtra. Indian manufacturers stepped up the aggression by not just expanding their product offerings in the domestic market but also entering into joint ventures. increasingly tapping into international markets and exhibiting a greater appetite for expanding overseas through the inorganic route. United Spirits completed the acquisition of major Scotch whisky player Whyte & Mackay in 2007 and wine manufacturer Bouvet Ladubay in August 2006. while RadicoKhaitan has been building up its exports in the Middle East and Africa by establishing a joint venture in the UK and United Spirits has been exporting its brands to China. improving lifestyles and higher disposable incomes encouraged consumer expenditure on alcoholic drinks over the review period. Indian manufacturers increased their global footprint in 2007.
which will provide a wider range of choices for Indian consumers. further established a firm footing in the Indian alcoholic drinks market in 2006. Maharashtra has been at the forefront of these changes with retailing of beer and wine being permitted in supermarkets. category investment. riding on changing demographics. A number of new product launches. The eastern state of West Bengal has also given the green light to the retailing of beer and wine through supermarkets. Moreover. Easing regulations allow sales through supermarkets The legislation surrounding the retailing of alcoholic drinks witnessed some liberalization efforts in the latter half of the review period. ensured yet another good year for the alcoholic drinks behemoth.UB Group. Meanwhile. With state governments easing regulations for the off-trade retailing of alcoholic drinks. increased social acceptance of drinking liquor and regulatory changes. With a number of international players slated to launch their brands in the Indian market. the alcoholic drinks industry has much cause for cheer. Chandigarh also jumped on the bandwagon. product availability and promotions are bound to increase. multinationals such as Diageo. product relaunches and packaging changes as well as promotional activity surrounding its key brands. Beam Global and Anheuser-Busch rolled out affordably priced made-in-India products to challenge the position held by UB Group. the parent company of United Spirits and United Breweries. with excise policy changes allowing retailing of wine through supermarkets. higher disposable incomes. Diageo tied up with retail giant Reliance Retail for the distribution of wine in 2007. Bright growth prospects for alcoholic drinks Alcoholic drinks are expected to post a strong performance in the forecast period. Kingfisher and McDowell¶s. current .
rum. Major Mergers and Acquisitions The alcoholic beverages offers an interesting case of a non-science based industry where firms have grown very large and survived (as the longevity of their brands andproducts shows) for a very long time.The notoriously high costs of distributionand brand building have created hugebarriers to entry²hence the importanceof acquisitions.Yet the market remains very fragmented. Leading businesses are constantly on thelookout for acquisition opportunitiesin high valuegrowth markets. Consolidation continuesapace as aggressive acquirers seek todemonstrate that they can wring valueout of the companies they buy.Meanwhile. WitnessSABMiller¶s acquisitions of Italy¶s BirraPeroni. BRL Hardy. Constellation Brands hasbeen rapidly building up its premiumwine portfolio through acquisitionsthat include California¶s RavenswoodWinery and Australia¶s largest wineproducer. . whose largest firmshave always ranked among the largest in the world. The alcoholic beverages industry offers few opportunities for organic growth. It is an industry. gin. especiallyif they have paid a premium. Romania¶s Aurora. Diageo.Diageo. for example. liqueurs andvodka²in which it has critical mass. along with firms from science based industries such as electronics and oil and capital intensive such as automobiles. moreover. ensures thatconsumer-centric brands like Smirnoffunderlie each of the spirits categories²whiskey. which is by far the biggest spiritscompany globally. accounts for lessthan 10 percent of the total industry. tequila.low per capita consumption in India is expected to provide room for growth in the forecast period.
1999 (Amounts states in millions of current US$) . under license in Italy. 1960. And AnheuserBusch usesthird parties²including local Heinekencompanies²to brew and sell its leadingbrand. has strucka deal with the Mexican brewer FEMSACerveza to gain an edge in that market. amongother countries. 1990. 1980. Argentina and Spain. The world¶s largest firms in alcoholic beverages. Budweiser. The firms that became truly global were primarily those that developed a portfolio of successful brands recognized in many countries. 1970. Standard accounts of growth and internationalization tend to give primacy to investments in science and technology.Some leading businesses have createdpartnerships and alliances with othercompanies in the industry to build thecritical mass necessary for distributionscale and efficiency in key markets. Brands have played a critical role in the evolution of multinationals in alcoholic beverages. and thereby to achieve continuous growth and long-term survival.Heineken USA will benefit from greaterscale and from the broader portfolio ofbrands.Heineken USA. competition and regulation. to move from familiar to geographically and culturally distant markets.Colombia¶sGrupo Bavaria and the Chinese divisionof Lion Nathan²all in the past fiveyears.Russia. for example. A similarly highly focused M&Astrategy has boosted Diageo¶s shareof the global spirits market and madeConstellation Brands the marketleader in the wine category. firms were able to respond to changes in consumption. Brands often determined the nature and scope of mergers and acquisitions in this industry and so help explain the successive merger waves that have transformed it since the 1960s. By acquiring and repositioning such brands. which will allow the companyto increase its leadership in the importsegment.
agriculture-industry-india.com/post/view/785/Bright-growth-prospects-for-AlcoholicDrinks-in-India/ http://web.References http://www.no/forskning/ebha2001.com/Global/Services/By_Industry/Consumer_Goods_and_Services/R_and _I/AchievingIndustry.com/agricultural-commodities/alcoholic-beverages.com/doc/18709189/Environmental-Scan-The-Global-Alchohol-Industry http://www. addictionindia.wikipedia.PDF .accenture.htm http://www./alcohol-related-harm-in-india-a-fact-sheet.indiacompanynews.indireports.org/.org/ http://www..nsf/dd5cab6801f1723585256474005327c8/a6cb7066ea59e da6c12567f30056ef4d/$FILE/C4%20-%20Lopes.bi..html http://www.pdf http://www.
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