Group Assignment

Sales and Distribution of AbinBev – Alcoholic Beverages

Post Graduate Programme in Management 2021-23

Indian Institute of Management Indore

Submitted By:
Group 10, Section B
Divyansh Prakash 2018IPM035
Harsha Dindi 2018IPM108
Himanshi Gupta 2021PGP146
Joshua Victor 2018IPM053
Mille Sharma 2018IPM064

Submitted to:
Prof. Aditya Billore

Date: April 01, 2022

 INDEX

INDUSTRY ANALYSIS………………………………………………………………….....02

DISTRIBUTION AND SALES STUDY…………………………………………………….12

EXISTING SALES MANAGEMENT………………………………………………………14

COMPARING WITH COMPETITOR………………………………………………………16

SUGGESTIONS FOR IMPROVING THE CHANNEL MANAGEMENT………………...18

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 INDUSTRY ANALYSIS

In 2020, the worldwide alcoholic drinks industry was expected to be worth USD1.58 trillion,
with a compound annual growth rate (CAGR) of roughly 3.5 per cent between 2020 and 2023.
With a market value of USD52.5 billion in 2020, India is one of the fastest-growing alcoholic
beverage markets. Between 2020 and 2023, the market is estimated to increase at a CAGR of
6.8%. According to the Ministry of Food Processing Industries, the output of alcoholic drinks
in the country climbed by around 23.8 per cent between 2015-16 and 2018-19. In India, the
alcoholic drinks sector supported 1.5 million employees and earned USD48.8 billion in sales
revenue in 2019. Foreign investment is welcome in the industry, and several states provide
subsidies to domestic manufacturers (for example, Maharashtra and Karnataka for wines).
Rapid urbanisation, changing consumer preferences, and a large and increasing middle-class
population with higher spending power have all contributed to the demand for alcoholic drinks
on the supply side. According to industry estimates, the number of persons who use alcohol
climbed from over 219 million in 2005 to 293 million in 2018, with 386 million expected by
2030. The use of alcohol by the upper-middle-income group has consistently increased from
7% to 21% and is anticipated to reach 44% by 2030. In most states, alcoholic drinks are one of
the top three income generators. However, there appears to be a lack of openness,
predictability, and clarity in the tax system to guarantee that the income-earning aim is matched
with other government goals such as "Make in India" and Indian exports. Across the states, the
governance and pricing arrangements for alcoholic drinks differ significantly. Through their
excise rules, the states regulate the whole supply chain of alcoholic beverages, from
manufacture to distribution to registration and retail. These rules are subject to frequent and ad
hoc modifications, creating uncertainty and making it difficult for manufacturers and distillers
to plan their investments.

Global Trends

To safeguard consumer health, more than 78 nations have placed price limitations on alcoholic
drinks by increasing excise taxes since 2010. However, alcohol use is price inelastic both
internationally and in India, meaning rising costs would not prevent consumption. As a result,
governments may encourage consumers toward reduced intake and greater quality
consumption by enacting the appropriate legislation. The research points out that such limits

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should be created through rigorous data modelling and transparency, citing examples from
numerous nations. This would safeguard consumers' health while allowing governments to
generate cash and facilitate exports.

Changing Consumption Trends

The paper identifies a number of intriguing market trends. While spirits continue to dominate
the Indian market, their volume share has fallen from 55.02 per cent to 50.31 per cent between
2013 and 2018. Beer consumption has risen from 44.56 per cent to 49.25 per cent, while wine
consumption has stayed nearly steady from 0.42 per cent to 0.50 per cent. According to the
preliminary study, the lower middle and higher middle-income groups will account for over
70% of India's rise in alcoholic beverage consumption over the next decade. There is a growing
tendency toward product premiumisation. In 2018, premium products saw a five-year CAGR
of 7.7%, with bottled imported spirits witnessing a CAGR of 10.9 per cent. By 2030, 50% of
customers are predicted to buy more of the same alcoholic beverage category they were
previously consuming, 26% will switch to higher-end brands, and 24% will spend on novel
categories of alcoholic drinks.

International Trade

In the worldwide alcoholic beverage trade, India is a minor player. In 2019, India's overall
proportion of global alcoholic beverage exports was only 0.27 per cent, putting it in 32nd place
globally, well below the number of developing nations. India's share of global imports was
0.75 per cent in the same year, putting it in 20th place. India has export potential in this industry,
which may be realised by lowering tariffs and establishing regulatory clarity across states to
promote manufacturing and "Make in India."

State Revenues from Alcoholic Beverages

According to this report's examination of state excise collections across ten states, the
percentage of income from alcoholic drinks varied by the state in 2017-18, but it was among
the top three revenue-earning components. The bulk of the ten states studied had a proportion
of alcohol income of nearly 99 per cent of total revenue in 2017-18; the exceptions were

3
Madhya Pradesh and Rajasthan, which had shares of 77 per cent 94 per cent, respectively (see
Figure B). Telangana had the most significant CAGR of 30.39 per cent in revenue collection
between 2013-14 and 2017-18, followed by Odisha (12.92 per cent) and Assam (12.92 per
cent) (12.69 per cent). Maharashtra has the lowest CAGR among all the states (6.29 per cent).
However, among the chosen ten states, Karnataka and Maharashtra had the most significant
income collection from the alcoholic drinks industry in 2013-14 and 2017-18. Income by
product category (see Figure C) shows that the 'foreign liquors and spirits' category generated
the most revenue in 2017-18 in states like Maharashtra (55.50 per cent) , Odisha (69.18 per
cent) , Telangana (79.61 per cent) ), Karnataka (86.98 per cent), and Delhi (95.55 per cent).
The 'country spirits' section generated the most income in states like Haryana and Assam,
accounting for 98.51 per cent and 81.31 per cent, respectively. In Uttar Pradesh and Rajasthan,
income from 'international liqueurs and spirits' and 'country spirits' was nearly similar,
accounting for 84.93 per cent and 75.6 per cent of total alcohol revenue, respectively. The most
extensive income collection (67.76%) in Madhya Pradesh came from the 'other revenues'
section, not from alcoholic drinks per se. Through a lottery/auction system for wholesale and
retail licences, northern states such as Haryana and Punjab ensure that they will receive 80%
of their projected revenues at the start of the fiscal year. Once a certain number of licences are
granted for that year, the government is assured of revenue in the form of licence fees,
regardless of whether or not licensees actually sell liquor. Even during the latest COVID-19-
related lockdowns, income is guaranteed in such instances. In certain areas, the tax burden falls
on producers, while in others, such as Delhi, it falls on consumers, potentially leading to a
move toward lower-quality items.

COVID-19 Related ad-hoc tax increases leading to revenue loss

To minimise revenue shortfalls and address consumer health requirements during the COVID-
19 pandemic, roughly 21 states increased excise taxes, extra excise duties, maximum retail
price (MRP), bottling fees, and implemented COVID-19 special fees, cess, and surcharges.
Eight of the ten states in the study have levied such taxes and levies, with Maharashtra and
Madhya Pradesh being the exceptions. Changes were brought in by increasing excise tax slabs
in states like Assam, Rajasthan, Karnataka, and Uttar Pradesh. At the same time, special
COVID-19-related cess/fees were applied in states like Delhi, Haryana, Odisha, and Telangana.
The impact on final product costs varied from 5 to 25%, except in Delhi, where prices

4
immediately soared by 70% due to a special corona tax of the same proportion. According to
industry estimates gathered during the study, pan-India sales volumes fell by 25-30% between
March and September 2020. As a result, revenue earnings were lower; particularly, revenue
earnings in Delhi were down approximately 25%, while revenue earnings in Odisha were down
around 40-45 per cent. Higher taxes resulted in fewer revenue collections, prompting
governments to re-evaluate their tax policies, and some jurisdictions began to provide sales
through internet channels. This demonstrates the need for a sophisticated, evidence-based, and
open planning approach in this industry. Route-to-Market Route-to-Market Route-to-Market
Route-to-Market Route Through their excise rules, states determine the distribution routes for
alcoholic drinks. In states like Maharashtra and Assam, there are four types of distribution
channels: (a) distributor model (company> distributor> retail); (b) corporation model
(company>corporation>retail); (c) wholesale model (company>wholesale>retail) in states like
Haryana; and (d) direct model (company>retail) in states like Delhi. Only in-person sales were
permitted before the pandemic, but during the COVID-19 epidemic, home delivery and e-
commerce channels were permitted in select states, including Odisha and Delhi.

Regulatory barrier: variation across states

The survey showed significant differences between states in terms of policy and execution.
Some states establish new or updated excise policies each year (usually at the start of the fiscal
year); in others, excise policies may not be amended for several years, with no changes in the
pricing permitted for manufacturing enterprises or suppliers. Excise policies may not be
published online in certain states. They may not be updated or available in English if they are,
making them difficult to understand and interpret for firms. The policies are public in English
and for the past five years in Haryana, Maharashtra, and Odisha; the guidelines are available
in English but cannot be accessed online for the past five years in Assam, Delhi, Karnataka,
and Telangana; and the policies are not accessible in English but are available for the past five
years in Madhya Pradesh, Rajasthan, and Uttar Pradesh. As shown in this report's examples
from ten states, different state legislation and regulations cause disparities in pricing patterns,
cost structure and taxes, governance models, route-to-market methods, and company setup.
Maharashtra (minimum 45 days) and Karnataka have the most extended lead times to grant
licences among the ten states indicated in 2020. (40-45 days). Even though the licences were
granted manually, Uttar Pradesh had the shortest lead time at seven working days. The

5
registration and licence issuance processes in Assam are both done online. However, the
average wait time was 20 days in 2019-2020. Such policies make conducting business more
difficult and weaken the underlying idea of 'Digital India.' Instead of being a single market, it
divides India into more than 30 distinct marketplaces. India's trading partners, such as
Australia, the European Union, and the United Kingdom, are likely to bring up state-level
variances during trade discussions.

Price Control Barrier

Because the alcoholic drinks industry is exempt from the goods and services tax (GST), state
governments can adopt independent pricing control measures depending on their objectives.
As a result, different pricing methods and procedures are used in other states. The technique of
determining the ex-distillery price (EDP) or ultimate price of products for whisky varies by
state. In Haryana, Uttar Pradesh, and Rajasthan, the lowest EDP among neighbouring states is
considered, while in Madhya Pradesh, the lowest EDP across India is considered; in Karnataka,
Maharashtra, and Assam, a free pricing policy is implemented; in Telangana, EDP is
determined through open tender; and in Delhi, a combination of lowest EDP and free pricing
is used, based on the product price. Price regulation is one of the most critical aspects of the
sector's regulation because differences in taxes and, as a result, final product pricing attract
illicit trade from neighbouring countries.

Furthermore, differences in product ultimate price definitions/ terminology create hurdles for
organisations. According to the report, most states base their EDPs for whiskey on the lowest
EDP among neighbouring states, ignoring variances in production costs across states.
Furthermore, the EDPs are not updated on a regular basis, neglecting inflationary pressures.
Overall, the pricing process is opaque due to a lack of evidence-based, data-driven
policymaking.

High Import Tariffs

The underlying idea of "Make in India" is undermined by high import taxes and a 150 per cent
cess, even on intermediate items. Even if tariffs are phased out, imports will not account for
more than 1% of domestic consumption; however, imported liquor prices in India are

6
significantly higher than in 95% of other countries, and India's trading partners have repeatedly
raised this as a critical barrier in their trade agreement negotiations.

Impact of Regulation and Pricing Mechanism

According to the poll, state governments have seen (a) a decline in or considerable loss of
potential revenue as a result of variety and occasional rules. (b) resulted in the expansion of the
illicit liquor industry and the death of people who consumed it. (c) made it more difficult for
producers to get various permits and comply with regulations, reducing the ease of doing
business; and (d) encouraged customers to switch to lower-quality goods, posing health risks.
Few companies have emerged in this industry as a result of increased monitoring, policing, and
control over the supply chain of items from producers to retailers, resulting in an oligopolistic
structure. Alcoholic beverage shipping is handled by just around 30% of logistics businesses.
The sector has a low value-added component and is heavily reliant on imports. Regulatory
hurdles have also prevented India from developing its manufacturing skills and exporting to its
full potential in this area, despite the industry's willingness. Suppose India maintains high
tariffs and cess and state-level non-tariff obstacles. In that case, it will be unable to negotiate
trade deals with important trading partners such as the United States, European Union, United
Kingdom, or Australia, according to survey participants. The poll also discovered that the
unpredictability of state excise laws and changes in the timing of their implementation have a
negative impact on the production cycles of manufacturers/companies operating in many
jurisdictions. Due to the ad hoc nature of making policy changes, such as charging taxes during
COVID-19 in certain states, the governments have not been able to fulfil their planned goal of
collecting tax revenues. Furthermore, policy changes are frequently not backed up by a
thorough examination of sectoral data patterns, putting evidence-based policymaking at risk.
Despite having tremendous potential and subsidies granted by the Centre and states for select
alcoholic beverage manufacturing, India has not been able to become a prominent exporter as
China or Chile have due to convoluted state-level legislation.

Market Share of different liquors in India

Market
Sno Type of Industry
Share

7
 1 IMFL 3
2. Country liquor 48
3. Beer 13
4. Illicit liquor NA
lmported liquor includes
5. 3
wine

Alcoholic Beverage Companies and their major brands in each product category

Sno. Company Whiskey Rum Vodka Brandy Beer Gin

Old Secret,
Empee
1 Victoria, Napoleon
Distilleries
Sixer
Country Hannibal White
2 Globus Spirits Le' Mans
Club Rum Lace
Black
Glen Imperial,
Black Magic, Seagull
Imperial Special, Imperial
3 Magic, Imperial London
Spirits Gold Coast Exclusive
Hatrick Iceberg Dry
Malt VSOP
Premium
Summer
Triple
Hall,
Crown,
Mohan Colonel's Big Ben
4 Old Monk Doctor's
Meakins special, London
Reserve
Golden
No. 1
Eagle
Old
Radico After Dark, Magic
5 Contessa Admiral,
Khaitan 8PM Moments
Morpheus
Hunter,
Som
6 Black Fort Wood
Distillieries
Pecker

8
 Mansion
TilakNagar House, Madira XXX Castle Mansion Savoy
7
Industries Senate Rum Club House Club
Royale
Kingfisher,
Zingaro,
London
United
8 Pilsner
Breweries
Heineken,
Sandpiper.
Black label
McDowell
N0.1, RC,
Bagpiper,
Black Dog, Red
McDowell McDowell
Whyte and Romanov, Blue
9 United Spirits Celebrations, No.1,
Mackay, White Riband
Old Cask Honey Bee
Vat 69, Mischief
Officer’s
Choice,
Royal Stag.

Porter’s 5 forces

Threat of New Entrants (MODERATE)

• In this industry, existing businesses have a cost and performance edge. This is due to
the fact that existing businesses have already made huge capital investments and benefit
from economies of scale. They've built up direct supply and distribution networks as
well.
• Only experienced players are allowed to try new things.
• A newcomer to the sector would struggle to evaluate distribution networks. The key
distribution channels, such as large supermarkets, petrol stations, and restaurants, are
already under the grip of the major companies.

9
Threat of Substitutes (HIGH)
• There are always new things on the market.
• Switching to alternatives would not cost customers anything. In most circumstances,
the difference in pennies between moving to a substitute for a client would be the
deciding factor.
• Some customers are concerned about price.

Bargaining Power of Suppliers (LOW)

• Already established firms are experimenting.
• Companies may swap suppliers fast and easily. The industry's suppliers aren't under a
lot of competition. Bottling equipment manufacturers and secondary packaging
providers are among the industry's suppliers.

Bargaining Power of Buyers (HIGH)

• The target market consists of young adults who are open to try new things.
• It takes time for brand loyalty to build.
• Customers are extremely price sensitive when it comes to alcoholic beverages, and they
are likely to switch brands if one of the similar brand with similar quality becomes
much more expensive than the other.

Rivalry among Existing Players (HIGH)

• The industry is not expanding at a significant pace. The industry's growth rate isn't very
fast; in fact, it's quite slow. This makes it extremely difficult for newcomers to compete
with the industry's established players.
• Because the industry's enterprises have distinct brand identities, brand names are a
crucial competitive advantage for new businesses.
• Because there isn't much that can be done in the category, different companies are
experimenting with different ideas.

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SWOT Analysis

PESTLE Analysis

Political
• There is a major stability in the major Political scenario (opportunity)
• There is a high level of improvement in the intergovernmental cooperation
(opportunity)
• There have been initiatives by the government against carbonated drinks (opportunity)

Economic
• There is an Economic stability of most major segmented markets (opportunity)
• There is a rapid growth of developing tier 2 and tier 3 economies (opportunity)

Social
• There is a higher health consciousness among the consumers (threat & opportunity)

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 • There has been a systemic increment in the busy lifestyles (opportunity)
• There has been a change towards discriminating attitudes about the quality of the
product (opportunity)

Technological
• For a long time there has been a moderate R&D investments by the players of the
industry (opportunity)
• There is a higher scope of increasing automation in the business operations
(opportunity)

Legal
• There have been strict regulations regarding the sales of alcoholic beverages in certain
parts of the country (threat)
• The rate of change of regulatory compliances have been moderate over the years
(opportunity)

Ecological
• There has been a high focus on business sustainability across the industry (opportunity)
• There has been an increased focus towards climate change and the effects of the
industry towards the water consumption and its exploitation (threat & opportunity)

DISTRIBUTION AND SALES STUDY

To obtain a clear picture of the distribution capabilities of Ab InBev in India, it is necessary to

understand the regulatory nature of the Indian Liquor industry.

The Indian liquor industry is highly regulated globally, with stringent state-specific rules
encompassing all aspects of business, ranging from taxation, price control, and distribution
models. The distribution structure varies from state to state and can be classified into three
types:

12
 ● Government Controlled: In states with more sales and consequently higher liquor
revenues, the government controls the distribution, retailing, pricing, and other
functional areas making it difficult for most companies to aim for increased profit
margins. The respective state government is the wholesale distributor of beer and
acquires beer directly from manufacturers based on an annual tender system. The
government controls the price at which beer is procured from the manufacturer.
● Open Market: There is little or no government intervention in the pricing and
distribution of beer. The manufacturers sell beer to the distributor who sells it
downstream. Market forces determine the prices.
● Auction Market: In such states, the seller must obtain a license to sell to distributors.
Moreover, there are a limited number of licenses.

Though Ab InBev operates in both the distribution structures, examining how they operate in
Auction Markets would accurately hint at their distribution might.

Ab InBev follows the four-tier system in India. Ab InBev sells its product only to wholesale
distributors who then sell to retailers, and only retailers may sell to consumers.

The four-tier system of distribution:

Tier 1. Ab InBev (manufacturer): Ab InBev is licensed to sell its products to

distributors, importers, and state control boards. Once a product leaves the brewery, Federal
Excise Taxes are collected.

Tier 2. Distributors: They are licensed distributors or importers who work with state
and central agencies to ensure that duties are collected. They then sell to approved and licensed
wholesalers.

Tier 3. Wholesalers: They are licensed entities that carry various beverage products.
Wholesalers are geographically close to the market and try to provide one-stop shopping for
retailers and achieve a high service level. They Procure products from multiple beers and other
beverage distributors.

Tier 4: Retailers: They are a wide variety of businesses, often subdivided into “off-
premises” retailers like liquor stores, supermarkets, general stores, and the like, and “on-

13
premises” retailers like bars, restaurants, hotels, and the like. These retailers must be approved
and licensed.

The dynamics of the relationship between Ab InBev and its distributors and how they are
forged provide insights into how Ab InBev commands a 28% share of the Indian beer industry.
Ab InBev usually serves several distributors, whom Ab InBev licenses through public bidding
to represent its brand in certain regions. However, they could also be designated by Ab InBev
when the distributors are the vital link of the channel in the desired market.

In bidding events, the distributors must commit to a certain annual sales goal to become
licensed. Distributors purchase beers from Ab InBev or other distributors and sell them to
several wholesalers. Distributors can also act as wholesalers to directly sell products to
retailers. Each distributor typically carries a single brand, though the distributor can carry other
non-competing beverages simultaneously.

Beyond distribution functions, some distributors also support marketing activities, customer
relationship management, complaint resolution, and promotional activities.

Though Ab InBev is behind its contemporaries in India with a 28% market share, it redeems
itself by being the leader in the premium beer segment. Ab InBev is able to leverage its
distribution network by employing a “Selective Distribution” strategy where Ab InBev adjusts
its price points to target a specific segment of the market to create an aura of exclusivity.

EXISTING SALES MANAGEMENT

The alcohol and beverage market in India is rather tricky to navigate with strict compliance
laws, state-wise distribution norms, taxation norms, and socio-cultural connotations related to
it. To make it more complicated, it is also hard to map out legitimate suppliers (who are in
possession of proper government clearances and licenses) and control the supply of the product.
Nearly 70% of Ab InBev’s sales happen in regions where the local/ state government have full

14
control over the liquor’s manufacturing, retailing, distribution, and pricing1. Despite these
existing complications, brewers and suppliers such as Ab InBev, Diageo and United Breweries
have continued to show promising growth in the Indian market.

In the alcoholic beverage industry, a very standard distribution channel exists within the Indian
context, which is followed by most manufacturers including Ab InBev. The chain/ channel
consists of wholesalers and distributors, point-of-sale operators (licensed and non-licensed,
both), retail chains (for example, RIL and Diageo partnered for selling liquor via retail outlets
of Reliance), and hospitality centres such as cafés, clubs/ pubs, and hotels2.

India also serves as a mass production unit or as a mass brewery unit for Ab InBev. It has more
than 170 outlets across India3. These are utilised not only to manufacture products for domestic
sales but also for international sales to countries such as Chile, Malaysia and UAE4.

As was previously highlighted, there are many hurdles when it comes to distributing alcoholic
beverages in the country. Ab InBev, in order to ensure that they are operating rightfully and
“sustainably” (which is also in alignment with the ESG goals of ensuring equity and welfare
of their supply chain), has developed a 3-step approach5. This approach has been outlined
below:

• Constantly revising and developing benchmarking frameworks to evaluate their

suppliers on how it is practicing “responsible sourcing” and the curative mechanisms it
has in place to address grievances and concerns.

1
Malviya, S. & Balram, S. (February 20, 2020). AB InBev wants its premium brands to have a bigger play in
India's beer market. The Economic Times. Retrieved from
https://economictimes.indiatimes.com/industry/cons-products/liquor/ab-inbev-wants-its-premium-brands-to-
have-a-bigger-play-in-indias-beer-market/articleshow/74220554.cms
2
The Indian market for alcohol. (n.d.). NPCS. Retrieved from
https://www.entrepreneurindia.co/information-description/10
3
Malviya, S. & Balram, S. (February 20, 2020). AB InBev wants its premium brands to have a bigger play in
India's beer market. The Economic Times. Retrieved from https://economictimes.indiatimes.com/industry/cons-
products/liquor/ab-inbev-wants-its-premium-brands-to-have-a-bigger-play-in-indias-beer-
market/articleshow/74220554.cms
4
The Indian market for alcohol. (n.d.). NPCS. Retrieved from
https://www.seair.co.in/indian-trader/anheuser-busch-inbev-india-limited.aspx
5
Ab InBev. (n.d.) Retrieved from
https://www.ab-inbev.com/suppliers/sourcing-responsibly/

15
 • Along with their core suppliers, Ab InBev’s local teams work on identifying elements
that pose high risk in Ab InBev’s existing supply chain. They also collaborate to
monitor supplier sites. Additionally, they also conduct surprise third party audits.
• They are also working on the conduction of workshops pertaining to human rights
which help them to point out any sector-specific risks, if there are any. It also helps to
build more robust, and well-researched targets that they set to achieve (be it long term
or short term).

In case, the supplier does not pass their evaluation tests, the teams have been instructed to de-
authorise these outlets from distributing and carrying Ab InBev’s products (this, however, is
their last resort).

COMPARISON WITH COMPETITIORS

The world's top four brewers are all based in India. However, the positions are reversed in
India, with AB Inbev, the world's largest brewer, having the weakest market share of the four
with less than 5%. Heineken is the largest of the four, thanks to its interest in United Breweries,
India's largest brewing business, which produces the top brand, Kingfisher. Heineken's
presence in India began in 2008 with its participation in the Heineken/Carlsberg purchase of
Scottish Newcastle. Heineken acquired a stake in United Breweries in December 2013,
bringing the company's total ownership to 38.7%, including the purchase of 1.3 percent from
Citicorp Finance India. United Breweries is striving hard to maintain its market-leading
position; its entire market share is believed to be around 55 percent, compared to AB Inbev,
SABMiller (around 25 percent market share), and Carlsberg (approximately 25 percent market
share) (approx. 8 percent market share). They're fighting for market share against their
competitors. The market also draws affluent local Indians who are now working in other sectors
and want to create their own breweries and maybe sell them to foreign companies once they
are operational, due to the promising features of growing it. One of the most difficult aspects
of establishing new breweries in India is obtaining licences and licences from local
governments, and locals have a significant edge over multinational enterprises in this regard
since they may do business differently.

16
Increased competition in the last decade has had a significant positive impact on beer quality.
Beer demand was more remarkable than supply in the 1990s, resulting in low-quality beer
being distributed to the market. This has altered as a result of greater competition in the 2000s,
with pool now more or less matching demand. This has improved beer quality, as customers
can now pick from a broader range of brands, allowing them to receive exactly what they want
rather than just what is available. International brands in both typical pilsner strength of approx.
4-5 percent alc. and strong beer of approx. 8-9 percent alc., local brands with the same split,
and other imports/craft beer are India's five varieties of beer. Strong beer kinds are primarily
offered during the summer months, with a comparatively high peak of around 15% throughout
this time. The standard pilsner varieties have minor variations, with maximum heights of
approximately 10%.

Kingfisher, Taj Mahal Indian Lager, Kalyani (United Breweries), Fosters, Haywards (both
SABMiller), Carlsberg, Tuborg (both Carlsberg), and Budweiser (all Carlsberg) are some of
the most well-known brands (AB Inbev). The changeover from Tuborg to Heineken as the
leading international brand exemplifies the fierce competition between the brands. Carlsberg
had the benefit of entering India a little before Heineken in 2007, so released the Tuborg brand
first, but they were unable to maintain their lead, allowing Heineken to take over. The early
British brewers who set up tiny ale enterprises in India were the inspiration for Indian brewing
until recently. However, given the historical/policy distinctions that can be noticed across the
top 5 worldwide brewers, the way brewing is done now at the larger breweries represents how
contemporary lager brewing is done everywhere around the globe. The breweries we toured
were in good shape, and they were maintained tidy and clean. The age of the equipment varied,
although it was often older than ten years. The current emphasis on upgrades and agreements
with Good Manufacturing Practice (GMP) and specialised initiatives targeted at increasing Key
Performance Indicators (KPI) and thereby decreasing Operational Costs (OpEx) has yet to
reach India. Several goods were tried when visiting the breweries and during our on-site study
of the beers made. The samples were reasonably fresh, indicating a quick turnover, which the
breweries visited corroborated. However, the predominant off-flavours discovered were in the
"oxidation" group.

17
 SUGGESTIONS FOR IMPROVING CHANNEL MANAGEMENT

1. Segmenting the distribution channels: On one hand, AB InBev should take a look at its
cutting-edge offerings. Budweiser, for instance, has extremely-excessive-give up
products like Budweiser-customized products for the fowl yr, star customized
aluminum cans, and grasp gold label, which can be even extra expensive than ordinary
imported items and pink wine or liquor of the same quantity. Sedrin beer additionally
introduces a sweet and bitter lemon soda beer, which is more appropriate for girls,
further to the overall taste. The principal promotional channels for those diverse
products are unquestionably distinct. On the other hand, some of the distribution
channels need to be subdivided and combed thoroughly. We urge that AB InBev collect
a statistical file on all promoting terminals, together with the income repute of
numerous items in each terminal, in addition to info on the income of other beers at the
terminals. If a product does not meet the projected sales repute, AB InBev has to recall
exiting the channel and focusing confined price range on product promoting to decorate
channel income.
2. Focussing on terminal promotion: To make sure a thorough hold close of the
distribution, AB InBev should pay attention to terminal merchandising in any
marketing channel, in addition to energetic emblem building and marketing
merchandising. To start, terminal businessmen have to take a lively participation in the
promotional value role. AB InBev wishes to growth these businessmen's enthusiasm
for actively selling the products via stepped promotional strategies in addition to
shelving agreements to make certain that AB InBev's merchandise are showcased and
AB InBev's advertising and marketing posters are prominently displayed, in order that
businessmen reply extra positively to numerous AB InBev advertising and marketing
measures. The second one step is to shape a reputable terminal income crew. AB InBev
should shape a group of promotional masters and forgo provider self-recruitment
techniques from an economic issue. So that one can get advanced control with a
protracted-term set profession, we need to first coach these legitimate sales personnel
from an employer attitude. Following that, AB InBev should utilize its company
sources to marketplace items, together with unique Budweiser tasting sites, emblem
advertising, and so on.
3. Shield the distribution channels in a variety of methods: AB InBev has its very own
arguments for having tight manipulation over distribution channels, however the

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 foundation of tight manipulation is the distribution channels' reliability. As a result, AB
InBev has to draw close the income channels from two views. AB InBev ought to
continue to work with existing sellers with the intention to keep a wholesome
partnership. It has to create high-quality relationships with some of the dealers so that
it will keep away from any problems that may arise due to negligence. They should
supply unique attention to safeguarding the dealers' affordable pursuits, in view that
high management can simplest be carried out with better allegiance from the dealers,
as allegiance is the inspiration of the pursuits. AB InBev's primary priority is to ensure
a pleasing and easy operating courting with the sellers, as well as to finish the bills
receivable turnover task as speedy as feasible. It is essential to each inspire sellers to
provide guidelines and to region an excessive fee on items. It's also necessary to
recognize every dealer's welfare and to look at them as a precious partner.
4. Incorporate brand image creation into promotional tools: First, the requirement is
to put forth greater effort in constructing the counters. The dimensions and appearance
of show cases varies relying on the retailing terminal channel. 2nd, deliberately plan
offline activities. AB InBev can take advantage of its own presence to arrange a few
social events which can be regular with the brand's image and favorable to citizens.
They need to sell the idea of cultured alcohol ingesting, healthful ingesting, and
stopping inebriated driving, as well as alcoholism, through posters and neighborhood
propaganda. In addition, they should actively produce videos relating to public welfare.
Small concerts or nearby scenic excursions, as an example, are any other exquisite
thought. AB InBev should strive to make its reach bigger through engaging in some
offline sports.

REFERENCES

1. AB InBev wants its premium brands to have a bigger play in India's beer market. The
Economic Times. (n.d.). Retrieved April 1, 2022, from
https://economictimes.indiatimes.com/industry/cons-products/liquor/ab-inbev-wants-
its-premium-brands-to-have-a-bigger-play-in-indias-beer-
market/articleshow/74220554.cms
2. Developing principles for regulation of alcoholic beverages. (n.d.). Retrieved April 1,
2022, from https://icrier.org/pdf/ES/ES_Alcoholic_Beverages.pdf

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3. India beer market. (n.d.). Retrieved April 1, 2022, from
https://www.entrepreneurindia.co/project-and-profile-
details/India%20Beer%20Market
4. January 2018 – scandinavian brewers' review. Scandinavian Brewers Review. (n.d.).
Retrieved April 1, 2022, from https://scandbrewrev.dk/2018/01/
5. Product distribution strategy for Alcohol Brands. Overproof. (2021, April 22).
Retrieved April 1, 2022, from https://overproof.com/2021/04/14/product-distribution-
strategy-for-alcohol-brands/
6. Subhashree, P. (2021, September 28). A deep dive into cartelisation in the Indian liquor
industry. Transfin. Retrieved April 1, 2022, from https://transfin.in/a-deep-dive-into-
cartelisation-in-the-indian-liquor-industry

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