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Brewers Association of India founded

The three largest brewers in India have formally joined forces to stimulate the market and represent their interests with the government.

United Breweries (controlled by Heineken), AB InBev and Carlsberg, which together account for about 85% of the country’s beer sales, have formed the Brewers Association of India.

Formed in partnership with the World Brewing Alliance (which includes most consuming countries), their aim, they say, is “to grow the beer category in India and drive innovation, moderation and sustainability”.

Open to everyone

Their new body is open to all brewers in the country. Its first action was to lobby the national government in Delhi over the way beer is taxed in India, a factor they say has caused the Indian beer market to stagnate at around 400 million cases per year, despite huge growth potential.

They also blame restrictive retail licensing rules for limiting beer sales.

Unlike most other countries, India taxes spirits and beer on the amount of liquid in the bottle rather than the alcohol content.

This is the biggest deterrent to growing demand, said Vinod Giri, the director general of the newly formed trade body, who took office this weekend.

Sanctions

This regime means that low-alcohol products such as beer are “penalized” by making them more expensive than spirits in real terms, he said.

The same tax is levied on a liter bottle of beer with an alcohol percentage of 5% as on a liter bottle of whiskey with an alcohol percentage of 40%. Consequently, beer becomes relatively more expensive compared to liquor, he said.

As a result, says Giri, former director general of the Confederation of Indian Alcoholic Beverage Companies, Indian brewers are at a distinct disadvantage compared to those operating in much of the rest of the world.

Globally, governments are shaping regulations to shift consumers to lower alcohol products such as beer, but not in India.

“If such a step is taken, it will not only unlock the beer potential in the country but also go a long way in encouraging moderate and responsible alcohol consumption,” Giri said.

In 2023, the beer market grew by 6.5%, with a turnover of just over 31 million hectoliters, or approximately 400 million cases.

Cina

But China, which has a slightly smaller population, sold 420 million hectoliters in 2022, compared to just 29 million hectoliters in India.

In the same year, the US, with a population about one-fifth that of India, consumed 204 million hectoliters and Brazil 149 million hectoliters. Even Vietnam, with a population fourteen times smaller than India’s, sold more than 50 million hectoliters that year, he pointed out.

According to the IWSR, under the current tax regime, the beer market in India will grow at a combined annual rate of around 3% between now and 2027.

India’s retail licensing rules and fees also do not distinguish between products with low alcohol content, such as beer, and drinks with higher alcohol content.

Cons

Beer, Giri says, faces greater complexity and higher distribution costs, such as cold supply chains and limited shelf life, putting the category at a further competitive disadvantage compared to spirits.

“Our collective commitment (in forming the new association) is to accelerate the category growth of the beer industry in India,” said Vivek Gupta, managing director and CEO of Heineken-controlled United Breweries, the country’s largest supplier.

“Together, the industry can help shape policies that promote responsible consumer choices in moderate alcoholic beverages, a robust tax and regulatory framework and promote investments for socio-economic benefits, he said.

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