Big business brews as global brands cash in on demand

Written by Neha Pal | Neha Pal | New Delhi | Updated: Dec 7 2011, 08:39am hrs
With beer consumption rising in the metros and major towns, top global brewers like Molson Coors, Duvel and Anheuser-Busch InBev are exploring options to set up breweries in India. Germany-based Rolec is also in the country now, while Amsterdams Heineken already set up its first brewery in Maharashtra earlier this year.

Reailising this, the excise department of Delhi government is now said to be pushing a proposal, which, if accepted, would allow microbreweries (selling self-brewed beer) in city's pubs and restaurants.

At present, Haryana is the only state that allows setting up of a micro-brewery at an annual fee of R2.5 lakh. "Once pubs and restaurants in Delhi get a licence to set up a micro-brewery, it would encourage international companies and local suppliers in expanding their presence," said Ankur Jain, director, CRAFT Beverages.

Wolfgang Roth, founding partner and MD of Rolec, said: "The quality of beer production in India is rapidly catching up with the best worldwide. Being a supplier of brewing systems, our focus would be the craft beer segment in the Indian market and we would be using the German brewing technology with a focus on high quality."

United Breweries had rolled out Heineken beer across India this September, almost three years after the Dutch company picked up a 37.5% stake in UB. Jean-Franois van Boxmeer, CEO of $17-billion Heineken, had said then that India remained the last frontier in the global beer market.

However, a high tax regime on alcohol products remains the biggest hurdle for growth.

Globally, beer is taxed at 50% of hard liquor, whereas, in India, beer is actually taxed 60% more than hard liquor.

About 26 different alcohol-specific taxes constitute about 50% of the consumer price, which is the highest in the world. Imported foreign beer brands, which recently entered India, continue to operate at a lower base due to high customs duty, sources said.

At present the top five Indian beer brands are Kingfisher, Haywards , Royal Challenge, Kalyani Black Label and Kings. United Breweries, with a market share of 56%, leads the pack, followed by 26% of Sab Miller. The remaining 18% is shared between several players, including Carlsberg (5%) and others.