The big beer battle

Written by Anirudh Vohra | Updated: Oct 29 2014, 21:07pm hrs
SUMMER AND cold beer are almost synonymous, but this season has seen the Indian market for the popular alcoholic beverage really hotting up. Carlsberg, the Danish company that is the worlds fourth-largest brewer, recently announced that it was investing R200 crore in its India operations. This comes on the heels of SABMiller, which markets Fosters, Miller High Life and two local brands, Knock Out and Haywards 5000, investing around $77 million in the country last year to expand its capacity and portfolio.

The investment has been seen at a time when the market share in the Indian beer market is constantly shifting, showing the level of competition in what is clearly a R3,000-crore business. Asia accounts for 35% of global beer consumption and India is the largest regional beer market. India, however, offers a somewhat distorted picture since strong beers account for almost 80% of the total alcoholic beverage sold.

The outright market leader is the United Breweries (UB) Groupjointly owned by Vijay Mallya and Heineken makers of Kingfisher, a name that is almost synonymous with beer in India. The company has a wide portfolio of beers in the low, medium and premium price bands and dominates the Indian market with a 50% share. We have a wide and diverse portfolio of brands, the largest manufacturing footprint, unmatched distribution capability and sharply-focused consumer initiatives, says Prakash Mirpuri, vice-president,

corporate communications, UB Group.

London-headquartered SABMiller is the second-largest brewer in most local markets with a 25% market share, but is now facing the heat from Carlsberg, which has been aggressively marketing its brands Carlsberg, Tuborg, Kronenbourg and the super-strong Palone. Five years after entering India, Carlsberg is in the second spot in some markets. UB leads most markets barring Haryana, Punjab and Chhattisgarh, where SABMiller is number one.

Michael N Jensen, managing director, Carlsberg India, says: This investment infusion represents our confidence as one of the fastest-growing beer companies in India and our commitment to this market. It is a tough market as well because of local preferences and the demand for beers that have a kick, which come under the strong category. These are beers with an alcohol content between 5% and 8%, which account for more than 80% of the market. UB has Kingfisher Strong, Carlsberg has introduced Carlsberg Elephant and Tuborg Strong, while SABMiller acquired two local brands, Haywards 5000 and Knock Out, to add to its imported Fosters Gold. In terms of brands, Kingfisher is number one, followed by Haywards 5000, Knock Out and Tuborg.

With rapid urbanisation, a young population and a fast-growing middle class, India has become an attractive place for companies to operate in. Today, the international names include Corona, Budweiser, Fosters, Carlsberg, Heineken, Shepherd Neame and Carling. They all expect growth in beer consumption to be driven by changing social norms, increasing disposable incomes and the growing social acceptance of the alcoholic beverage. In many markets, beer and wine are now allowed to be sold in grocery stores, something unheard of earlier. The greater accessibility should lead to a rise in demand, an eventuality that the Big Three are already banking on. UB benefits from 28 breweries spread across the country, its latest being the one in Patna this year. SABMiller has 10 high-quality breweries located across nine states in India. Its brewery in Andhra Pradesh is the countrys first to have a capacity of 1.5 million hectolitres. Carlsberg runs five breweries in the country. In 2012, India consumed 20 million hectolitres of beer, which amounted to 1.6 litres of consumption per person. The per capita consumption of beer grew by 86 million cases during 2008-12256 million cases in 2012 from 170 million cases in 2008, a rise of 11%.

Increasingly, consumers are showing a preference towards the premium beer segment, whose share is now 5% of the total beer market with segment volumes almost doubling in the last two years. The premium segment has been growing at 39% over the last 24 months against the overall industry growth average of 5%. Our current brand portfolio is one of the widest in the beer industry. We cater to the diverse needs of various consumers, right from the value-based consumer to the consumer who is looking at an international, high-quality beer drinking experience. All our brands like Haywards 5000, Knock Out, Royal Challenge, Fosters, Indus Pride, Miller High Life and Peroni Nastro Azzurro are key players in their categories and targeted markets, says Darioush Afzali, marketing director, SABMiller India.

Kingfisher already has Kingfisher Ultra, which is selling well in the premium beer market along with Heineken, the largest shareholder of the UB Group (38.76% stake at the end of the June quarter). UB announced the launch of Star Can in India, along with the global rollout of the new, modern and progressive Star Can design. In India, Heineken is currently available in 650ml and 330ml bottles, and the latest 500ml aluminum Star Can expands the brand offering in India.

SABMiller launched Miller High Life, the iconic international brand, which has performed well in a short duration. Carlsberg joined the fight with Kronenbourg 1664, Kronenbourg Blanc and Carlsberg Green, the 100% malt mild beer. We are encouraged with the performance of our brands Carlsberg, Carlsberg Elephant, Tuborg and Tuborg Strong, and plan to focus on these at the moment. In 2013, we introduced global brands like Kronenbourg 1664 and Kronenbourg Blanc, says Jensen of Carlsberg India.

The rising acceptance of social drinking is a major contributor to the industrys growth. With the ban on advertising, most beer companies go for promotional activities in pubs and bars, the most popular being ladies nights when drinks are served free to women. In fact, surveys show that beer is the preferred alcohol of the 21st-century Indian and has a strong female consumer base. That has also prompted the introduction of flavoured beers, from fruity twists to spicy infusions, and fancy names like Basmati Blonde. The latest addition is Indus Pride, Indias first

beer brewed with authentic Indian spices such as coriander, cardamom, fennel

and cinnamon, launched by SABMiller India.

To add to the variety, there has been a spurt in the number of beer cafes and microbreweries. The microbrewery boom started in 2008 with two brew pubsHowzatt and Rockmans Beer Islandopening within a month of each other in Delhi-NCR and today all major Indian cities are experiencing the presence of such outlets. Other players have branched out to concepts such as non-alcoholic brand extensions and surrogate advertising coupled with alignment with sporting events. Kingfisher is associated with five teams of the IPL as the good times partner, resulting in huge brand awareness among the masses. We are in constant evaluation of consumer opportunities and have several initiatives in the pipeline, adds Mirpuri of the UB Group.

The biggest problem breweries face in India are the different state regulations, which impact sales and pricing. As the sale and distribution of alcohol in India are controlled by state governments, which impose taxes on imports and exports, companies are forced to open distilleries and breweries in each state where they want to sell their products cost-effectively. The Indian alcohol distribution structure is of three typesgovernment-controlled, open market and auction market. Assam, West Bengal and Puducherry are some states with an open market; Tamil Nadu and Kerala (which has now banned alcohol) fall under the complete regulation of government, whereas Haryana, Chandigarh and Punjab fall under the auction market structure.

What could make a difference is the advent of online liquor stores. There has been a rapid increase in the number of websites offering liquor on sale. Like all other online stores, there is the convenience and the availability of a huge variety at one place. Discounts that only online portals can manage are an added advantage for consumers. Some websites that offer liquor online for sale are www.letsbuydrink.com and www.boozzr.com

The beer market is all set to ride on the e-tailing wave in India. Moreover, favourable demographics coupled with increasing focus of foreign brewers on product range and rising social acceptance of alcohol is expected to enable beer demand to grow an estimated 12% yearly, as per reports.

That frothy future is what is leading to the cut-throat battle between the big three, a battle that can only benefit the consumer.

BEER BASICS

* Beer is considered the worlds most widely consumed alcoholic drink and is regarded as the third-most popular after water and tea.

* Beer is manufactured by the hydrolysis of starch and fermentation of the obtained sugar. The starch and enzymes are generally obtained from malted cereal grains such as malted barley and malted wheat.

* In addition, most beers are also flavoured with hops, which add bitterness and act as a natural preservative. However, other flavourings such as herbs and fruits might be included. This process of preparation of beer is called brewing.

* In brands, Kingfisher prevails the Indian market followed by Haywards 5000, Knock Out and Tuborg.