India’s largest beer maker United Breweries (UBL) is betting big on its new premium strong beer, Kingfisher Ultra MAX, for higher margins. The strong beer, with a refined taste, is currently available in six states and will be retailed across the country in twelve months, a senior company official told FE. The ‘strong’ category accounts for over 85% of the beer sold in India.
“The beer market in India has traditionally been driven by strong beer where alcohol delivery is the key. It is not a refreshment drink unlike the mature markets. People drink spirits because it works out cheaper to get a kick when compared to beer. The strong category accounts for 85% of all beer consumed in the country and will soon touch 90%,” Samar Singh Shekhawat, senior vice-president of marketing, United Breweries, said.
Alcohol content and price are important considerations in India, where spirit outscores beer with 80 % of the market.
Experts say that in the strong beer category, price and availability are critical and substitution is high. However, the market is also seen growing in the premium sector, where taste is also critical. The entry of global brewers with premium brands has opened the market for premium beers.
“The market for higher alcohol beers has been growing consistently over the years, and continues to develop both in terms of volume and salience to the total market. The Indian beer drinker today is seeking differentiation in terms of a more refined taste and palate, and is willing to pay for this added value,” Sheikhawat said.
“We have launched Kingfisher Ultra MAX as an extension of our hugely successful Kingfisher ULTRA brand, and now the Indian beer drinker can enjoy a distinctive, refined beer packed with a punch. In line with its premium positioning, world-class brew and distinct packaging, Kingfisher Ultra MAX will be priced at the top end of the beer pyramid, making it the most premium strong beer brand in the country,” he added. In Maharashtra, the 650 ml bottle is priced at Rs 180 and the 500 ml can at Rs 140, UBL sources said.
Continuous margin erosion due to stiff competition, increased input costs and the government’s reluctance to bring prices in line with costs is a major concern for brewers. Premiumisation is the key word and beer and spirit makers are pushing products that bring more margins. Earlier, the industry was trying for volumes and margins for most brands were minimal, an industry source added.
According to the data of All India Brewers’ Association (AIBA), the beer industry is valued at Rs 25,000 crore with 23 million hectolitres beer sold in the country. “The industry is growing at around 6 %. Earlier, the industry was growing 10-12 % between 2002 to 2012. However, growth decreased due to restrictions like higher taxes and limited availability of beer,” AIBA sources reports.
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