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The Rediff Business Special/ Neena Haridas

'Hardened' guzzlers give Indian beer-makers a new high

And you thought the Indian yuppie blindly aped the West in all that he eats and drinks. Think again. He might wash down his Big Mac with a Diet Pepsi, but when it comes to guzzling down that can of beer, he likes it hard. Unlike in the West where mild is in, Indians prefer their beer nice and strong. At least that is what the market figures would have us believe.

Consider this: The market share of the mild beer segment has slipped to 45 per cent from an exalted 66 per cent in 1993-94, the corresponding gains accruing to the strong beer basket. And that might just be, well, the tip of the froth. With the size of the beer market for 1998-99 pegged at 68 million cases, strong beer is slated for a 30 per cent growth rate -- roughly thrice its mild counterpart's 9 per cent.

Mild or strong, the Indian beer market is definitely frothing. After a negative growth of two per cent during 1996-97, the market grew at 15 per cent in 1997-98. For the next three years, this market is poised to grow at 15 per cent annually. This in spite of the fact that India uses only five per cent of all potable alcohol produced in the country for beer as against 50 to 65 per cent in the developed countries.

In terms of volume sales, the total market has grown from 30.31 million cases in 1993-94 to an estimated 31.5 million cases in 1998-99. Of this, strong beer has grown from 15.9 million cases to an estimated 38.5 million cases.

But why is the mild beer market going flat? One of the reasons is that Indians are still not a patch on the beer guzzlers of the West. Take this: According to the World Beer Review published in Drinks International, per capita consumption of beer in India is just about half a litre compared to 160 litres in Czech Republic and 130 litres in Germany and 100 litres in the UK. That is, beer consumption by an Indian in a year is equal to that consumed by a Czech in a day. Hence, when Indians finally decide to indulge they do it really 'hard.'

Besides, the Indian beer market has not matured like in the United States or Europe. Here, a beer connoisseur gets to choose from two kinds of beer -- mild and hard. Whereas his Western cousin gets to choose from beer styles such as bitter, stout and lager. Lager, the only one sold in India, is either strong with over 5 per cent alcohol content or is mild with less than 5 per cent.

Within the country too, there are variations in the consumption pattern. For example, the western and southern states account for 70 per cent of the beer consumption because of the tropical climate and high concentration of breweries in these regions (of the 48 breweries, nine are in Maharashtra itself). South India alone gulps 45 per cent of the beer sold in the country.

Armed with these statistics, beer brewers in the country are taking a hard relook at the market. The UB Group, a dominant player in the beer market with its Kingfisher brand, is set to take on the market with a stronger version of its flagship brand. Meanwhile, Shaw Wallace & Company has a lead over its competition with its largest selling Haywards 5000 in the strong beer category. The brand recorded a growth of over ten times since 1993-94 to touch 9.8 million cases in 1998-99 -- the fastest for any beer brand in the country.

Ravi Kaza, assistant vice-president, Shaw Wallace, says, "Traditionally, the strong beer segment is dominated by regional players. In the mid-1990s we identified strong beer as a potential growth driver. Our research revealed that consumers perceive strong beer to be more value for money. In retrospect, the strategy has paid off. We are targeting a sales of 15 million cases for the brand in the current financial year."

In fact, Shaw Wallace is the only Indian global player in the strong beer segment with its two brands -- Haywards 5000 and Haywards 2000. Other strong beer brands like Khajuraho, Thunderbolt and Knock-out dominate regional markets. Knock-out, for instance, enjoys a large chunk of the beer market in Andhra Pradesh, Karnataka and Tamil Nadu.

Not to be left behind, the UB group is gung-ho on the strong market. Besides plans to mop up the urban market with Kingfisher strong, it has fielded other strong beers such as Bullet, Charger and Kalyani Black for the regional guzzlers. Though these brands do not have a national dominance, Kalyani Black, for instance, dominates the eastern market. According to company sources, Kingfisher strong will lead to some conversions in the urban market, thanks to the brand equity that its mild avatar enjoys.

Which is not to say that Shaw Wallace is resting on its laurels. The company's review of its position in the beer market has shown that focussing on a particular segment alone will restrict growth in the long-term. Hence, it plans brand promotional activities targeting the entire beer category.

"The blueprint for our beer brand focuses on promotional activities that are brand specific, and not segment specific. We also plan to introduce some innovative packaging, the likes of which the beer industry in India has not seen. The consumer needs to be excited about the products in order to convert intent to actual sales," says Kaza.

However, it is a long way before India can boast of a real beer market. What really bothers marketers is the high taxes imposed on beer. This is driving consumers to cheap liquor containing high alcohol. In certain states, government levies alone account for about 50 per cent of the total price. "As a result, a nip of cheap liquor and a bottle of beer are priced competitively attracting a vast majority of consumers to cheap liquor which gives more kick per rupee spent," explains Kaza.

Availability is also a constraint because beer is sold only in liquor shops unlike in other markets where beer is considered a beverage and sold in general stores.

Nevertheless, there has been a breather -- at least in Delhi -- since the state adopted a dual duty structure. Now, milder alcoholic beverages are taxed lower than hard liquor. Currently, Indian Made Foreign Liquor is subjected to an average excise duty of Rs 480 per dozen (750 ml) bottles in Delhi, which is considerably higher than the excise duty on beer of Rs 27.12 per dozen (650 ml) bottles. This is probably the reason for an increased sales of beer in the capital. From 18.79 million bottles in 1994-95, beer sales increased to 26.75 million bottles in 1995-96. Till end-1998, a total of 28.34 million bottles were sold in Delhi.

With the capital going soft on beer, the marketers believe other states will follow suit. This, they say, will boost beer sales, in turn pushing the government to recognise beer as a beverage. In time, beer may be available in retail stores sooner than later, they believe. For sceptics, however, it is a case of chicken-and-egg story -- they believe unless total consumption increases there will be no moves in this direction.

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