"Hallelujah Its Raining Beer"

With deregulation on the cards and a number of foreign players waiting to tap into the Indian beer market, the froth is coming forth as India prepares to guzzle into the sunlight. The Beer sales has clocked 27% growth in 2006-07 making India in exalted company, second to China’s impressive 33% growth. In similar markets in Eurupe home to the best wines, the prescence of active substitutes for beer, like wine and spirit, has slightly dampened the sales of Beer. India has traditionally been a duopoly market for beer with only United Breweries and Sab Miller to contend with. Now with the big froth of companies( Carlsberg,Budweiser,Beck’s) knocking on India’s doors, there is an expectation that with the increase in beer demand, there will be a price stabilisation unlike the current duopolistic scenario. This is in stark contrast with the earlier governmental policies which did not encourage imported ingredients and inclusion of foreign players.

One of the big economic drivers of beer consumption in India is deregulation which seems to increase the beer consumption by as high as 70%, witnessed in the case of the state of Punjab in 2006.While deregulating beer is good for the trade and brings down prices, it does not yet allow consumers to buy their beer from the local grocery market, unlike China where Beer is treated in the same distribution network as bottled drinks like Coca Cola and Pepsi. As a result of which apart from the existing duopoly in India the prices of beer get dictated by the states, instead of a model where manufacturers decide the price based on the market forces. So for that to happen, Beer has t be de linked from spirit, interstate levies need to be removed and outlets would need to be on fixed fee longer term basis than the existing auction system.

SAB Miller (A Recruiter at Great Lakes)has 13 brands in India compared to Kingfsher’s 15 , and is adopting a multi brand strategy along with a lot of variety in wider offerings, experimenting across various price bands to increase sales. Kingfisher seems to adopt a different approach in terms of a high volume guzzling option with pricing based on kegs and cans that are economical for the larger volume.

The new market entrants like Budweiser and Anheuser Busch seem to bet heavily on new products and variants, where the speculation is rife on the premise that spend on product development by way of improved processes is marginal. The fact that these foreign players are stil interested shows that there is more data than what has so far met the eye, and that’s the fact that India’s per capita beer consumption is .8 litres compared to 22 litres with the global market leader China, which spells a big opportunity. So to conclude, I would want to re christen the Gerri Halliwell number to some thing like this “Halleluhaj! Its Raining Beer”, as India gears upto guzzling beer by the keg.

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