Anheuser Busch InBev and Heineken, two of the world’s biggest brewers, said India is one of their top priority markets but demand has been restrained due to high taxes and small number of retail outlets even as it shares a similar growth trajectory with China.

“There are not many countries in the world that population-wise get to the scale of China. In India, beer is taxed at the same level as spirits, and also the access is relatively limited, only 80,000 alcohol licences across the country for 1.3 billion people. If you compare that with China with 6 million points of sale, it’s literally 1%”, Budweiser Brewing APAC chief executive Jan Craps said in an investor meeting. “India today is already the fifth largest market for Budweiser worldwide.”

India – a warm, tropical country with promising demographics and increasing affluence – remains one of the largest beer markets for global brewers. Heineken, which owns Kingfisher, and Anheuser Busch InBev, which sells Budweiser, controls nearly three-fourths of the country’s beer segment. More than 20 million people enter the legal age for drinking every year in the country.

In India, strong beer accounts for more than 80% of the total volume and many consumers of strong beer are also potential purchasers of value and low-priced spirits. This cross-category competition makes price – and excise rates – crucial. If regulations push up beer prices, the gap between cheap Indian made foreign liquor and beer closes sufficiently for many consumers to switch, according to the IWSR Drinks Market Analysis report.

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Also, the country’s beer market is worth ₹10 billion or 28 million hectolitres (mhl), much smaller than the Chinese market, where beer worth ₹65 billion or 488 mhl is sold annually. Beer accounts for just 10% of the spirits market, with per capita consumption of 2 litres.

“We have a job to do – to strive for a more fair regulatory environment for beer. The beer price is also relatively expensive and has very much to do with the excise regime,” Jacco van der Linden, president APAC at Heineken, told analysts during its capital markets event. “There are parallels to draw with China 20 years ago. India is more of a continent than a country and to understand this large market, you would have to de-average the market.”

The above news was originally posted on news.google.com

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