India: India’s leading brewers collectively introducing a dozen new beer brands

Heineken, Anheuser-Busch InBev, and Carlsberg are collectively introducing about a dozen new beer brands in India to slake the thirst of its summer-singed consumers, the Economic Times reported on April 17.

For the world’s top three brewers, which together control about 90 per cent of India’s beer market, new products could be the recipe for fending off an unhealthy cocktail of sales bans, shrinking store networks, and stagnant demand in a warm, tropical country with promising demographics and increasing affluence.

India’s beer sales fell 2 per cent in the year to March 2017, but companies expect the segment to expand 5-7 per cent in the current fiscal, driven by premium products.

“We need to strengthen our portfolio because consumers want to choose, and we want to be a part of their choice. In the next six months, we will come up with two strong beer brands in the premium segment, and an interesting portfolio of imported brands in the next six weeks,” said Shekhar Ramamurthy, managing director at United Breweries (UB). Heineken owns 43 per cent of UB, which sells Kingfisher, Kalyani Black Label, and Zingaro beers, and controls half of India’s beer market.

UB will launch brands including Desperados, a pale lager beer, a wheat beer brand Edelweiss, Mexican brand Sol, and Dos Equis, a pale lager from Heineken’s international portfolio.

“Then some more are being developed in India in the premium segment to further strengthen our market leadership. Kingfisher will continue to be our lead brand,” said Ramamurthy. The launch strategy appears ambitious, given that about 30,000 vends near highways accounts for a third of the total stores, and they were legally restricted from selling alcohol from April 1.

With annual sales of about 300 million cases, India is the latest focus area for global brewers that are battling sluggishness in more mature markets around the world. Yet, average consumption of beer in India is about 2 litres per person a year, minuscule compared to the global consumption average of about 30 litres. Still, AB InBev, the maker of Budweiser and Fosters, said consumer sentiment continues to stay positive and its portfolio expansion will help re-stimulate growth.

“The trend of consumers trading up has never been stronger in the country and the premium segment has been unaffected by the slowdown,” said Kartikeya Sharma, marketing director, AB InBev, India and South-East Asia. Imported labels such as Corona, Hoegaarden and Stella, which are limited to Mumbai, Delhi, and Bangalore, will now be taken to more than a dozen markets across India, he said.

In India, the industry remains regulated with high taxation. In many parts of the country, wholesale or retail distribution is controlled by the state government. Also in 60 per cent of the markets, state governments dictate the price at which beer can be sold. Hence, companies are pushing for premium brands that earn higher margins.

Also, India remains a country favouring strong beer, and global companies have been producing stronger variants of their flagship beer brands such as Carlsberg Elephant, Tuborg, and Budweiser.

Last week, Carlsberg launched a premium strong beer with scotch malts, Tuborg Classic, which managing director Michael N Jensen claimed will be one of the biggest innovations to have hit the Indian beer industry. Apart from mainstream beer brands, experts believe the market could see a slew of new launches in the craft beer segment, an expanding niche.

From just two craft breweries in 2008, India now has more than 50 across the country, with most centred around Gurgaon, Pune and Bangalore, as per Euromonitor data. There has been a global move toward craft beers, and India mirrors the trend. “We expect at least 20 new beers to be launched in the fiscal, as there is interest from Canada, New Zealand, Lithuania, and even Iceland," said Rahul Singh, who owns 40 beer cafes across 12 cities.

19 April, 2017