E-Malt.com News article: India: Premium mild beer segment growing fast even though Indians have always preferred strong beer

Indian consumers are known to look for the biggest bang for their buck, and when it comes to beer it's no different — some 85% of the country's drinkers liked their lager strong in 2014 (alcohol content between 5% and 8% as against under 5% in mild beers), according to a study by the All India Brewers Association.

Yet, when it comes to beer versus liquor, Indians still seem to prefer the latter, with Indian-made foreign liquor (IMFL) and hooch consumption estimated to be two times that of beer in volumes. In contrast, in developed markets like the US and the UK and even in emerging ones like Brazil and China, beer accounts for almost three-fourths of all sales.

That, though, may be good news for brewers of premium mild beers in India, who although operating in what's still a very niche market can only expect rapid growth from hereon.

Premium mild beer (typically priced at between Rs 70 and Rs 150 for 330 ml bottles) accounts for 15% of the 320 million cases of beer sold annually in India, points out Shobhan Roy, director general, All India Brewers Association. "However, the growth in the premium segment is pegged at 20-25% with the urban centres accounting for a large part of the consumption," he adds.

"This [premium mild beer] segment is growing ahead of the strong category," avers Mahesh Kanchan, marketing director, Carlsberg India. "It has a rising preference amongst new consumers and predominantly in metro markets." Carlsberg has the Tuborg label in this category, which Kanchan claims is the "No 1 international beer brand in the country today."

Premium mild beers have been around in India for some time, but the difference is now that more and more of the brewers are making them in India rather than importing them. Carlsberg, for instance, has seven breweries spread across India. The other two that form the 'Big Three' of beer, SABMiller and Anheuser-Busch InBev, have also begun manufacturing their flagship premium light brands in India.

And that's one of the factors driving growth in this segment. "The fact that all the biggies — Carlsberg, United Breweries, SABMiller and Anheuser-Busch InBev — are now brewing in India is helping them to sustain the growth of the premium mild segment and keep their products affordable despite local taxes," adds Roy.

SABMiller India, for instance, which has 10 breweries across the country, now manufactures its premium Italian brand Peroni Nastro Azzurro in the country. The label, which is globally associated with food and fashion elements, is being targeted at young and affluent urban Indians through various lifestyle events.

And because it's now made in India, the brand also has an affordable price tag of around Rs 120 (in Delhi) for a 330 ml bottle (as against above Rs 200 for all imported premium beers).

Other smaller, lesser-known labels too have begun making in India — or will soon begin to.

When Ankur Jain, chief executive officer and founder of Cerana Beverages, a company focused on importing speciality beer brands to India, decided to foray into brewing himself, he was looking at the urban Indian market — both on-tap in restaurants and pubs, and the retail market. Bira 91 Blonde and Bira 91 White, the two premium beer variants from Cerana that were launched a couple of months ago, are now available in Delhi and Bengaluru, and will soon be in Mumbai and Pune. Jain says these beers have been created especially for the urban Indian.

"From taste, format, size of bottle to alcohol content, this is a beer brand that has been imagined in India. We are reaching out to the trendy, young and urban consumers with what we feel is a new lifestyle product," explains Jain.

Though Bira 91 is being brewed in Belgium, he plans to move the production to India soon; that will help him lower the price of the 330 ml bottle from the current Rs 150 to Rs 100 approximately. Bira 91 is associating with local events such as live acts of young independent artists.

"It's a local approach that links with the urban lifestyle. Often, the audiences are of just 60-100 people," says Jain. It is efforts like these that have helped make Bira 91 the most widely distributed draft beer brand in Delhi among all domestic and imported brands, within just three months of its launch, claims Jain.

Another lesser known brewer seeking to stir things up in premium beer is Mahou San Miguel of Spain, which recently flagged off its domestic operations. Mahou India, its first subsidiary outside Spain, has launched Mahou 5 Star, dubbed as India's first premium Spanish beer, which is being made at the company's brewery in Bhiwadi, Rajasthan.

Erik d'Auchamp, chief executive, Mahou India, reckons this is a good time to enter the premium segment as beer is becoming more acceptable as a social drink within India's "young, vibrant and growing population." "The Indian consumer likes to try new brands, and as more and more international brands enter this market the consumers' willingness to experiment with new tastes is also increasing. This helps raise the bar for everyone and we feel very comfortable competing in this space," d'Auchamp. He explains that Mahou's focus will be on "mainstream plus and above" — that is, on consumers who are willing to pay for "exceptional quality".

As an example, he points to Mahou Clasica, a beer known for its bright gold colour with an elegant and faint malt aroma that will soon be launched in India. American brewing major Molson Coors too has premium light beer offerings Carling and Cobra Premium in the Indian market, although it hasn't yet taken the call on brewing in India.

"India's economic growth, rising disposable incomes, changing social mindsets and increasing beer appreciation have led the market to undergo a shift that translates not only into increasing consumer demand but also an upsurge in demand for premium products. Consumers in India are developing a palate for high quality international beer brands," says Ravi Kaza, president, Molson Coors Cobra.

So where does this leave home-grown leader United Breweries (UB), which has the premium mild brand Heineken in its fold (by virtue of the Dutch brewer's 40% stake in UB) as well as Kingfisher Ultra? Samar Singh Sheikhawat, senior vice president, marketing, UB, gives a glimpse of how important Heineken is in UB's scheme of things.

"We have recently invested in additional capacity for our Heineken brewery, which has been recognised as the best among our 65 breweries in the world," says Sheikhawat. He adds that innovative properties such as the recent limited-edition trophy packs emblazoned with the iconic football UEFA Champions League trophy insignia helps the Heineken brand to stay connected with affluent urban beer drinkers; he claims Heineken is the fastest growing brand in the premium segment.

If there's one dampener to the growth prospects, it's the high taxes (up to 70%), strict regulations and restricted distribution. "Strong beers are an aberration in India largely due to lopsided government policies. All across the world, beer is a mild beverage and treated and taxed differently from spirits. And in most developed countries, beer accounts for 70% of all alcohol consumption by volume," says Pradeep Gidwani, owner of beer pub chain Pint Room. Clearly, it's time to beer up.

The Delhi government's recent decision to allow microbreweries in the Capital is being welcomed by both beer lovers and the food and beverages industry. In the second week of June, a Cabinet meeting chaired by chief minister Arvind Kejriwal approved a proposal prepared by the excise department to allow beer microbreweries in hotels and restaurants across the Capital. So far, Delhiites had to travel to either Gurgaon or Faridabad in Haryana for freshly crafted beer.

Microbrewery licences are currently given only by state governments in Karnataka, Maharashtra, Punjab and West Bengal, besides Haryana. According to the Delhi government, allowing microbreweries in the city will make available fresh beer in different flavours to Delhiites, besides helping generate more revenue.

Rahul Singh, founder and chief executive of pub chain The Beer Cafe, is as pleased as punch with the decision. "We see the approval for brew-pubs in Delhi as a step in the right direction for encouraging a world-class beer culture. We are waiting for the comprehensive policy to be out and will definitely explore this space," he said.

The Beer Cafe has 13 outlets in Delhi National Capital Region, three in Mumbai, three in Pune and one each in Chandigarh, Amritsar, Mohali and Ludhiana. The company also launched a Belgian-style brewed ale from UK called Witlinger last year. Singh adds that the Uttar Pradesh government has permitted draught beers in its excise policy this year, thereby opening another avenue for premium brands to enter Noida.

Lalit Ahlawat, director, Striker Group, is also gearing up with a microbrewery game plan for the Capital. "We run three brew-pubs in Gurgaon and are looking at targeting young beer lovers in Delhi too with our fresh products," says Ahlawat.



08 July, 2015