market research india - beer market in india 2009
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September2009
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ExecutiveSummary
Market
Indianbeer
market
is
valued
at
INR
35
bn
with
volume
sales
of
172
mn
cases
for
FY
2008
09
Themarketisexpectedtogrowatanannualrateof17.2%till2011
ForeignbrewersareeyeingtheIndianbeermarketwhichislargelyuntappedandhasgrowth
Drivers&
potent a
Drivers: Hugemarketpotential
Challenges: RegulatoryEnvironment
Entryofinternationalbrands
Withcurrent
duopoly
situation
and
entry
of
foreign
players,
beer
industry
in
India
will
quickly
witness consolidation
Trends
Premiumbeersegmentisoutpacingthemainstreambeermarkettouchingagrowthrateof
between4050%
EmergingnewsubcategoriesofbeerwithconsumersinIndiaopenforexperimenting
Competition
Morethan80%ofthemarketiscontrolledbytwomajorplayersUnitedBreweriesLimited(48%)
andSABMillerIndia(35%)
WithInBevacquiringAnheuserBusch,ithaspotentialtoemergeasthethirdmajorplayer
2BEERMARKET INDIA.PPT
Themarket
is
set
to
flourish
with
15
new
breweries
and
10
international
brands
in
next
3
years
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MarketOverview
CharacteristicsandTrends
KeyDevelopments
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Indianconsumerspreferstronglagerswhichhashigheralcoholiccontent
Categoriesofbeer
La erBrewedusingbottomfermentingyeastthatfermentsslowlyatalowtemperaturetocreatea
smoot er,me ow eer
Ale Usestop
fermenting
yeast,
is
a
more
aromatic
and
fruity
product
Stout Darkandheavy,withroastedunmaltedbarleyand,oftencaramelmaltorsugar
MildBeer Developedasasweeterandcheaperalternativetodarkales
Bitter Highlyhoppedforamoredryandaromaticbeer.Itispaleincolourbutstrong
DarkBeer Barleyiskilnedforalongperiodoftimewhichcreatesricherflavours
FruitBeer Fruit,usuallyberries,isaddedeitherduringprimaryfermentationorlater
WheatBeer
(Weizen)MaltedwheatandbarleyareusedforthisGermanstylebeer
Indianbeermarketisdominatedb La eranditsvariousshades
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Withtheglobalbeermarketbecomingstagnant,theinternationalfirmsarefocusingonuntappedIndianmarket
Indianbeermarkethaswitnessedasteadygrowthof10%overadecade
MarketOverview Market
size
&
growth
48+17%INR bn
termsofexpectedgrowthrates
Thereare
56
units
manufacturing
beer
in
India
under
licensefromtheGovernment
Themarketissettoflourishwith15newbreweries
41
35
30
20
30
40
and10internationalbrandsinthenext3years
ForeignbrewersareeyeingtheIndianbeermarketwhichislargelyuntappedandhasgrowthpotential
0
10
2008 2009 2010e 2011e
Segmentshare(volume wise,2009)Growthinpercapitabeerconsumption
Mild beer
172mncases
1.0131.097
1.1631.200
900
Population (mn)
1,5
Consumption (litres)
74%
26%
300
600
,
0,5
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Strong beer2000 2005 2010
0,0
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MarketOverview
CharacteristicsandTrends
KeyDevelopments
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Drivers&Challenges Summary
DriversChallenges
Hugemarketpotential
Entryofinternationalbrands
Hightaxstructure
Risingincomelevels
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YoungpopulationandlowpercapitaconsumptionwillboostthebeersalesinIndia
ImpactHugemarket
potential
ThepopulationandcurrentconsumptiontrendsareexpectedtoboostthebeersalesinIndia
Nearly28%ofIndianpopulationliveinurbanareaswhichcomesclosetothepopulationofUSA
Urbanizationishappeningataveryfastpaceandabout40%ofthetotalpopulationisexpectedtolivein
urbanareasby2020
Peoplein
India
are
relatively
younger
when
compared
with
global
average
About50%oftheIndianpopulationwouldbeunder30yearsevenin2015
InthetotalalcoholmarketinIndia,beercontributesonly4%ofrevenue
Thelowpenetrationinbeerconsumptionprovidesasubstantialandsustainablegrowthin
demandfor
beer
in
future
74.080.0
60
80
Litres
ompar sono er ap ta eer onsumpt on
1.2
22.125.0
20
40
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EuropeUS IndiaGlobal AverageChina
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BeerconsumptioninIndiaisexpectedtogrowwithrisingincomelevels
ImpactRisingincome
levels
Indiaisoneofthemostattractiveconsumermarketsintheworldwithaboutonesixthofthe
globalpopulation
TherisingincomelevelshasadirectpositiveimpactonbeersalesinIndia
Also,urbanconsumerswhoaremoreexposedtothewesternculturesocializewithbeer
Thegrowingincomelevelsparticularlyintheurbanearningclassisapotentialmarketforbeer
manufacturersinIndia
90
AggregateAnnualDisposable
Income(INRtn)
Perhouseholdannual
income(INR000)
Coretarget2813%
TotalNo.ofHousehold(mn)
23%
24%
44
15%
Strivers
Globals
groups
>1000
5001000
34%
12%
43%
23%
2% 1%207
44%
5% 1%1%
2025
3%
15%
34%
2015
9%
33%
34%
2005
24
23%
49%13% 7%
9%
Deprived
Aspirers 90200
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EvolvingbeermarketinIndiaisattractingmanymajorinternationalbrands
ImpactEntryof
International
brands
Indiaiswidelyacknowledgedasanuntappedbeermarketwithhugegrowthpotential
ManyforeignbeermanufacturershaveenteredorplantoentertheIndianbeermarketwith
theirproductline
Themarketissettoflourishwith15newbreweriesand10internationalbrandsinthenext3
years
WiththeglobalmarketsexperiencingloworstagnatinggrowthandfocusshiftingtoIndia,the
n an n us ry sexpec e ow ness as grow n ecom ngyears
InternationalPlayers Brands
Carlsberg Carlsberg,Tuborg,Palone
AnheuserBuschInBev Budweiser,StellaArtois,Becks,Hoegaarden,Leffe
AsiaPacificBreweries Tiger,Cannon10000,Barons
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HighlyregulatedenvironmentisamajorchallengefacedbythenewplayersenteringIndianmarket
TheIndianbrewingindustryoperatesinahighlyregulatedenvironmentandbeeriscategorized
withotheralcoholicproductsforlicensingandtaxationpurposes
ImpactRegulatoryenvironment
MovementofbeeramongstatesinIndiarequiresanexportandanimportlicense
Exportfeesisimposedinthestatewherebeerismanufacturedandimportfeesonthestate
whereit
is
sold
FewstateslikeTamilnaduhavestrictrulesofsellingonlybeermanufacturedwithinthestate
Therearemanyotherrestrictionsonadvertising,distributioninfrastructureandretailing,varied
taxstructures,controlledpricingandlicensing
TheretaildistributionchannelsarenotcompletelyopenforsellingbeerinIndia
Regulationsarestiffwithrespecttosellingbeerthroughmodernretailchainswhereasinmost
eve ope na ons eeran w ne sava a e ngroceryorre a s ores
DistributionchannelofbeerinChinaisoneoutletforevery300persons.Whereasitisone
outletforevery21,000personsinIndia,thushinderingtheeaseofaccessibilityofbeer
Morecomplexityinoperations
Highercosts
Entrybarriersfornewentrants
RegulatoryEnvironmentLeadsto
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MinoritypreferenceforbeerinIndiaandhightaxstructurearethemajorchallengesforIndianbeerindustry
ImpactHightax
structure
Oneofthereasonsforthelowpreferenceforbeerishightaxesimposedonbeerconsumption
Onabsolutealcoholbasis,beeristaxedhigherthanspiritsinmostofthestatesinIndia
Thereareabout26differentalcoholspecifictaxesthatconstitute50%oftheconsumerprice
whichisamongthehighestintheworld
InIndia,beertaxesareleviedbyindividualstatesandtaxesarealsopaidbetweenstates
0 10 20 30 40 50 60-10-20-30-40-50
%
TaxonBeer(basevalue:taxonhardliquor)
India
Global50%
60%
Tax on hard liquor
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Market
Overview
CharacteristicsandTrends
KeyDevelopments
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CharacteristicsandTrends Summary
Risein
barley
prices
and
emergenceofcontractfarmingIncrease
in
merger
and
acquisitionactivity
Characteristics
andTrends
Newformsofbeerbeingintroducedinmarket
Premiumbeermarketoutpacing
mainstreambeermarket
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Pl i i i ll h h j i d
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Playersare
growing
inorganically
through
joint
ventures
and
acquisitions
Theentry
of
foreign
players
will
expedite
the
consolidation
of
beer
market
in
India
Settingupagreenfieldbrewerytakesabout1824months,thuscompaniesarelookingatjointventuresoracquisitions
Date DealType Targetcompany Stake(%) Buyer Value(USDmn)
04Aug09 Acquisition RhinoBreweries 100% YuksomBreweries,India 8.38
19Jan08 Acquisition IcebergIndustriesLtd 76% CobraBeer,India NA
14Sep07 Acquisition ParagBreweries 52% Carlsberg,Denmark 8.14
28Feb07 Acquisition CrownBeersLtd 50% AnheuserBuschInternational,USA NA
Date DealType Targetcompany Stake(%) Buyer Seller Value(USDmn)
02Feb09 Minoritystake Kyndal Lucal NA LucalBolsDistilleries KyndalIndia 1.02purc ase o s
,
e er an s v
25Jan08 Minoritystakepurchase
UBGroup 37.49% Carlsberg,Denmark;
Heineken,
Netherlands
Scottish&
Newcastle Plc
(S&N)
1530.00
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P i b t i t i th i t b
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Premiumbeer
segment
is
outpacing
the
mainstream
beer
markettouchingagrowthrateofbetween4050%
Premium Beer
Overview Marketshare
of
premium
beer
(volume)
TheIndianbeerindustryismovingtowardspremium
categoryofbeer
Lifestylechangesandincreasingwesternculturein
Indiaaresomeofthefactorsdrivingthepremium
segment
Manydomesticandforeignpremiumbrandsare
95%
Mainstream Beer
GrowthrateofpremiumbeerPremiumbrandsinIndianbeermarket
Premiumbeersarepricedabout30%higherthan
regularbrands
40
0 10 20 30 40 50
50Premium
%UnitedBreweries
Limited
KingfisherPremium,UBPremium
Ice,KalyaniBlackLabelPremium
15 20Mainstream
beer Minimum
Maximum
er
n a os er s,
eron ,
oya
a enge
OtherPremium
Brands
Cobra5.0%Premium,Budweiser,
Carlsberg,StellaArtois,Tiger,
Becks
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N b t i f b i i
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Newsub
categories
of
beer
are
emerging
as
consumers
in
Indiaarenowopentoexperimentation
WithIndian
consumers
open
to
experimentation,
many
multi
national
firms
are
introducing
alcohol
free
and
flavoured
beersinthemarket
Craftbeers,whichareavailableinuniqueflavours,isexpectedtopenetratethelagerdominatedIndianbeerindustry
CobrabeerisbullishonalcoholfreebeerandflavoredbeerinIndia.Ithasrolledout:
regularlagers
o ra g : owca or esan owcar o y ra es; o ra ero : co o ree; o ra e:
Flavoredbeer(Includes Lemongrass,BloodOrange,SweetLimeandFreshGingerflavours)
TheUB
group
also
sees
an
opportunity
for
new
beer
sub
categories
and
segments
in
India
o ra eer
threenewvarietiesofbeerincludingfruitflavoredandlowalcoholbrands
Dalmia Dalmia
Continental
Pvt.
Ltd.
is
the
exclusive
importer
and
distributor
of
Clausthaler,
a
non
Continental alcoholicbeerfromGermanbasedRadebergerGroup
Hema HemaConnoisseurCollection,hasintroducedaGermanpremiumwheatbeerErdinger
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onno sseur WeissbierinIndia
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Growingdemandforbarleyandevolvingcontractfarming
Barleyaccounts
for
one
sixth
of
the
cost
of
making
beer
Increaseindomesticconsumptionandexportdemandhaspushedthebarleypricesupby20%fromJan08 June08
Increaseinbarleypriceshasletto10%increaseincostofbeer
TheproteincontentinbarleycropinIndiais1315%comparedto710%indevelopednations
ThehighproteincontentinIndianbarleyisnotsuitableformakingbeer
Rajasthanisanidealplacewherebarleycanbegrownundersuitableclimaticconditionsforhavinglowerprotein
contentrequiredbythebeerindustry
SABMillerIndiaisencouragingfarmersinRajasthantocultivateatypeofmaltbarleyrequiredbytheindustry
ThecompanylaunchedaprogrammecalledSaanjiUnnatiforeducatingfarmerstosowtherighttypeofcertifiedseedsandpractices
Growthinbarleyprices(2008)Indiasbarleycropconsumptionbreakup
1,3001,200
1,200
1,500
+20%Price per 100 Kg
25%
Beer and Malt Firms
0
300
600
900
- - -
75%
Fed to Animals
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Market
Overview
CharacteristicsandTrends
KeyDevelopments
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Indian beer market presents a h ge gro th potential in
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Indianbeer
market
presents
a
huge
growth
potential
in
termsofvolume,categoriesandvariants
TheIndianbeermarketisdominatedbytwoplayers
controllingmorethan80%ofthemarket
Competition Marketshare
(2009)
Others
Strongbeerispredictedtogrowfasterasitis
perceivedtooffervalueformoneyalternativeto
spirits
WithInBevacquiringAnheuserBusch,ithas 48%UBL
17%
Indianbeermarket
ThefutureofbeermarketinIndialookspositivewith
theentry
of
many
international
players
Beer sales will increase alon with increasin number
35%
SabMiller India
MarketShare
(segment
wise)
ofbrandsandsubcategoriesinIndia
ExistingplayerslikeUBLandSABMillerareplanning
toexpandtheirrangeofproducts
Newplayers
like
ABInBev,
Carlsberg
are
bringing
40%30%
23%6%
theirinternationallyrenownedbrandstoIndia
Themarketissettoflourishwith15newbreweries
and10internationalbrandsinthenext3yearsSabMiller India
30% 70%
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Others
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MajorPlayers(1/5)
CompanySnapshot:
United
Breweries
Ltd
BusinessHighlights
Brands: KingfisherPremium,KingfisherStrong,UBExportLager,LondonPilsner,UBPremiumIce,KalyaniBlackLabel
Premium
JointVenture: 50:50
JV
with
Scottish
&
Newcastle
of
the
UK
in
Millennium
Alcobev
Pvt
Ltd.,
(MABL);
MABL
brands
include:SandPiperLager,ZingaroStrongBeer,KalyaniBlackLabelStrong
BusinessStrategy
nanc a s: ecompanyrepor e ane urnovero . mnan pro a er axo . mn
asamanu ac ur ngne wor o rewer esacross n a
Thecompanyenjoysamarketshareof48%intheindustryandplanstoexpanditssharefurther
KingfisherStrongisthesinglelargestsellingbeerbrandinIndia,whileKingfisherPremiumcontinuedtooutperformin
itscategory
p ans
ose
up
wo
new
green
e
rewer es
a
a epa y
n
n ra
ra es
an
an angu
n
arna a a
n
ordertosupporttherevenuegrowth
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MajorPlayers(2/5)
CompanySnapshot:
SABMiller
India
BusinessHighlights
Brands:Haywards5000,Haywards2000,HaywardsBlack,Fosters,IndusPride,Peroni,RoyalChallenge,KnockOut
SABMillerIndiaisasubsidiaryofSABMillerPLCregisteredinIndiaasSKOLBreweriesLimited
Financials: (FY200708)ThecompanyreportedanetturnoverofINR10860mnandprofitaftertaxofINR344mn
BusinessStrategy
er as rewer es oca e s ra eg ca yacross n a oserve e eermar e se c en y
Thecompany hasamarketshareof35%andstandsinthesecondposition
ThecompanyhasinvestedaboutINR1250mninthepasttwoyearsforupgradingthebreweriestoglobalstandards
SABMillerhasleverageditsglobalexpertiseinpackaging,pricing,occasionandproductgapswhichwereimproved
ase
onconsumer
ns g s
SABMillerplanstobringtheiconicDutchpremiumbeerGrolschtoIndia.SABMillerPlchasacquiredthebrandforUSD
1.2bnin2007
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MajorPlayers(3/5)
CompanySnapshot:
Asia
Pacific
Breweries
Ltd
(APB)
BusinessHighlights
Brands:Tiger,Cannon10000,BaronsStrongBrew
JointVentures
APBAurangabadLtd: 76:24JVwithVijayChougleforabreweryof5mncasescapacity
APB PearlPvtLtd: 67:33JVwithCKJaipuriaforabreweryof6 mncasescapacity
BusinessStrategy
p ans oacqu rea rewery n a as an oexpan o or n a, a sop ans oes a s presence n aryana
andPunjab
By2010,APBplanstoreachacapacityof20mncasesofbeerperannum
APBlaunchedTigerandCannon10000brandsinWestBengalandplanstolaunchBaronssoon
ecompany
s
oo ng
ormergers,
acqu s ons,
con rac
pac ag ng
e
ups
w
o er
compan es
o
expan
s
presenceinIndia
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MajorPlayers(5/5)
CompanySnapshot:
InBev
India
BusinessHighlights
Brands:TennentsSuper,Becks,StellaArtois,Hoegaarden,Leffe
AnheuserBusch(AB)wasacquiredbyInBevin2008andformedABInBevIndia;currentlyoperatesusingtradingname
InBevIndia
InBevoperatesinIndiathrougha49:51jointventurewithsoftdrinkbottlerRKJGroup
BusinessStrategy
ABstartedoperationsinIndiathrougha50:50jointventurewithCrownBeersInternationalinitiallybutlaterAB
purchasedtheremainingownershipfromCrownBeerIndiaLtd
InBevIndiahasaproductioncapacityof1.9mncasesayearthroughtwocontractbreweringarrangements:
RegentBreweriesinMadhyaPradesh
DasappaandSonsBangalore
InBev
lansto
introduce
Tennents
brand
in
North
India
either
b
findin
a
contract
brewer
or
b
settin
u
a
brewer
tookmanagementcontrolofKoolBreweryinJuly2008
ABInBevIndialaunchesBudweiserbeerinNorthIndiainAugust2009.IthasreceivedagoodresponseintheSouthern
statesandMaharashtra
Thecompanyexpectstocross2.9mncasesinsalesofBudweiserbeerbyDecember2009
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Market
Overview
CharacteristicsandTrends
KeyDevelopments
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KeyDevelopments
Date Development
Jul2009 SABMillerhaschosenShoppingtrip360,aretailsolutionfromInfosysTechnologiesforevaluatingitsinstoremarketingcampaigns
Jun2009 CarlsbergIndiaplanstosetupbreweriesinSouthIndiatobrewitsthreebrandsCarlsberg,TuborgandPalone.Thecompanyexpectstocapture10%ofmarketshareinayear
Mar2009 United
Breweries
Group
plans
to
sell
37.5%
stake
in
United
Breweries
Limited
to
its
partner
Heineken
NV.
Thisdoesnotinvolvesellingofkingfisherbrand
ep e g um ase rewer n ev p anstosetupanewp ant n n ra ra es ,t ecountry s argest eermarketbysales,evenasittakesitsfirstlocallyproducedbrand,Tennents Super,totheneighboringstateofKarnataka
Aug2008 Radico
Khaitan
plans
on
entering
the
beer
market.
The
company
wants
to
tie
up
with
an
international
brand
foritsbeerfora becauseitbelievesthatitwillhel ittobreakintothedomesticmarketfaster
July2008 TheUSD52bnInBevAnheuserBuschDeal wouldisexpectedtocreatetheworldslargestbreweryandcouldpotentiallyseeathirdbigplayeremerginginIndia
May2008 SABMillerIndiaplanstobringDutchpremiumbeerGrolschtoIndiawhichitacquiredin2007forUSD1.2
bn.The
company
is
also
likely
to
launch
Miller
Lite
beer
in
India
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