INDIA: Beer market deregulation would help market mushroom - analyst

By | 21 August 2012

A loosening of regulation in the Indian beer market offers major opportunities for global brewers

A loosening of regulation in the Indian beer market offers major opportunities for global brewers

Deregulation of the Indian beer market could grow the country's profit pool by 14 times its current size by 2016, according to an analyst. 

Nomura said the market offers a "major growth opportunity" for global brewers as India currently only accounts for about 1% of global beer volumes, despite accounting for 17% of the world's population. 

But it said in a note today (21 August) that regulation remains a "big barrier".

"With taxes taking around 50% of the revenue pool for beer in India and alcohol regulation devolved to state governments, producer profit/volumes are unlikely to improve significantly in the medium term," the note said.  

Affordability also "remains an issue", the analysts noted, meaning beer is "almost a luxury". 

However, Nomura said that deregulation of the market could see the country's beer profit pool grow by US$90m to US$1.2bn by 2016. This would be compared to a doubling of the profit pool if there was no change in regulation. 

Beer only accounts for 10% of alcohol tax revenues, against 90% for spirits, Normura said. And a number of measures have been introduced to improve beer's situation, it said, including delinking beer and spirits duties, higher taxes on spirits, and the rollout of beer-only retail outlets. 

Heineken would be the "largest beneficiary" of deregulation, the analysts said, as its 37% stake in United Breweries accounts for 75% of the industry's profit pool.  

SABMiller and Carlsberg could also see benefits from growth in the market, the note added.

SABMiller is India's number two brewer, with 24% volume share, while Carlsberg is India's number three operator with 6% volume share. 

Last week, Carlsberg reported a 43.2% leap in net profits, partly boosted by strong growth in Asia. 

Expert analysis

Consumer Trends in the Beer, Cider & Pre-mixed Spirits Market in India

This report provides the results for the Beer, Cider & Pre-mixed Spirits market in India, from Canadean’s unique, highly detailed and proprietary online survey of consumers’ Consumer Packaged Goods (CPG) consumption habits, and forms part of an overall series covering all CPG product markets.

Sectors: Beer & cider, Emerging markets – BRIC, The off-trade, The on-trade

Companies: Carlsberg, SABMiller, Heineken, United Breweries

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