INDIA: Beer market deregulation would help market mushroom - analyst
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.
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.
Heineken has a "low appetite" for China's mainstream beer sector and will continue to concentrate on the premium end of the market, the head of the Dutch brewer has said....
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