INDIA: State regulations block beer market growth - SABMiller
A tangled web of tax and regulations across Indian states remains a major barrier to beer market growth in the country, the head of SABMiller India has said.
Differing regulations on pricing and distribution, as well as fluctuating excise charges, foster inefficiency in the beer sector and make it harder for brewers to attract consumers, said Jean-Marc Delpon de Vaux, CEO of SABMiller India.
Speaking at a press meeting for international journalists in Delhi this week, de Vaux said: "Across India, there are 12m hectolitres produced by 65 breweries. You could easily produce the amount of beer drunk in India with two, three or four breweries. The reason there are so many is the legislation. Transporting beer is expensive, so you need breweries in the different states."
Beer consumption in India remains relatively low on the world scale. Indians drink little more than one litre per capita annually, compared to a global average of 22 litres, although annual market growth is around 23%.
Duty tax on beer in India is an average US$13 per unit of alcohol, according to SAB figures, placing the country significantly above the world average of $4, as reported by global beverage market research group Canadean.
Brewers are becoming increasingly frustrated with the situation.
De Vaux's comments come less than a week after SABMiller told just-drinks that it has joined forces with rival United Breweries to file a lawsuit against authorities in the state of Andhra Pradesh. They allege that the state's procurement price for beer has not risen since 1997, while retail prices have more than quadrupled in the same period.
Andhra Pradesh accounts for nearly a third of SAB beer revenue in India and the company hopes to make the lawsuit a test case.
Lobbying by brewers is expected to rise considerably in the build up to a meeting of excise duty officials from India's 35 states and territories in Goa in January.
Sundeep Kumar, SABMiller India head of corporate affairs, said that the issue would likely have to be solved on a "state by state" basis. He said that the main problem is to find a way to relax controls "without harming revenues of the states".
SABMiller has an estimated 38.5% share of India's beer market, behind Vijay Mallya's United Breweries, which controls just over 40% of the sector.
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