India: India’s leading brewers to invest over Rs 3,500 crore in capex this year

India's largest brewers-United Breweries, AB InBev and Carlsberg-said they will invest over Rs 3,500 crore to set up breweries in India in 2025, the highest capex announcement by them for a year in over a decade, ET Manufacturing reported on February 20.

These companies together account for around 85 per cent of the beer sales in India. Last week, Jacob Aarup-Andersen, CEO of Carlsberg, told analysts that while India is a volatile and complex market to operate in, the Danish brewer will step up investments in 2025. It has committed Rs 350 crore to open a plant in Mysuru, taking its cumulative investment in Karnataka to Rs 600 crore.

For the beer segment, India offers very attractive growth opportunities supported by demographics, with a growing and young population and an estimated 800 million people of legal drinking age. Around 20 million people enter this group every year. While alcohol is still considered taboo in many states, there is still an estimated 140 million people in the beer-drinking population.

"The growth drivers in the beer markets are several, including urbanisation, increasing wealth, growth in dining out and an increasing number of women beer drinkers," said Aarup-Andersen. "But India is also a complicated market to operate in. Alcohol sales are restricted. There are only 90,000 outlets across the country with permission to sell alcohol. Alcohol regulation is done state by state, resulting in different market and tax structures, including import and export duties between states. This basically means that you need to operate state by state."

India - a warm, tropical country with promising demographics and increasing affluence - remains one of the largest beer markets for global brewers.

United Breweries chief executive Vivek Gupta said it will invest Rs 750 crore to set up a new brewery in Uttar Pradesh, its first greenfield expansion in nearly 12 years. "Based on the category growth and positive policies where the stores are going to double, we wanted to make sure we have a long-term supply there," he said. "We are also in talks with other state governments on various models of how we expand our capacities and be future ready."

India is traditionally a spirits market with high alcohol products accounting for around two-thirds of alcohol consumption. Also, the market is mainly a strong beer market, with around 80 per cent of the market volumes being strong beer.

Last month, union minister for food processing industries Chirag Paswan said that the Belgian beer brewer AB InBev planned to invest $250 million in India's beverage market in the next two to three years.

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