India: The beer industry came off a sedate first quarter, which also happens to be the peak summer consumption period for the highly seasonal drink in the country, The Hindu Business Line posted on July 18. Indian market leader United Breweries (UB) Ltd has indicated that industry depletions may have grown, year-on-year, by 2.5 per cent at best even as the second-largest brewer Shaw Wallace Breweries Ltd (SWBL), managed by SABMiller, pegged the first-quarter growth at around 2 %.

The overall momentum in the first quarter should have come as a disappointment for the brewers who began the year anticipating robust growth in the wake of the general economic buoyancy. After a good opening in the month of April, the sales nosedived in May, when the summer consumption normally peaks, with big guzzling States such as Tamil Nadu and Andhra Pradesh swinging negative as far as 40 per cent and 16 per cent, respectively.

Officials with both the UB group and SWBL cited a host of reasons, including early monsoon over peninsular India, dry days on account of elections, infrastructural problems in Tamil Nadu and systemic changes driving up the price in some Northern States for this downfall. The sales witnessed some recovery in June but it was hardly enough to register any impressive rally for the industry in the first quarter.

It now threatens to mar the industry's search for 5 to 8 per cent growth in the current financial year after a rather sluggish 2 to 3 per cent jump in the last year, 2003-04. To make matters worse, the beer industry's already precarious profit pool shrunk further in the first quarter on the back of soaring freight costs while the bottle price also doubled to Rs 7.

According to SWBL estimates, the Southern markets, which account for nearly 50 per cent of the domestic consumption estimated between 83 million and 84 million cases annually, reported 1 per cent growth in the first quarter. While sales in Andhra Pradesh and Karnataka moved up by 6 and 10 per cent, respectively in the first three months, Tamil Nadu and Kerala dragged the sales with negative strokes of 8 and 19 per cent, respectively. The North Indian States, where the bulk of the annual sales are mopped up during the summer, witnessed a 5 per cent decline, with the Rajasthan market dropping by 14 per cent and Uttar Pradesh remaining flat.

Among the other markets, Maharashtra is believed to have de-grown almost 9 per cent, while Madhya Pradesh, where the beer price came down significantly on account of government intervention, saw sales zoom by as much as 41 per cent.

The country's average beer price is pegged at about Rs 55 per 650 ml bottle, which is at least 25 per cent or even 50 per cent higher than the cost of 180 ml of hard spirits. "People have been preferring hard liquor to beer taking into account kick per rupee and the lower unit price in favour of the former," the industry officials said.

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