India: Premium beers outgrow overall beer category by nearly three times in FY24

Premium beers outgrew the overall beer category by nearly three times in FY24, companies' reports and excise data showed. According to available data, premium beers (on average, beers priced above Rs 125 per pint) grew 25-30% by volume in FY24, compared to 8-10% growth of the overall beer category, The Economic Times reported on July 8.

At Bira91's recently opened Taproom pubs in Ludhiana, flavoured premium beers such as Citrus Wheat, IPA and Stouts are outselling stronger and regular lagers by about three times.

"What is interesting to note is that there's this stereotype that people in Punjab drink strong beers. But this busts that stereotype - consumers there are actually drinking beers that are flavourful and milder," said Ankur Jain, chief executive of B9 Beverages, which sells Bira91.

Typically, wheat beers are priced 20-30% higher than most premium lagers.

B9 Beverages, in which private equity fund Tiger Pacific Capital invested $25 million for a close to 4% stake this March, is setting up more Taprooms with similar products in Mohali, Andhra Pradesh and Madhya Pradesh, Jain said.

United Breweries (UBL) reported 21% volume growth for its premium portfolio led by its Kingfisher Ultra and Ultra Max variants, though its overall volumes grew 10.9% in Q4 of FY24, driven mainly by the business in South and East. To keep up with the trend of flavours and premiumisation, the Heineken-owned UBL introduced Queenfisher beer in India this March, a premium lager aimed at an increasing number of women consumers.

AB InBev, which makes Budweiser, Hoegaarden and Corona, has called growth of premium beer brands as a driving force behind its India unit in investor presentations.

Researcher IMARC Group said the Indian beer market could touch Rs 62,240 crore by 2028, up from ₹38,360 crore in 2022, growing at a compound annual growth rate (CAGR) of 8.1%.

"Premiumisation for beer, so far considered a mass beverage, has taken off in India now, though on a smaller base. This is a trend that was so far seen in spirits like whisky and wine, leading to spurt in flavours and boutique beer brands coming up," said Vinod Giri, director general at alcobev industry body Brewers Association of India.

The trend is fuelled by younger consumers, more women consumers, marketing push by companies, and an estimated legal drinking-age population of about 300 million, said executives.

ICRA said in a March report that it expects revenue growth of 8-10% for domestic alcohol beverages companies in FY2025. While Indian-made foreign liquor (IMFL) companies are expected to witness 11-13% revenue expansion supported by preference towards premium products and volume growth of 3-5%, beer companies would see 4-6% expansion in volumes. ICRA expects beer to witness a good season in Q1 FY25 in anticipation of a hot summer, compared to the previous fiscal, which saw unseasonal rainfall.

"In addition to the healthy demand, the industry is expected to benefit from the moderation in input costs, especially packing material such as glass bottles, which accounts for 60-65% of an alcobev manufacturer's cost. However, prices of barley, which is the key raw material for beer, are expected to continue to be fairly stable," said Kinjal Shah, vice president and co-group head-corporate ratings at ICRA, said.

The alcobev industry is seeing a growth revival in mid to high single digits after three years, when growth rates in the pre-Covid era were in the range of 12-15%, which executives said was also riding on premiumisation, leading to value growth across categories including beer.

Apart from the prominent names, about half-a-dozen beer startups selling premium labels have sprung up in response to consumer demand. The homegrown Proost Beer, subsidiary of Grano69 Beverages, raised '27.5 crore through a mix of equity and debt funding in 2023, which it said was to cater to a premium affordable segment. Another new-age player, Reybier Alo Bev, is looking at 'heritage beers.'

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