India: Indian beer market is growing at a rate of 7.5% per annum

India is currently the smallest beer market in the world at 85 million cases. However, it is growing at a rate of 7.5% per annum, and with a resurgent Indian economy growing at an average of around 6% each year for the last decade, it will not be long before the beer market begins to grow by leaps and bounds, India Times cited Karan Bilimoria, founder and CEO of Cobra Beer, on December 8.

According to experts, the Indian beer market has a huge potential. India is currently one of the smallest beer markets in the world at 85 million cases, and is growing at 7.5% pa. The target population is expected to increase by over 80 million in 10 years, thus offering a huge potential base.

The main factors contributing to the growth are increase in income level, globalisation, communication and decreasing cultural and social restrictions. If you look at the UK market, you can see the phenomenal growth of lager in the last few decades. In 1960, only 1% of beer in the UK was lager; 99% was ale. Today, two thirds of all beer drunk in the UK is lager.

If government deregulates the market, it will allow for expansion in the beer market, which in turn will help in creating job opportunities for people and farmers. Lager beer complements almost any kind of spicy food, which is why it should be much bigger than it is in India.

The Indian market is where the Chinese beer market was 20 years ago. The per capita consumption of beer in China today is 20 litres per person per annum whereas in India it is approximately 0.8 litres per person per annum. As the Indian economy grows and India integrates more and more with the rest of the world, even if the per capita consumption increases to 10 litres per person over the next decade, the Indian beer market would potentially grow 15 times.

However, in order to make this happen, the government would firstly have to deregulate beer from spirits and reduce the duty structures on beer. The government will need to support the beer industry by levying a central excise duty instead of the present structure where duties are a state subject, which adds on to the cost of beer and uneven pricing of the same product in different markets.

If you were to compare the two, the simplest way would be to say that the European beer market is old, well established and very slow-growing, whereas the Indian beer market, while also with a long history, still has huge potential for the future. India is currently the smallest beer market in the world at 85 million cases.

However, it is growing at a rate of 7.5% per annum, and with a resurgent Indian economy growing at an average of around 6% each year for the last decade, it will not be long before the beer market begins to grow by leaps and bounds.

The new economic reforms in India date to 1991. In China, reforms started in 1978 when its per capita consumption of beer was around 0.6 litres per person per annum.

Today it is nearly 20 litres per person per annum and in 2003 China overtook the US as the world’s biggest beer market. By the same token, consumption in India today is very low, around 0.8 litres. Following the China example, I am willing to bet that in 10 years’ time, India will be one of the world’s major beer markets.

Success is not an end, it is an ongoing journey. We have still a long way to go in spite of having begun to establish ourselves as a global brand. We have started brewing Cobra in Rajasthan this year. We are also considering brewing Cobra in the South for the southern market under licence with other breweries

We are also looking at a greenfield facility in Andhra Pradesh.Our target is to expand our sales to around one million cases of beer in India over the next three years. It is a very conservative estimate, but we will move slow and steady.

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