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CASTLE MALTING NEWS in partnership with www.e-malt.com Italian
16 December, 2021



Brewing news India: Beer volume declined by 39.1% in 2020

The total number of alcohol consumers in India is estimated at around 160 million, of which 7.5% are women. However, the update by women has increased during the pandemic, according to a new report by UBS, The Times of India reported on December 16.

According to International Wine and Spirits Records, the total alcoholic beverage volume declined 29% year-on-year in 2020. The decline in spirits was relatively lower at 19.7%, while beer volumes fell 39.1% yoy, given its higher out-of-home consumption salience and the “lower cost per unit of alcohol”. Per capita consumption of alcohol is lower in India (5.5 litres) compared to Asian (6.4 litres) and global (6.2 litres) averages.

“We believe it is likely to improve, as structural drivers of demand (such as favourable demographics) remain, despite recent disruption. We expect progressive improvement in the regulatory environment: 1) lowering of excise duties (Delhi, West Bengal and Maharashtra); and 2) improving distribution (Delhi and Uttar Pradesh), to aid growth,” said Sunita Sachdev, Analyst, USB Securities.

United Spirits is the market leader in the Indian liquor market with a volume share of around 23%. Global spirits producer Diageo has management control of USL with a 55.9% stake. USL has the largest distribution network among Indian spirit companies. The company has 11 ‘millionaire’ brands (brands with sales of more than 1 million cases per year) and 45 manufacturing facilities in India.

In the beer space, United Breweries has a 52% share of the beer market in India. Heineken holds 61.5% of United Breweries. The company’s flagship brand Kingfisher is the most popular Indian beer brand globally. As state governments do not allow the inter-state movement of alcoholic beverages, UBL owns 20 breweries and operates 11 contract manufacturing facilities across the country.

“Beer was one of the worst affected categories during the pandemic due to restrictions in on-premise consumption and consumers avoiding cold beverages. After the initial disruption, there has been a quarter-on-quarter recovery in beer demand,” noted UBS. Regionally, volume recovery in the north has been quicker than in the East and the North than in the south and the west. While UBL’s beer volumes are up 89% in the second quarter of FY22 in the East, it is up only 49% in the South.

UBS expects as sustained period of growth over the next four to five years for the Indian alcoholic beverages sector, as the regulatory outlook improves across states. Post the initial increase in additional taxes during the pandemic, UBS thinks most states have realised that excessive taxation can have a negative impact on overall revenue collection and have corrected this.

Data collected by Ambrosia, a monthly publication for the alcohol industry, shows that Andhra Pradesh, Telangana, Kerala, Karnataka, Sikkim, Haryana and Himachal Pradesh are amongst the largest consumers of alcohol in India.

“For Toddy and country liquor, Andhra Pradesh and Telangana have the highest levels of consumption which drops to the lowest levels in states like Jammu and Kashmir, West Bengal, Maharashtra and Gujarat. The consumption in these states are as low as 100 ml per capita per week. Levels of Toddy consumption have seen a sharp decline in the northern state of Bihar as well, which still ranks in the medium to average range (101-500 ml per capita per week),” it said in a report.





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