Beer sales in India grew 4.6% in 2018, although companies expect sales to taper off this year due to an increase in taxation and liquor curbs during the general election.Growth last year was still slower than in the previous years, when it ranged from 5.2% to 18% between 2009 and 2016.
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“In the last couple of years, we have had highway bans, demonetization and excise duty hikes in Maharashtra and West Bengal, which had depressed the industry. The owner of KingfisherNSE -11.11 % beer said it grew in double digits last year, ahead of the overall market.
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Both beer and Indian-made foreign liquor (IMFL) declined 3% in 2017. While India’s IMFL market recovered and grew 10% last year, the most since 2012, the beer category hasn’t seen a similar surge. A key reason was lower demand in two crucial states. A year ago, West Bengal increased duty on beer to 45.5% from 30% in January and then reduced it to 42.7% in March after initial supply disruptions, leading to tipplers shifting from beer to lower-priced spirits. In Maharashtra, excise duty on beer was increased by 17% and the revised pricing structure was obtained only after mid-December 2017, leading to a shortage of beer as manufacturers cut back on Supplies.
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In India, the liquor market is regulated, with high levels of taxation. In many parts, the state government controls wholesale or retail distribution. Over the past two years, West Bengal, Chhattisgarh and Jharkhand have changed policies to allow liquor sales only through government-owned corporations, similar to states such as Delhi, Rajasthan, Kerala and Tamil Nadu.
Heineken, Anheuser-Busch InBev and Carlsberg, the world’s top three brewers that together control about 90% of India’s beer market, have been betting on premium brands to drive sales in the warm, tropical country with promising demographics and increasing affluence.