Heineken, the second-largest brewer globally, expressed astonishment at India’s accelerating momentum. This isn’t limited to the beer sector, where state governments are increasingly adopting progressive measures, but also extends to its ability to attract and nurture businesses across various industries. This transformation is positioning the Indian market as one of the final frontiers of growth for international companies.
Heineken’s chief financial officer, Harold van den Broek, remarked to investors, “India’s national confidence, coupled with its commitment to fostering prosperity across industries and enabling growth and attraction of work, is truly remarkable.”
United Breweries, under the ownership of Dutch brewer Heineken, commands fifty percent of the Indian beer market, boasting popular brands like Kingfisher, Bullet, and London Pilsner. Despite India’s warm tropical climate, promising demographics, and growing prosperity, it remains one of the largest beer markets for international brewers. However, significant challenges persist, including the disparity in tax rates between beer and spirits, particularly in key states like Karnataka, Maharashtra, and Haryana. Moreover, the limited availability of alcohol retail licenses, totaling just 80,000 across the country, including stores, pubs, and bars, presents additional obstacles.
Despite over 20 million people reaching the legal drinking age annually in the country, beer represents only 10% of the spirits market. Per-capita beer consumption in India stands at just two liters, trailing behind most Asian markets.
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“We’re witnessing the alignment of perfect branding with market execution, albeit cautiously, as India’s market dynamics vary significantly from state to state. Each state requires its own tailored approach. However, we’re encouraged by the increasingly constructive and enduring dialogues with various state governments. India remains a strategic long-term investment for us,” Broek noted.
“We are observing a normalization of consumer behavior, indicating a growing acceptance of alcohol in several states.”
In India, over 80% of the total volume in the beer market is attributed to strong beer. Interestingly, many consumers of strong beer also show interest in purchasing value and low-priced spirits. This inter-category competition underscores the significance of price, including excise rates. According to the IWSR Drinks Market Analysis report, if regulations result in increased beer prices, the price gap between cheap Indian-made foreign liquor and beer narrows enough to prompt many consumers to switch their preferences.
Heineken reported a 20% organic increase in net revenue in India last quarter, primarily fueled by volume growth and a favorable price mix. Beer volume expanded in the low-teens, outpacing the market, a result influenced by adjustments in route-to-market strategies implemented last year.
In the premium beer segment, United Breweries commands less than a quarter of the market share, trailing behind AB InBev, known for brands like Budweiser and Corona. AB InBev has achieved strong performance in this segment, surpassing the domestic beer market, fueled by increasing demand for its premium offerings.
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