Monday saw Lord Bilimoria share his thoughts about the growth opportunities for beer in India in an article for Indian news magazine, Indian Outlook. The piece identified the substantial discrepancy between the consumption of beer and spirits in India, despite the recent rise in popularity of beer in the country, and made the case for reforming the taxation rates in India so that they better reflect the alcoholic potency of the products being sold and help to reduce the health and social problems associated with easily available cheap liquor.
To Get India on Tap
It is an anomaly that, all over the world, beer accounts for over 65 per cent of alcohol sales, yet in India it is still under 10 per cent. India has one of the smallest per capita beer consumption rates in the world, at just two litres per person per year. In comparison, people in the Czech Republic, which has the highest rate of beer consumption in the world, drink approximately 145 litres per person per year. Now consider a country like Kenya—beer is consumed there at six times the rate of India, at 12 litres per person per year.
India has the potential to be a beer market second only in size to China, which is the biggest beer market in the world today by a long shot. However, China has a rate of beer consumption of around 40 litres per person per year. In order to catch up with China, India’s beer consumption rate would have to grow over 20 times—and China is not standing still.
In Britain, on those magical hot British summer days, beer sales go through the roof. India, with its constant warm climate, is the perfect country for beer. It should be the nation’s refreshment of choice. Instead, we have a country with a culture that sees people in rural areas drink country liquor, which is cheap and potent—causing huge health and social problems which have led it to be outlawed in a number of states.
Following the liberalisation of the Indian economy 24 years ago, beer drinking has increased in popularity with growth rates hitting double digits year on year. India’s younger population is more in tune with their global counterparts in drinking habits and prefers the refreshment of beer to the potency of spirits.
However, while there has been an increase in beer production, beer is still hampered by high taxes. This inflates the price with a 650ml bottle of beer in India costing, on average, 100 rupees —prohibitively costly for many. The cause of hefty beer taxes is that beer is lumped in with spirits for tax purposes and given the same restrictions, despite the fact that strong beer consists of seven per cent alcohol by volume, while Indian-made foreign liquor and country liquor have an alcohol content of 40 per cent and up to 60 per cent respectively!
As a result, advertising beer is prohibited and the number of licensed outlets—wine shops, bars and restaurants—is very small when compared to other countries with established beer markets. In China, there is one outlet for every 395 people; in India, there is one outlet for every 17,000!
As the two beverages are combined under the same legislation and the tolls fall equally heavily on both, consumers are given no incentive to choose beer over Indian-made foreign liquor, which delivers three times the alcohol for the same price.
Limiting the availability of spirits would also change alcohol consumption patterns in the country. Indian spirits are currently available in small volumes like 180 ml and 90 ml, volumes designated for individual consumption which would never be sold in the western market. If only beer in India could be more affordable and more available, the popularity of drinking strong spirits would fall, creating enormous health and social benefits.
I started manufacturing Cobra in Bangalore 25 years ago as an export-only product and within seven years Cobra became the biggest ever export beer out of India. Cobra is now by far the biggest Indian beer brand outside India. It is a matter of great pride to me that we have won 83 Monde Gold Medals, making Cobra beer one of the most awarded beers in the world, showing that a beer of Indian origin can be amongst the best on earth!