The Hindu Business Line : Top global brewers look anew at Indian beer market

EVEN as the top global brewers rush to carve out a slice of the exploding Chinese beer pie, a few of them including Heineken and Carlsberg are casting their eyes on India once again.

These brewing giants, who looked at the domestic market through the '90s before deferring entry plans, are looking at fresh opportunities, as India remains one of the last potentially large beer markets where the end game in market consolidation is yet to begin.

Informed sources said Dutch major Heineken and Danish brewer Carlsberg have been evincing renewed interest in the Indian beer market in recent months with their representatives "hanging out and holding discussions" with the caucus of industry experts and influential individuals who could help to brew a fresh entry plan.

Sources said the global brewers, especially Heineken, is not averse to foraying into the country with a partner from outside the domestic alcoholic beverage sector, while Carlsberg has been exploring acquisitions of independent breweries or joint venture opportunities through their partner in Nepal, the Khetan Group.

Belgian brewer, Interbrew, is also interested in an entry in India although its plans seem to have slipped into a dormant mode of late.

This comes in the wake of the recent inroads made by leading transnational brewers like SABMiller and Scottish & Newcastle (S&N) in the local market through equity participation in the country's top two beer makers, the UB Group and Shaw Wallace Breweries, which account for nearly 80 per cent of the beer sales between them.

"With the top brewers already aligned, the new entrants will have to look at smaller independent brewers or partner with influential business groups from outside the alcobev sector who could initially navigate a green field venture in a highly State controlled market," sources said. It must be mentioned that Heineken in the mid-'90s was in advanced stage of talks to partner tobacco major ITC to enter India.

The domestic per capita consumption of beer is 0.7 litre compared to China's 18 litres. Beer sales - with staggered growth of 6.5 per cent in the last five years - is pegged at about 82 million cases annually. Industry observers said the developments in the beer market in China and India, which attracted almost similar level of interest from the global brewing giants more than a decade ago, is a study in contrast as the former was helped by de-regulation that brought down consumer price (a 640-ml pack costs roughly 18 US cents against $1.12 for 650 ml in India) and exploded beer consumption, catered to by over 400 brewery firms across that country.

In fact, all top brewers who are in a bitter race to gulp down significant share of the Chinese beer market - the biggest in the world today - had aggressively looked at India in the early '90s. The world's largest brewer and maker of Budweiser, Anheuser-Busch, came close to sealing a joint venture with Shaw Wallace, while Carlsberg had an MoU in place with the UB group.

With de-regulation of beer remaining elusive, the country is yet to throw up critical volumes that could tantalise the global brewers who nevertheless are betting on a robust GDP growth that often bodes well for consumption and better pricing ability for the brewers.