New Delhi: A consortium of leading beer producers, including United Breweries, AB-InBev, and Carlsberg India Pvt. Ltd, have forged an alliance to establish the Brewers Association of India. This collaboration underscores the industry's resolve to confront longstanding issues such as taxation inequities and regulatory barriers that have impeded the sector's expansion.
Vinod Giri, slated to assume the role of director general for the newly formed association, has shed light on one of the pivotal hurdles facing the industry – the discriminatory taxation system. Unlike many countries where alcohol taxes are scaled according to alcohol content, India employs a volume-based taxation model. This approach, Giri argues, "unfairly penalizes low-alcohol beverages like beer, making them disproportionately expensive compared to their higher-alcohol counterparts."
India's beer market is struggling to gain momentum despite its immense growth potential. While global beer sales have surged in recent years, India's share remains comparatively modest. Giri has pointed to figures from 2023, where India's beer market reached a modest 31 million hectolitres (a unit of measurement equal to 100 litre), a stark contrast to China's staggering 420 million hectolitres and the United States' 204 million hectolitres.
According to Giri, compounding the issue are regulatory frameworks that fail to differentiate between low-alcohol and high-alcohol beverages, perpetuating an environment that impedes market access and stifles innovation. While global trends pivot towards incentivizing lower-alcohol products to promote responsible consumption, such measures have yet to gain traction in India.
The Brewers Association of India aims to serve as a unified voice for the industry, advocating for policy reforms that foster a conducive environment for growth. Collaborative efforts between industry stakeholders, government bodies, and agricultural partners are envisioned to pave the way for a regulatory landscape that promotes responsible alcohol consumption while nurturing market expansion.
Industry luminaries such as Kartikeya Sharma, president of AB InBev India, and Vivek Gupta, managing director and CEO of United Breweries Ltd, have voiced their commitment to surmounting challenges, including taxation anomalies and accessibility barriers. Dolf van den Brink, CEO of Heineken, UBL's parent company, foresees the burgeoning Indian middle class and the burgeoning craft beer movement as pivotal drivers for future growth.
Heineken's substantial investments in the Indian market, totaling over Rs 8,000 crore in recent years, underscore the company's confidence in the market's potential. These investments, primarily directed towards expanding production capacity, signal a long-term commitment to meeting burgeoning demand and fostering industry growth.
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