Despite beer’s global popularity, its consumption in India remains modest compared to its population, remaining below 350 million cases a year. Kartikeya Sharma, India president of Anheuser-Busch InBev or Ab InBev, the owner of brands such as Budweiser, Hoegaarden and Corona, said this could change if states focus on taxing beer the “right way”. The company expects India to evolve into a well-entrenched beer market over the next three-five years if the laws support its growth. Edited excerpts:
Has the business in Asia grown, and is India growing in tandem with that?
Asia Pacific has the fastest growth rates for us around the world and has a 10% contribution to the company’s Ebitda. China is the largest market in the region. Interestingly, India has the lowest beer category penetration, and this could be because we need over half a million labels and licences, and regulatory approvals every year to run our business here. India (has) not just federal but also state-level oversights. But we could not be clearer that we won’t trade off or compromise our business model.
Within India, how have your categories performed?
India is now the fourth largest market globally for Budweiser. At the close of the first half of 2023 (January to June), wedged against 2022 overall, we were 20% higher in terms of business. We saw mid to high single-digit growth when we compared it to the same period in 2019. We saw 58% of our business come from high-end volume products like Budweiser, Budweiser Magnum, Hoegaarden and Corona, and 42% coming from non-premium in terms of volume. In terms of the topline contribution in terms of volume, the mix goes up to 65%. Where we can measure growth, states like Karnataka and Telangana are growing.
Has the beer industry recovered to pre-covid?
The industry has not come back to the pre-covid levels everywhere but has grown very much in some states. Maharashtra, for instance, once a top three beer market in India, is still trailing in absolute terms in the industry when compared to 2019 levels. One reason is that the state has had the highest duty increases. Of the top 10 markets in India, Maharashtra remains the only market that has not breached those levels.
There is a very complicated way in which beer is taxed in India. And the number of cases sold across India has also not grown much in the last decade. Do you agree?
India is taxing beer heavily. In a way, it is being taxed twice. This is because it is being taxed by “alcohol by volume” and not “strength”.
So, if beers are between 3-8% alcohol by volume, they are taxed per bottle and not on the amount of alcohol in them. Barring West Bengal, no other state is following this. The state introduced slab-based taxation on beer post-pandemic, and the government saw a 9-18% increase in terms of revenues.
This is an example of how when taxation on beer happens, there will be no reduction in the tax a state collects because more volumes will be sold. The absolute pole of revenue for the state has gone up. While West Bengal serves as a very good template, we feel governments are being a bit more temperate because they don’t want to cross that threshold of earning more than a certain amount from excise on alcohol.
Karnataka recently changed its entire spirits policy. Did that impact you in any way?
From an industry and revenue standpoint, Karnataka has really come through for beer companies. We saw a positive impact from a steeper duty fee, which was imposed on spirits as compared to beers, something along the lines of 10% on beers and 20% on spirits. Even Telangana is growing in the high single digits. The highlights have to be states like West Bengal, Karnataka, Uttar Pradesh, Odisha, Rajasthan, and Punjab in the first half of 2023.
(The reporter was in Bengaluru on an invite from Ab InBev India)
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Updated: 25 Aug 2023, 12:01 AM IST