SABMiller India

Beer makers look to cans to grab yuppies

Mail Today, 18-August-2008

BEER makers expect the sales of canned and draught beer to pick up in the niche segment comprising the young and upwardly mobile in metros and big cities.

Cans are considered superior to bottles as far as packaging of beer is concerned. “ Canned beer retains more gas than bottled beer because of the packaging process as a result of which it tastes better,” Som Distilleries chairman and managing director, Jagdish Arora told M AIL T ODAY . The Bhopal- based company has entered the canned beer market recently with its Hunter brand and is only the third company in the country to sell canned beer after Vijay Mallyas UB Distilleries and multinational company SAB Miller.

Arora said that setting up a packaging unit for canned beer at a brewery requires a 50 per cent additional investment than that required for the main brewery. The cans have to be imported from countries such as Poland, Hungary, the UK and Dubai, which adds to the cost.

Unlike India, the consumption of canned beer is much higher than bottled beer in the western countries. Industry statistics show that canned beer comprises 68 per cent of beer consumed in western countries while bottled beer accounts for 25 per cent. The remaining seven per cent is sold in PET bottles.

Draught beer is also a niche product as it is a fresh beer, which is the natural juice of barley. The beer is not pasteurised and does not contain any preservatives, which enables it to retain its natural taste. It is also considered better from the health standpoint.

However, the problem with draught beer is that it has a shelf life of only four days after which it goes sour, like curd. It can be marketed only in the region close to a brewery and cannot be transported over long distances.

Arora said draught beer sales were also on the rise and his company had already started selling 40,000 litres a month in Madhya Pradesh in places such as Bhopal and Indore.

Japanese tourists visiting Sanchi, which forms part of the Buddhist tourist circuit, were also good customers for the newly introduced brand.

Beer has always been targeted as a mild alcoholic drink for the young generation. The beer market too is growing in the country, though at a much slower 5.5 per cent per annum.

Andhra Pradesh is the largest consumer of beer accounting for over 18 per cent of the total beer sold in India, followed by Maharashtra, Tamil Nadu, Karnataka and Rajasthan.

These five states consume nearly 60 per cent of the total beer sold in the country.

In value terms, beer constitutes only five per cent of alcoholic beverages consumed in India compared to over 65 per cent globally, especially in the worlds largest beer consuming market, the US. India is the fastest growing liquor market in the world with 10- 11 per cent volume growth per year. Indias per capita consumption of whisky is 0.75 litres per annum.