Beer market in India set for new fizz

Multinationals have not been able to stay away from the Indian market with its middle class consumers’ fast-gaining affluence.

Beer makers are no exception.

Kaltenberg, one of the oldest beer brand in Germany and the most sold international brand in its parent Royal Bavarian’s portfolio, is set to enter India.

It will have a premium positioning but will be priced much cheaper than imported beer brands.

CMJ Breweries, which is bringing the German beer to India, has already test-marketed it in the western parts of the country in association with Konig Ludwig International, which has the selling rights to Kaltenberg in international markets.

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The commercial launch will happen in the next two to three weeks, starting with Mumbai and the rest of Maharashtra.

Kaltenberg, priced at Rs 125-a-pint, will be positioned higher than the other premium beer that cost around Rs 100, but much lower than imported ones such as Hoegaarden and Corona, which are priced upwards of Rs 250.

Says Rohit Jain, chairman, CMJ Group: “Pricing was done keeping in mind the huge gap between the two segments.

“As we have to import all raw materials to maintain the quality, we will have to sell it at a low profitability.

“It is not a volume game and we are not looking at profits at the moment.

“For us, to have Kaltenberg here in India is the most important thing.”

CMJ will produce the beer in India, and plans to start selling it nationwide within the next few months.

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Starting with about 200 outlets in Mumbai, it plans to make the product available in about 80-90 retail points in every city.

The product will be available across 1,000 outlets over the next few months in Maharashtra, Goa, Daman, West Bengal, Bihar, Jharkhand, Delhi, Karnataka, Tamil Nadu and Andhra Pradesh. CMJ will also make the beer brand available in pubs, clubs and restaurants.

Keeping in mind that most of India’s beer market is dominated by the strong version, CMJ also has plans to launch a strong Kaltenberg.

About 80 per cent of beer sold fall under the ‘strong category’ that has six to eight per cent alcohol content.

A milder one will be available in metros, says Jain. Kaltenberg will be available in cans, which accounts for about 30 per cent of the market, by next festive season.

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However, Jain plans to focus on visibility and the right format for sales, rather than volumes, in the next five to seven years.

Studies suggest that India is the fourth-largest beer market in Asia-Pacific in terms of volume, but is at the bottom of the world’s top 30 markets by way of value.

In 2012, Indians consumed about 20 million hecto-litre of beer -- just 1.6 litre per person, a fraction of 37 litre in China, 31 litre in Thailand and 30 litre in Vietnam -- according to market research reports.

However, the market is estimated to grow to about $9 billion (Rs 56,000 crore) by 2016.

Jain says imported beer accounts for about five-seven per cent of the market, growing at more than 10 per cent annually.

“Over the next 10 years the market will only grow.

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“People here are ready to pay for good beer.

“Our target is to capture about one-two per cent of the premium and imported beer market in India, with sales of about 200,000 cases a month,” he says.

The beer market is dominated by United Breweries’ brands like Kingfisher Strong and Draught, as well as milder variants like Ultra.

Carlsberg too has introduced stronger brews such as Carlsberg Elephant and Tuborg Strong.

The other brands in the market include Heineken, Sabmiller and Haywards. United Breweries’ Kalyani Black Label remains popular in eastern India.

Microbreweries are also cropping up in some of India’s metros such as Delhi-NCR and Mumbai such as Rockman’s Beer Island in Gurgaon.

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Jain will spend about Rs 5-7 crore (Rs 50-70 million) on branding.

CMJ has also lined up investments of Rs 400-450 crore (Rs 4-4.5 billion) over the next 12 to18 months.

This includes setting up its brewery in Byrnihat, Meghalaya, spread across 8 acre for an estimated cost of Rs 110 crore (Rs 1.1 billion), while Rs 180 crore (Rs 1.8 billion) will be invested in establishing the extra neutral alcohol facility that can produce about 100 kilo-litre per day from grains.

Other brands of CMJ that it has launched are Magpie Premium Lager Beer, Savage Super Strong Beer and Nutcracker Premium Strong Beer. However, these have been launched in the Northeast in March, 2013.