Consumer behaviour
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THREE CHEERS FOR BEER
Despite being placed 39th in the world rankings, the beer market in India with 5.6 million bottles is the most emerging market and is set for rapid growth in the coming decade. USA with 232, China with 219 and Germany with 107 million bottles is placed first second and third respectively. With 85 million potential beer drinkers set to be added in the next ten years, the market will see penetration levels increase from 11 to 20 per cent. According to Dr Mohan Krishna, deputy general manager-strategic planning, Shaw Wallace Breweries Limited, factors like rising incomes, changing lifestyles and removal of market distortions will fuel the growth of the beer market. He informed that the strong beer is currently the largest and fastest growing segment currently enjoying 61 per cent share while the mild beer segment has 39 per cent share. While the mild segment has witnessed a fall from 66 per cent in ’93-94, the strong beer segment has seen a growth from 34 per cent in 93-94. The three main reasons for the rise in strong beer segment, according to Dr. Krishna, is that it gives greater intoxication (helps one get a kick), more value for money (high kick for lower price) and in summer consumers prefer to drink chilled strong beer instead of hard liquor. Consumption of strong beer is pegged at 75 per cent in smaller towns and cities compared to 65 per cent in metros and bigger cities. Studies according to Dr Krishna predict that the mild segment will be placed at 21 per cent and the strong beer segment at 79 per cent of the total beer market in India by year 2011-12. 
A host of international beer brands have entered the Indian market over the past few years in the mild beer segment like Becks, Fosters, Corona, San Miguel, Cobra, Castle Lager. Among these Fosters has made the biggest impact. Among the Indian brands in the mild segment Kingfisher of United Breweries, Royal Challenge from Shaw and Wallace are amongst the most popular brands. Kingfisher has also made its impact abroad. Smith felt that Indian strong beers were really good and comparable with the international brand. He said that there was great potential in marketing Indian strong beers, especially in France and United Kingdom. “The French are interested in stocking novel beers and Indian strong beers could find place in restaurants in Paris and London along with Japanese, Chinese and Kenyan beer. The marketing trick to sell Indian beers abroad is to have a very definite Indian identity as consumers should identify the product with India,” stated Smith. 
Whisky WISE Whisky is the largest segment of the liquor industry in the country. India today is the largest consumer of whisky overtaking USA two years ago, according to the IWSR study. According to Smith, domestic whisky growth is concentrated in India with the other big market Japan registering a fall. The Indian Made Foreign Liquor (IMFL) and scotch segments is pegged at 79.5 million cases in India with 2.5 million cases in premium and above, 7 million cases in prestige and above, 31 million cases in regular and 39 million cases cheap and medium categories. IMFL is split into categories, the first Rs 150 and above which constitutes the bread and butter for the industry accounting for 92 per cent of whisky industry profits and roughly 52 per cent of the volume while the second category is the Rs 90-140 price range accounting for 42 per cent of volumes but contributing just 8 per cent of the whisky industry profits. However this category helps mop up volumes in big markets like Tamil Nadu and Andhra Pradesh. The mid-segment has shown the maximum growth with brands like 8 PM whisky from the stable of Radico Khaitan Limited entering the Limca Book of Records for selling more than a million cases in its launch year. However, domestic players face a threat from international players with the expected total removal of quantitative restrictions by 2004-2005. Already quite a few international companies have entered the Indian market. “We will have to face the challenge and improve our product and packaging. It should be turned into an opportunity to offer our customers more value for money,” said Vazirani. While all whisky in India is made from molasses the question often raised is why doesn’t the Indian whisky manufacturers switch over to grain based whisky? According to Jim Murray, author of Complete Guide to Whisky, the Indian barley can offer the most intensely attractive spirit to taste. Murray’s guess is that it is being consumed by the breweries that produce beer. The reason for all whiskies having a molasses base is that India is one of the largest producers of sugar cane in the world and molasses is a cheap by-product of the sugar industry. The liquor companies purchase this as the source material for conversion to alcohol and all that they have to do is to add whisky essence and a little color to market it as whisky. Murray said that some of the liquor companies do not even convert the molasses into alcohol. They simply purchase the pure spirit. “The local demand is so high that liquor companies cannot afford aging and whatever aging take place is the time lag between bottling and casking. The average price is in the region of Rs 175 to Rs 500 (USD 3.57 to USD 10.20). There are some better varieties available from Rs 300-Rs 650. Since the local whisky is available at such low prices, the masses do not care for real Scotch, which is any way astronomically priced. More so when the kick is same for whatever whisky it is,” says Murray. On the other hand, due to the burgeoning elite class in cities like Delhi and Bombay, the awareness and demand for deluxe whisky is increasing and already international companies like Seagram’s, UDV are entering the Indian market. There are representative offices of many of the well-known foreign brands and there have been some joint ventures. Among the other spirits like rum, vodka, gin, brandy etc rum followed by vodka has done better than the rest in the Indian market. While the defense canteen sales are one of the biggest markets of dark rum, white rum has seen a marked growth. Flavored rum which is very popular in the US, Brazil, Caribbean and Philippines is now being introduced in India. Indian brands like Old Monk, Contessa Rum, Celebration are popular. Smith feels that Indian dark rum is really good and comparable to international brands. In his opinion Indian dark rum has good export potential. According to the IWSR study, growth of Vodka has been mainly restricted to Russia. DIFFEREENT DUTIES ON LIQUOR Excise Duty Export Pass Fee Vend Fee Sale Tax/Surcharge License Fee Toll Tax Brand/Label Fee Permit Fee Transportation Fee Import Pass Fee Additional Duty Distillery/Brewery License Fee Bottling Fee Litterage Fee Assessment Fee Franchise Fee DISTRIBUTION SYSTEM A. FOR RETAILORS COMPANY Order slip sent on the behalf of the wholesaler Goods delivered Order slip sent to Excise Office and Pay Excise Duty Download 1.64 Mb. Share with your friends:
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