Strong beer overpowers milder version in the Indian market

MARKETING NEWS

LiveMint.com - Mar 26th, 09:00

Bangalore: While Americans and Europeans prefer their beer to be light on alcohol content, Indians have traditionally been partial to a stronger brew, a preference that’s become further accentuated of late along with an improvement in the image associated with such beverages. 

The domestic market for strong beer grew faster in 2012 than in the past three years due to new product launches by foreign brewers and increasing sales of market leader Kingfisher Strong.

Strong beer, with alcohol content of more than 5%, now accounts for more than 83% of all beer sold in India, up from 80% last year, according to industry executives.

The Indian preference for strong beer led Carlsberg, Foster’s maker SABMiller and Anheuser-Busch InBev to launch brands tailored specifically to the market over the past two years. They include Tuborg Strong, Carlsberg Elephant and Budweiser Magnum, priced at par or higher than Kingfisher Strong.

Overall beer sales in India is expected to grow 13-15% this financial year to about 270 million cases, said Samar Singh Sheikhawat, senior vice-president, marketing, United Breweries Ltd, maker of Kingfisher beer.

“This year, the growth has been driven totally by strong beer. Strong (beer) will grow at some 15% while mild beer will decline by 3-4%. When I joined United Breweries three-and-a-half years ago, it was 75-25% (in favour of strong beer),” Sheikhawat said.

Beer with high alcohol content hasn’t always had a great image in India, but that may be changing.

“It’s become more socially acceptable for people to be seen drinking strong beer because high-quality brands like Foster’s, Carlsberg and Budweiser have launched in this segment. Earlier, people had no options when they wanted to move up from Kingfisher Strong,” said Akash Sahu, general manager, brand communications, SABMiller.

Unlike the West, taste and refinement aren’t factors for most drinkers in India, said Ankur Bisen, vice-president, retail, at consultancy Technopak Advisors Pvt. Ltd.

“That’s why strong beer is more popular as it has high alcoholic content. In the West, the positioning of beer is different—beer is seen as a refreshment drink,” Bisen said.

Over the past three years, Kingfisher Strong and SABMiller’s Knock Out have reported higher growth than most other strong beer brands, whereas Haywards has lost market share, according to data provided by Euromonitor.

Tuborg Strong is Carlsberg’s fastest growing brand in India, with sales having doubled in 2012, managing director Soren Lauridsen said in a recent email.

For United Breweries, which has more than a 50% share of India’s beer market, Kingfisher Strong still drives growth, Sheikhawat said.

To gain a larger share of the strong beer market, the company is expanding distribution of lesser-known Kingfisher Red, also a strong beer but 7-10% more expensive than Kingfisher Strong. It’s currently available only in north and east India.

Kingfisher Red “just became a million-case brand last month. Now, it’s on an aggressive expansion path. We’ve just launched in Orissa. Over the next two years, we will launch the brand in the traditional strong beer markets like Andhra Pradesh and Karnataka,” Sheikhawat said.

Within a few years, strong beer will account for 85-90% of all beer sold in the country, Sheikhawat said.

“I don’t think it will go beyond 90% because there are so many mild beers which are launching and expanding distribution. While the overall mild beer category is flat or declining, the ‘super-premium’ mild beers like Kingfisher Ultra, Heineken, Carlsberg, Miller High Life are growing,” he said.