Significant Shift Towards Higher-Quality Beers

The Indian beer industry faces innumerable challenges in terms of pricing and government taxation that makes it out of reach for many a drinker who would like to experience beer in a pub or a permit room. If these rough tumbles are sorted out, the beer industry in India could see a massive upward spiral in the years to come due to the young generation’s preference for new tastes and flavours, views Gurjas Singh, Executive Director, Penguin Overseas.

The scenario, when it comes to remain competitive and adapt to drinking beer in India, is definitely changing. And this is more than evident from the way in which consumers are increasingly seeking higher quality products and are willing to pay a premium for them. This shift encompasses various aspects, including the quality of the liquid itself, the packaging, branding, and the overall consumer experience. This shift is reflected in the rising popularity of experiential drinking and microbreweries in India. The growing demand for low-calorie beer options in the country also emphasises on the critical need for beer brands to innovate.

This includes expanding the product line and actively engaging with consumers through experiential and personalised marketing strategies. As Gurjas Singh puts it, “This approach is essential for brands to the evolving preferences of their target audience. In India, the beer market is experiencing a significant change towards higher-quality products, influenced by evolving consumer preferences for distinctive flavours and experiences.”

The Dominant Players

“In India, lagers dominate the beer market, accounting for approximately 67 percent of the market share, followed by wheat beers at 22 percent. The remaining 11 percent comprises specialty beers, including IPAs, stouts, craft brews, and low- calorie options, reflecting a growing diversity in consumer preferences,” informs Gurjas.

He points out that for new and emerging brands, particularly craft breweries, this presents a unique opportunity to differentiate themselves in the market by focusing on premium quality, unique flavours and innovative packaging. “Craft breweries have the flexibility to experiment with different ingredients, brewing techniques, and branding strategies to appeal to discerning consumers who are looking for something special and artisanal,” he candidly observes.

Much Ground to Cover

When it comes to beer, despite having the world’s largest population, India currently ranks 23rd globally in terms of beer consumption. According to Gurjas, this relatively low ranking can be attributed primarily to the significant barriers posed by high license fees and excise taxes, particularly in on-trade establishments. “For instance, while a beer might be priced around Rs 150 in a liquor shop, the same beverage can fetch anywhere between Rs 400 to 500 in a bar or restaurant, representing a staggering markup of approximately 300 percent. This substantial price differential serves as a deterrent to consumption, limiting the accessibility of beer to a broader segment of the population in India,” Gurjas explains.

“To boost beer consumption in India, excise initiatives could include reducing tax rates on beer, streamlining licensing processes for microbreweries, and implementing marketing campaigns to promote responsible beer consumption. Additionally, increasing consumer education about different beer styles and flavours could help expand the market for beer in India,” Gurjas Singh states.

“With a compound annual growth rate (CAGR) of 7.1 percent, the Indian beer market is expected to reach Rs 781.2 billion by 2032. Consumer preferences are shifting towards premium and craft beers, driven by urbanisation, rising disposable incomes, and a young demographic inclined towards experiential drinking,” observes Gurjas. As the market matures, the industry anticipates continued growth in innovative beer styles, expansion of microbreweries, and regulatory changes favouring the industry. Essentially, the reins are now in the hands of the young beer drinkers who are responsible for shaping many an emerging trend in India’s beer market.

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