Big players hold the key to beer’s future

While it cannot be discounted that the beer industry in India is growing at a tremendous pace, driven by rising disposable incomes, the younger generation’s demand for healthier options and an increasing focus on sustainability, factors like restrictive regulations, high taxation and the absence of uniform policies are throttling this growth curve, says Vivek Gupta, Managing Director and CEO, United Breweries Ltd.

As industry experts note that the Indian beer market is evolving swiftly, with an appetite for premium products, it is, therefore imperative for leading beer producers to respond strategically by fostering innovation. As consumers seek moderation without compromising on taste, companies are diversifying their portfolios to include session beers that are lighter and easier on the palate. India presents a significant long-term growth opportunity; with per capita beer consumption currently low at just 2 litres per annum, alongside a rapidly expanding middle class.

“Even though beer is underpenetrated in India, the future is bright for the industry. The fundamentals need to improve for the beer industry to grow,” comments Vivek. These fundamentals encompass several challenges, including low category penetration, restricted accessibility in retail outlets and a slow pace in harnessing its full potential. “Restrictive policies limiting outlet accessibility are among the key barriers, alongside high taxation and a complex regulatory environment,” he adds.

Addressing these obstacles requires collaboration between industry stakeholders and state governments. The initial step should be simplifying taxation and harmonising regulations across states to reduce complexity and encourage market expansion. Additionally, improving retail availability by increasing the number of licensed outlets and strengthening distribution networks is essential to enhance consumer accessibility. Further investment in cold-chain logistics is also crucial to maintaining product quality, which directly influences customer satisfaction and repeat purchases.

UBL’s Playbook

To navigate the current complexities of the industry, UBL has implemented a series of strategic measures. “Our strategy includes enhancing consumer engagement through memorable experiences and expanding our footprint during premium consumption occasions. Innovation within the premium category will play a significant role in future growth, and we are committed to expanding our premium portfolio to meet the evolving consumer demands,” explains Vivek. The company actively engages with regulators and policymakers to advocate for industry-friendly reforms.

This effort is aimed at striking a responsible balance between market growth and societal interests. “Through these concerted efforts, we believe the Indian beer industry can overcome the current barriers and unlock its substantial growth potential,” Vivek states. As the dominant force in India’s beer market, UBL is focused on sustaining and expanding its leadership position by acting as a category-maker rather than a category-taker.

Expanding Horizons

Recognising the underrepresentation of beer in the Indian market, Vivek believes that leading players such as UBL have a responsibility to stimulate market growth by addressing fundamental industry challenges. “We are also investing for the future to sustain long-term growth. We are really looking at category growth and winning in all segments while ensuring that we leverage and increase the importance of our supply chain network, and focus on profitability and capital efficiency in our choices to sustain long-term growth in the Indian beer market,” he affirms.

UBL boasts of a diverse portfolio, including Heineken Original, Heineken Silver, Kingfisher Ultra and Amstel Grande. This aligns with evolving consumer preferences, reinforcing the company’s market position and driving profitability. In tandem with this, UBL is aggressively broadening its distribution channels to improve accessibility and deepen market penetration in both urban and rural areas. “Innovation remains integral to our strategy, with a dedicated commitment to introducing new products and exciting flavours,” Vivek notes.

These offerings cater to a diverse consumer base, ensuring the brand remains dynamic and appealing. Additionally, sustainability and responsible business practices are embedded in UBL’s operations, as it continually strives to minimise environmental impact and contribute positively to communities. Understanding market direction and adjusting strategies accordingly has been key to UBL’s continued success.

Embracing Dynamism

As a Heineken-UBL leader in India, navigating the complexities of managing a highly dynamic company and a diverse team is no small feat. “The key to success in my role lies in ensuring that our strategic vision aligns with both the evolving market trends and the needs and preferences of our consumers and customers,” he explains.

This passion is rooted in the belief that, through strong leadership, UBL will not only drive business growth but also create a lasting positive impact—shaping the industry’s future and delivering value for its stakeholders in the years to come.

The Heineken Effect

Heineken’s 61.5 percent stake in UBL has added substantial value to both companies. “Heineken’s strategic control has significantly enhanced our capabilities and market position. This partnership has facilitated the introduction of global best practices, innovation and a strengthened premium international portfolio,” says Vivek. UBL has thus witnessed robust growth, outperforming the market in terms of volume expansion and contributing significantly to Heineken’s global revenue.

With a twin strategic objective of expanding the Kingfisher brand and accelerating beer premiumisation, brands such as Heineken Original, Heineken Silver, and Amstel Grande have driven this transformation. The premium segment saw growth of approximately 14 percent in Q3 FY24, demonstrating the company’s commitment to evolving consumer preferences. UBL reported an impressive third-quarter performance with 8 percent total volume growth and a 43.1 percent gross profit margin.

Riding The Momentum

UBL’s strong Q3 performance reflects the resilience and efficacy of its strategy, positioning it well to regain pre-pandemic margins. It remains cautiously optimistic about its Q4 and full-year results, driven by sustained premiumisation and operational efficiencies. “We are structurally strengthening our position and remain confident in our year-to-date achievements, with a positive outlook supported by recent favourable market dynamics,” Vivek shares. The premium segment recorded a volume increase of 34 percent, with UBL gaining market share across India’s highly competitive beer market. 

UBL’s diverse portfolio, featuring Kingfisher, Amstel Grande and Queenfisher, provides a distinct competitive edge. “We have not only gained share on an overall basis but also in the premium segment, continuing the growth trajectory from previous quarters. In Q3 FY25, the premium volumes grew 33 percent, with the strongest growth coming from our Ultra portfolio, including Kingfisher Ultra and Kingfisher Ultra Max,” Vivek states. UBL recently launched Amstel Grande, which has garnered a promising consumer response.

Strong brand recognition and heritage play a pivotal role, with Kingfisher enjoying enduring consumer loyalty. Complementing this is UBL’s extensive production and distribution network, ensuring broad market reach. Strategic premiumisation has been instrumental, with brands like Amstel Grande and Heineken Silver resonating with urban consumers seeking premium experiences. Innovation remains another key differentiator, illustrated by the launch of Queenfisher Premium Lager and Kingfisher Flavours, including Mango Berry Twist and Lemon Masala variants.

India-EU Trade Talks

India and the European Union (EU) are currently negotiating a trade agreement. According to Vivek Gupta, UBL is committed to responsible growth. He anticipates that strengthened ties between India and the EU will foster structured engagement with state governments, ultimately benefiting the beer industry’s development.

Investing In Tomorrow

UBL recently announced a greenfield brewery in Uttar Pradesh as part of its long-term growth strategy. The state presents significant potential due to rapid urbanisation. “We will continue to invest in our supply chain capabilities to ensure the long-term availability of our beer brands,” Vivek asserts.

Recognising emerging trends such as increasing demand for low and no-alcohol options, UBL is implementing targeted strategies to address these segments. The company also champions social responsibility through its ‘Brew a Better World’ initiative, aligned with Heineken’s global sustainability strategy. “We have a holistic approach to our sustainability agenda, addressing three key areas– environmental, social, and responsible business practices,” Vivek explains. These efforts span Telangana, Karnataka and Maharashtra.

Additionally, UBL promotes responsible alcohol consumption through initiatives such as ‘Project Kartavya’ in Punjab, educating consumers about moderation. It also supports farmers, truckers and bottle-pickers through fair trade practices, work-life balance initiatives, and skill development programmes. Furthermore, Heineken’s latest report highlights UBL’s strides in gender diversity, with women in senior management rising from 0 percent in 2021 to 27 percent in 2024.