Shaping Policy, Supporting Growth BAI’s 2025 Roadmap

The Indian beer industry is at a crucial juncture, balancing regulatory challenges with growth potential. As consumer perceptions shift towards beer as a moderate, social beverage, the Brewers Association of India (BAI) is advocating for fair taxation, improved accessibility, and a supportive regulatory framework. With 2025 set to bring key policy changes across multiple states, the industry faces both opportunities and hurdles that will shape its trajectory in the coming years. In this exclusive conversation, Vinod Giri, Director General of Brewers Association of India, shares insights with Shalini Kumar on how policy changes are impacting the beer market, the association’s case for an ABVlinked duty regime, and the role of global beer giants shaping industry standards.

How does 2025 look like for Brewers Association of India, especially given the new policies emerging across states?

We notice an increasing acceptance of beer as a moderate, uplifting beverage, more of a social bonder rather than a product associated with gloomy alcoholism. This is acknowledged by most state authorities and reflects in their excise policies that seek to treat beer differently in terms of licensing and taxation. Most states are expected to sustain growth, with Andhra Pradesh as welcome addon, and we hope excise inaction is put to bed in Delhi now. However, abrupt, revenue-driven policy decisions, like those in Karnataka and West Bengal, remain a concern. If such setbacks are reversed, double-digit growth is possible.

How is BAI addressing challenges like taxation, accessibility, and ease of doing business? Since the Indian beer industry is advocating for ABV-linked duty regime, please share rationality on this demand and can it be met?

The logic is simple: consumers buy alcoholic beverages for their alcohol content, not the water. If taxation is based on alcohol, it should apply only to the alcohol present in the product, not the entire beverage. Many OECD nations along with the West have adopted ad quantum taxation, where tax is linked with the amount of alcohol in the beverage. Indian policymakers understand this argument, but concerns about potential revenue impact delay action. If we can demonstrate a revenue neutral model, we will find more traction on ground. That’s what we are trying to do.

BIA was formed by industry leaders—United Breweries, AB InBev and Carlsberg. What value do these global players bring to India’s beer segment, which has potential but struggles to meet global standards and lacks institutional support for international expansion?

Beer is inherently local—it must be produced and served fresh using local ingredients and workforce. Unlike spirits or wines, there is no real BIO in beer. These companies operate 55 breweries in India worth ₹25,000 crores, bringing global standards and practices in beer production and delivery to India. And if they are unable to meet any global standard in quality, it would likely be due to regulations prohibiting it rather than due to lack of intent or ability of these ‘globally local’ companies.

Reports suggest India’s per capita beer consumption is just 2 litres, despite its vast demographic potential. Do existing players have the capacity to meet the demand if consumption were to double? What steps are needed to support this growth and how is BAI fostering technological innovation to enhance brewing efficiency and product quality?

I agree, the per capita consumption of beer is abysmally low even—even Vietnam’s market is nearly twice the size. I do hope that we face the good problem of having the demand run out of capacity soon. Our members have the ability to add production capacity quickly, provided the regulatory and investment climate is not compromised. Extracting more capacity out of existing production lines is more dependent on changes in regulation rather than the companies’ ability. A key innovation is High Gravity Brewing, which we hope the governments add to their rule books all over, like Karnataka, Telangana, Andhra Pradesh and now Rajasthan do.

Karnataka has also raised strong beer prices, and more states may follow suit. How will this impact revenues, given that many consumers prefer affordable brews?

Karnataka has increased taxes on beer three times in one-and-half years, which has put brakes on the beer growth in the state and brought thousands of crores of investment in breweries in the state under cloud. These tax increases are driven by a fundamentally flawed premise of no price elasticity on alcohol amongst some policy makers which has been proven wrong every time. The fact is that consumers accept price hikes in line with the prevailing inflation; anything higher or lower has a proportionate impact on demand. Companies face a dilemma: if the demand slackens, their return on investment in the state comes under stress and some may feel forced to absorb tax increases and prevent the price rise. Taxes account for 70 percent of the consumer price, and by making companies absorb taxes is just squeezing them further. If the government rolls back tax hikes, all stakeholders, including the government would come out better off.

What impact do you foresee from FTAs with the EU, UK and US on India’s beer industry?

Beer is not a good traveller—it is like bread, the fresher the better. In addition, it’s a high volume and low value product compared to spirits or wines further limiting the cross-border trade. That is why most global beer companies have set up manufacturing capacity locally and are that way both global and Indian manufacturers. While our members are not impacted by the FTAs significantly, they firmly believe in the principle of fairness and want the FTAs to be fair and equitable.

What’s your take on the growing demand for low-alcohol and non-alcoholic beers? Will this trend sustain?

Globally low alcohol and NABs have got some traction. NAB sales have hit 60 million hectolitres and are more pronounced in traditional beer markets such as Europe and Brazil. Non alcoholic versions work well for beer since it has a unique taste which remains unaltered due to absence of a mixer. So when the same taste is delivered without alcohol, there is easier acceptance. It’s still in its early days in India but the product is reaching shelves well. However, I think the products need freedom to advertise as the category they compete in, i.e., soft drinks, have other products advertising freely and very aggressively.

As sustainability becomes a key ingredient in modern brewing, how is the BAI stirring up initiatives to reduce environmental impact, promote responsible sourcing, and craft a greener future for the industry?

Our members are world leaders in sustainable brewing, adhering to global best practices in emissions control, effluent treatment and water management. They are known to have played a big role in improving the quantity and quality of barley production in India and established global sustainability standards for suppliers. These companies view their business in India in the same fashion as they would for their operations anywhere in the world.