E-Malt.com News article: India: Beer only accounts for 50% of alcohol sales and Indians prefer stronger brands

The Indian penchant for value buying extends to liquor, where there is a clear tendency to choose drinks which provide the strongest 'kick' for the buck. Sales of country liquor and Indian-made foreign liquor (IMFL) almost match that of beer, the world's most popular alcoholic beverage. And even among beer drinkers, the preference is for 'strong' beer with higher alcohol content: in 2014, 85% of them preferred it strong, Times of India reported on March 15.

The Indian preference for more alcohol in drinks is brought out by data collated by the All India Brewers Association. Beer sales account for only 50% of liquor sales in India - much lower than in China where it is 87%, Brazil (84%), US (83%) and UK (75%). Even within beer the preference is for stronger ones. Wine accounts for only 1% of liquor sales.

Exacerbating this behaviour in Maharashtra is a skewed excise duty structure where tax per volume of alcohol is higher on softer liquors. Although prima facie, a litre of beer attracts excise duty of only Rs 60 compared to Rs 225 on IMFL, the numbers change when the comparison is made on tax per alcohol volume. Beer on an average has an alcohol content of 8% against 42.5% for IMFL, which means the tax on the alcohol content works out to Rs 75 and Rs 52.57 per 100ml for beer and IMFL, respectively. In other words, alcohol in beer is taxed 43% more than the alcohol in IMFL. Surprisingly, in Maharashtra, country liquor outsells beer perhaps for this reason.

In India the highest beer consumption is in Andhra Pradesh, followed by Maharashtra, where the number of people consuming beer is double that of IMFL patrons. But in spirits, consumption of country liquor is very high in Maharashtra due to lower taxes than on hard liquor, beer and wine. Tamil Nadu has the highest consumption of IMFL in the country, and in terms of beer, it stands third. According to the brewers' association, Kerala's per capita consumption is highest in the country though it is far less in overall consumption compared to other states.

"Whisky prices are very steep in Maharashtra, almost four times higher than in other states such as Goa. We can't say it is because beer is taxed and priced equally with hard liquor that people are opting for hard drinks. We think the government is trying to achieve prohibition through 'prohibitory pricing'," said a bar owner.

The hospitality industry has a different take. Past president of the Federation of Hotels and Restaurants Associations of India (FHRAI) Kamlesh Barot said the government could follow international trends where micro-brewers create fresh beer with less alcohol from newer ingredients. "These breweries were stopped citing pollution norms. Rather than taxing lager beer which is a glycerin beer, the government should promote micro-breweries. Fresh beer is healthier as it has low alcohol content. It is also cheaper," he said.


18 March, 2015