Alcoholic beverage consumption patterns vary considerably among different countries and even among different ethnic groups within one country. These variations in drinking patterns include, for example, the types of beverages consumed preferentially, occasions on which consumption typically occurs, drinking levels that are considered normal, and population subgroups for whom drinking is considered acceptable.
A cross cultural comparison of drinking practices in India, Nigeria and Mexico, found after surveying drinking patterns in Bangalore as a sample, the following results depicting Indian drinking culture:
Drinking Practices- India
Most commonly consumed alcoholic beverages
Drinking predates European contact
Women's drinking patterns
Men's drinking patterns
Context of drinking Occasions
Evidence of concerns about young people's drinking
Extent of major concerns about alcohol-related problems
Arrack, palm wine, beer, and imported liquors
Yes, but not particularly central to social life
Predominantly (about 95%) abstinent
Highly variable across regions
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No regular context established; thus far, not a part
of regular daily life or ritual occasions
Increasing problems seen in health, social, and economic areas
According to government statistics, India is the largest market for alcoholic beverages in the world. The demand for spirits and beer is estimated to be around 373 million cases. There are 12 joint ventures companies having a licensed capacity of 33919 kilolitres per annum for production of grain based alcoholic beverages. 56 units are manufacturing beer under license from the Government. The wine industry in India provides considerable opportunities for value addition and employment generation in agro-processing sector. The Ministry has sanctioned a Wine Park at Vinchur, Nasik.
Indian alcoholic drinks industry expected to beat global recession blues
Although the economic uncertainty in early 2009 did affect on-trade sales of alcoholic drinks adversely, with the bulk of volume sales coming from the off-trade channel, the major product categories within beer and spirits were largely unscathed by the global economic slowdown. While wine sales were adversely affected by the combined effects of the terrorist attacks in Mumbai in November 2008 and the drop in hotel occupancy in the first half of 2009, manufacturers and importers of wine were optimistic regarding a strong recovery by 2010. With beer, wine and spirits players retaining their momentum in terms of new brand launches, 2009 remained highly dynamic. Overall volume sales maintained a double-digit growth rate for the fourth consecutive year in 2009.
Growth in small cities and towns buoys the industry
As economic growth has continued to spill over from the major cities into the neighbouring smaller towns and cities, the alcoholic drinks industry has been buoyed by strong growth in the consumption of branded alcoholic drinks, such as domestic lager and economy Indian whisky in smaller cities in less developed states, such as Orissa, Bihar and Madhya Pradesh. Products with a premium image, such as vodka and other blended Scotch whisky, also witnessed higher growth in the smaller cities than in the major cities, where growth slowed as these products matured over the review period.
Niche categories attract alcoholic drinks players
With continued expansion in the consumer base for niche, international and premium products, manufacturers and importers stepped up their activity in niche categories ranging from champagne to dark beer. The spate of international brand launches continued in 2009, with the entry of several brands, including Korbel Champagne, by Brown-Forman Corp, and Teacher's Origin blended Scotch whisky, by Beam Global Spirits & Wine India Pvt Ltd. Niche categories also attracted domestic players, such as TVB Craft Breweries Pvt Ltd and Sipping Spirits Pvt Ltd, which launched new products such as dark beer and flavoured vodka. Niche concepts also gained traction in the on-trade channel, with, for example, the opening of Beer Garden - a microbrewery - by Rockman Group in 2008, followed by the launch of Howzzat - a cricket themed microbrewery - in early 2009.
Upmarket outlets create opportunities for premium products
While independent food/drink/tobacco specialist retailers continue to dominate the retail landscape, due to their greater number and penetration across India, volume sales of alcoholic drinks through supermarkets/hypermarkets witnessed a strong rise in 2008 and 2009. This provided a point of contact for manufacturers to target upmarket consumers with premium products, such as imported lager and wine. Premium specialist outlets operated by leading manufacturers, such as Diageo India Pvt Ltd, also provided an avenue for the launch of super-premium brands, such as Johnnie Walker Blue Label and King George V.
Always on Time
Marked to Standard
Robust growth forecast for alcoholic drinks
Demand for branded alcoholic drinks is expected to continue to rise over the forecast period, as purchasing power increases and consumers of so-called "country liquor" trade up to branded products, such as economy spirits. Strong growth is forecast across the price and product spectrum, as urban consumers become increasingly brand savvy and experiment with international brands and niche products. The rise of chained outlets in the on-trade is also expected to provide opportunities for manufacturers to connect with consumers through promotions and tie-ups. A double-digit volume CAGR for the alcoholic drinks market overall is expected over the forecast period.
In India, alcohol market is a state subject. Each state has different tax rates of up to 45%. Due to this different tax structure, free movement of alcoholic beverages across the states is not possible.
Advertising for alcoholic products is prohibited under Indian law
Sale of alcohol is not permitted in certain Indian States like Gujurat
Certain days like election days are dry days
The Key Players in this sector include:
AMRUT DISTILLERIES LTD
BACARDI-MARTINI INDIA LTD
CARLSBERG INDIA PVT LTD
INDAGE VINTNERS LTD
MOHAN MEAKIN LTD
PERNOD RICARD INDIA PVT LTD
SABMILLER INDIA LTD
SAMANT SOMA WINES LTD
UNITED BREWERIES LTD
UNITED SPIRITS LTD
United Breweries Group or UB Group, based in Bangalore, is a conglomerate of different companies with a major focus on the brewery (beer) and alcoholic beverages industry. The company markets most of its beer under the Kingfisher brand and has also launched Kingfisher Airlines, an airline service in India, with international flights operating recently. United Breweries is India's largest producer of beer with a market share of around 48% by volume. The group is headed by Dr.Vijay Mallya who is also a member of the Indian Parliament.
United Spirits Limited (USL) - the INR 5700 crore spirits arm of the UB Group - is India's largest and the world's 2nd largest spirits company. USL was earlier McDowell and Company Limited. USL has a portfolio of more than 140 brands, of which 19 are millionaire brands* (selling more than a million cases a year) and enjoys a strong 59% market share for its first line brands in India. United Spirits recorded global sales of 90 million cases for the fiscal year that ended on March 31, 2009.
At United Breweries, innovative, creative and aggressive marketing is complemented by a strong distribution network. A management focused on building brand equity on one hand and exploiting it to the hilt on the other with concerted emphasis on quality.
UB Premium Ice
Kalyani Black Label Premium
Kalyani Black Label Strong
Whyte & Mackay
Black Dog whisky
McDowell's No.1 Platinum
McDowell's Green Label
Old Cask Rum
Old Adventurer Rum
From FY2004 to FY2008, its sales revenues grew from Rs 452 crore to Rs 1,370 crore, at average annual rate of over 50%; whereas net profit grew by a 538% average annual growth rate from Rs 2.77 crore to Rs 62.47 crore.
UBL undertakes the production and marketing of beer. Its products are available in 52 countries across the world. It has a installed capacity of 6,110,000 hecto liters/annum and it produces around 3,674,632 hecto liters/annum. This capacity is divided amongst a network of 23 units in different states of India. The lower capacity utilization of 52% in FY 2008 was due to the ban of free movement of beer across state boundaries. A distillery can only be used to supply to a state where it is located. In order to keep up with the increase in demand, the Company has plans to expand capacity covering 8 key markets across the country. A total of 14.75 lac hecto liters/annum capacity will be added by Dec 2011. In addition to this the company also has plans to set up two new greenfield breweries, located at Mallepally in Andhra Pradesh and Nanjangud in Karnataka. The capital for this expansion is planned to be met with the proceeds of a right Issue.
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Business and Financial Metrics
UBL has had a highly leveraged capital structure with debt to equity ratio as high as 12.85 in FY2005. The high leverage was the result of expansion activities that the company was undertaking. The debt to equity ratio was reduced to 1.92 in FY2006 by issue of new shares. The company has managed to reduce the long term debt to equity ratio to 1.19 in FY2008; but this has been done by increase in its short-term debt.
From FY2004 to FY2008, sales revenues have grown from Rs 452 crore to Rs 1,370 crore, at average annual rate of over 50%. In the same period, net profit grew by a 538% average annual growth rate from Rs 2.77 crore to Rs 62.47 crore. From FY2004 to FY2007, the operating margin has been increased from a low of 6.72% to 13.49%. Over the same period, the corresponding the net profit margin has increased from 0.58% to 6.1%. This was done by continuous efforts in increasing the operating efficiency. One of the indicators of increased efficiency, the inventory turnover has increased from 14.26 to 23.32. In FY2008 the operating margin fell to 12.8% and the net margin fell to 4.49% because of the increase in raw material cost.
Share holding pattern: The promoters, namely United breweries Holdings limited,owns 37.49% of UBL; foreign corporate bodies also own 37.49% of the company. FII's own another 16.59%.Fidelity India Special Situations Fund and Franklin FMCG Fund are the mutual funds invested in the firm, with 2.6% and 0.16% ownership respectively.
United Breweries Limited share holding pattern 
United Breweries Holding
Foreign Corporate bodies (S &N)
Private Corporate Bodies
Banks Fin. Inst. and Insurance
UBL has 9 brands under management which include Kingfisher, UB Export, London Pilsner, Premium Ice and Kalyani Black Label. Apart from maintaining a balanced portfolio of brands in Mild and Strong Beer, the company plans to focus more on premium beer. In May 2008, it announced plans to launch low alcohol flavoured beer brands and develop a new segment. Since the company is focused on production and marketing beer, all its revenues are from the beer and aligned activities. The table below gives the breakup.
Product mix FY2008
Unit of Measurement
Sales Value in Rs Cr
Technical Knowhow &Franchises
NDTV good Times
Corporate Social Responsibility
The initiatives of the UB group under corporate social responsibility include:
Its keen pursuit of activities in the field of Life Sciences has led to the setting up of a super specialty hospital - Mallya Hospital at Bangalore. In June 1991, the Mallya Hospital was inaugurated in the central business district of Bangalore in a multi-storied complex with excellent medical equipment and best medical consultants. It was initially a 150-bed hospital, which has grown into a 450-bed hospital of which approximately 50 beds are for critical care. The hospital boasts of multi-specialty disciplines and is the first such hospital in India to be awarded the ISO 9002 certification. Subsidized health care is given to the under privileged class of society by providing a general ward which is reserved for them.
The Vittal Mallya Scientific Research Foundation was set up in December 1987, in memory of the Group's Founder, late Mr. Vittal Mallya. It has been actively involved with a mission called "Science for Humanity" and is a non-profit organization participating with the Government in a Public Private Partnership on various projects.
In the field of education, the Group has assisted in the setting up of the Mallya Aditi International School where the best possible education is imparted. Mallya Aditi International School is located on a sprawling five-acre campus in the northern outskirts of Bangalore. It boasts of buildings of award-winning architectural standard, which allows students to interact with the sky, the earth and plant life as they move from room to room.
The Group's commitment to the society is not restricted only to the city of Bangalore, but outside of Karnataka as well. It has also provided an extensive drinking water scheme in Srinivasapura village and has been actively involved in installation of Rain Water Harvesting structures at their Palakkad brewery thereby providing drinking water to Ganeshpuram village, Palakkad. A similar project was carried out at the Brewery in Ponda, Goa, which not only benefited the Brewery but also the village, whose well-water levels rose to help tide over their water problems during the dry months.
The UB Group has rebuilt and renovated the Cubbon Park Police Station, exactly a century after it was originally built as a guard room for the statue of Queen Victoria. Great care has been taken to maintain the colonial style of this quaint architectural heritage building.
Market Leader- Significant share of the Beer market of about 39% by UBL alone (Source: Company estimate)
Contract brewing tie-ups in place
National presence with company brands available throughout the country
Well known brands like "Kingfisher Lager", "Kingfisher Strong", "Kalyani Black Label Lager", "UB Premium Ice", UB Export and "London" range
Large capacities may lead to a problem of over capacity in winter/rainy seasons
Expensive Brand Maintenance
Dominant single brand, Kingfisher
Over leveraged position leading to short term cash flow problems
Growing beer market
Any deregulation in the excise policies with reference to taxation and duty on beer which could drastically push up the demand for beer
Changing societal attitudes
Tie-up with S&N to open export opportunities
The level of taxes, is very high which could render beer unaffordable
Advertising and marketing restrictions
Entry of foreign liquor majors may affect existing market share
SABMiller India is a wholly owned subsidiary of SABMiller plc, one of the world`s leading brewers, operating across six continent with over hundred years of heritage.
SABMiller's India sojourn began in 2000 and in just a few years, it has cornered nearly one third of the Indian beer market with brands such as Haywards 5000, Haywards 2000, Haywards Black, Knock Out, Royal Challenge, Castle Lager and Fosters.
Based on consumer insights, SABMiller India has taken innovative measures to fill up the packaging, pricing, occasion and product gaps. Expertise on a global level has come in use to create many firsts in India including the use of one-way bottles, flash pasteurisation, establishing draught standards, and now Haywards Black - a genuine stout beer.
With ten world-class breweries strategically located across India, SABMiller is well positioned to easily access and efficiently service the beer markets. The Company's commitment to India and ethos of quality is reflected in the fact that it invested over Rs. 125 crore in the last two years to upgrade breweries in line with global standards.
Beer market in India is estimated to be around Rs. 3000 crores.Around 94 million cases of beer are sold annually. United Breweries is the market leader with a 47.5% market share. SAB Miller comes second with a 38.3% market share.
Traditional beer markets in Europe and USA are either flat or are in a state of decline, whereas India still has a huge untapped market. For these reasons international beer companies are coming to India almost every quarter. Kingfisher, since its origin proved to be the marketing savvy brand and even though it was the largest selling beer brand but when Fosters entered the Indian market Kingfisher sniffed possible competition and invested heavily in brand visibility and positioning. Kingfisher changed its logo and adopted a new logo and tagline, sponsored the West Indian cricket team and also used the Indian cricketers to sponsor its product. It went into airlines, lifestyle and even started a television channel with NDTV.
Given the position of the players in the market,
Fosters needs to improve the perception of quality of its products.
Fosters need to mould its taste to suit the Indian consumers.
Kingfisher is a well-known brand name and Fosters need to create a brand
name by very good advertisement.
Fosters need make the people feel their product more value for money.
Fosters need to create effective punch line which creates an impact on the
Indian consumers mind.
The Products of Fosters need to more available and more up-to-date.
Fosters has to come with new variants suiting the Indian market.
The incentives have to be improved by Fosters so that the Retailers
recommend to their consumers.
Fosters need an army of brand loyal consumers.