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Boby Kurian

Bangalore , Aug. 27

THE monsoon bounty has sent the brewing industry reeling in the last 60 days. After 12 per cent annual growth in the last two years and notwithstanding a buoyant economic outlook, beer sales have crashed across India starting July, resulting in a 5 per cent de-growth during the first four months of the financial year 2003-04.

This shaved off two million cases in the crucial months, which accounts for 40 per cent of the gross annual sales. After scraping through with zero growth in the summer season, thanks to the early monsoon showers, the domestic beer sales plunged between 18 to 20 per cent in July. What the led the carnage was the huge negative swing of 30 per cent witnessed in big markets such as Andhra Pradesh and Orissa, besides the continuing slide in markets such as Tamil Nadu. The cumulative beer sales in the four-month period ending July stood at 34 million cases as against 36 million in the same period of the last financial year.

But the chilling news for the brewers is the unabated fall in sales in August, which is pointing towards 20 per cent in monthly sales. Now, for the industry to wipe off the deficit incurred in the early months, it should clock sales growth of at least 10 per cent in the remaining part of the year. "This may be a monsoon related blip, and we may, hopefully, see a recovery to close the year with no-gain no-loss situation. But the momentum of growth which was there for the last couple of years is lost," the officials at UB Group, the country's largest brewer, said. The Indian beer market saw a volume of 80 million cases in 2002-03 with per capita consumption of little over 0.7 litres.

SABMiller, the transnational which recently took over management control of India's second largest brewer, Shaw Wallace Breweries, said there was a direct and visible co-relation between monsoon and beer offtake in the country, while the effects of buoyant macro-economic outlook on consumption was more long term. "The trade effects an immediate stock correction with the monsoon shower. It is not necessarily based on data whether consumer drinks less beer," analysts tracking the brewing sector said. Meanwhile, SABMiller expects beer sales to firm up as the economic fundamentals conjure up an optimistic future. "Monsoon is the main vector and the demand should pick up once it disappears," sources said.

But an elusive tax reform and deregulation of the sector are key to explode beer consumption in India and take it anywhere close to China's per capita consumption of 16 litres. Said a top official with UB group: "We expected at least one or two big States to initiate some reforms during the year. It hasn't happened yet." Beer is clubbed with the sensitive Indian made foreign liquor in taxation driving up prices to prohibitive highs in many States. For instance, the Tamil Nadu sales reported consistent decline over the last 12 months after an administrative move saw retail price of beer touch Rs 60 per 650 ml bottle. "The nip packs of many acceptable IMFL brands are available at less than the prevailing price of beer, making them a better option for the consumer who seeks kick for the buck," sources added.

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