AlcoholicDrinksInIndia Euromonitor May 2005

Alcoholic Drinks in India
Euromonitor
May 2005
Alcoholic drinks India
List of Contents and Tables

1. EXECUTIVE SUMMARY ................................................................................................................................. 1
2. OPERATING ENVIRONMENT ....................................................................................................................... 2
2.1 Consumer Expenditure on Alcoholic Drinks ......................................................................................... 2
Table 1 Retail Consumer Expenditure on Alcoholic Drinks 1999-2004..................................... 2
2.2 Taxation and Duty Levies ...................................................................................................................... 2
Table 2 Taxation and Duty Levies on Beer 2004........................................................................ 4
Table 3 Taxation and Duty Levies on Wine and Spirits 2004..................................................... 4
Table 4 Categorisation of Wine and Spirits in Andhra Pradesh 2004 ......................................... 4
Table 5 Typical Wholesaler and Retailer Off-trade Mark-ups by Sector 2004 ........................... 4
Table 6 Selling Margin of a Typical Beer Brand 2004 ............................................................... 5
Table 7 Selling Margin of a Typical Wine Brand 2004 .............................................................. 5
Table 8 Selling Margin of a Typical Spirits Brand 2004 ............................................................ 5
2.3 Legislation ............................................................................................................................................. 6
2.4 Contraband/Parallel Trade ................................................................................................................... 7
2.5 Duty-Free .............................................................................................................................................. 7
2.6 Country Liquor ...................................................................................................................................... 7
Table 6 Production of Country Liquor 1999-2003...................................................................... 7
2.7 Spurious Liquor ..................................................................................................................................... 8
3. ALCOHOLIC DRINKS...................................................................................................................................... 8
3.1 Sizes....................................................................................................................................................... 8
Table 10 Sales of Alcoholic Drinks by Sector: Total Volume 1999-2004.................................. 10
Table 11 Sales of Alcoholic Drinks by Sector: Total Value 1999-2004 ..................................... 10
Table 12 Sales of Alcoholic Drinks by Sector: % Total Volume Growth 1999-2004................. 10
Table 13 Sales of Alcoholic Drinks by Sector: % Total Value Growth 1999-2004.................... 11
3.2 Market Performance by Region........................................................................................................... 11
Table 14 Sales of Alcoholic Drinks by Region: Total Volume 1999-2004................................. 12
Table 15 Sales of Alcoholic Drinks by Region: Total Value 1999-2004 .................................... 13
Table 16 Sales of Alcoholic Drinks by Region: % Total Volume Growth 1999-2004 ............... 13
Table 17 Sales of Alcoholic Drinks by Region: % Total Value Growth 1999-2004................... 13
3.3 Market Performance by Rural-Urban Split ......................................................................................... 14
Table 18 Sales of Alcoholic Drinks by Rural-Urban % Analysis 2004 ...................................... 15
3.4 Key Trends and Developments ............................................................................................................ 15
3.5 Competitive Environment .................................................................................................................... 15
3.6 Leading Companies – Allied Domecq Spirits & Wine (India) Pvt Ltd................................................. 16
Table 19 Allied Domecq Spirits & Wine (India) Pvt Ltd Shares of Alcoholic Drinks
by Subsector 2000-2003............................................................................................... 17
3.7 Leading Companies – Champagne Indage Ltd.................................................................................... 17
Summary 1 Champagne Indage Ltd Operational Indicators 2003................................................... 18
3.8 Leading Companies – McDowell & Co Ltd......................................................................................... 18
Summary 2 McDowell & Co Ltd Operational Indicators 2003....................................................... 19
Table 20 McDowell & Co Ltd Shares of Alcoholic Drinks by Subsector 2000-2003 ................ 20
3.9 Leading Companies – Mohan Meakin Ltd........................................................................................... 20
Summary 3 Mohan Meakin Ltd Operational Indicators 2003 ......................................................... 21
Table 21 Mohan Meakin Ltd Shares of Alcoholic Drinks by Subsector 2000-2003................... 21
3.10 Leading Companies – Radico Khaitan Ltd .......................................................................................... 22
Summary 4 Radico Khaitan Ltd Operational Indicators 2003......................................................... 22
Table 22 Radico Khaitan Ltd Shares of Alcoholic Drinks by Subsector 2000-2003 .................. 23
3.11 Leading Companies – Shaw Wallace & Co Ltd................................................................................... 23
Summary 5 Shaw Wallace & Co Ltd Operational Indicators 2003 ................................................. 23
Table 23 Shaw Wallace & Co Ltd Shares of Alcoholic Drinks by Subsector 2000-
2003 ............................................................................................................................. 24
3.12 Emerging and Niche Companies ......................................................................................................... 24
3.13 Distribution ......................................................................................................................................... 25
Table 24 Off-trade Sales of Alcoholic Drinks by Sector and Distribution Format: %
Analysis 2004 .............................................................................................................. 26
Table 25 On-trade vs Off-trade Sales of Alcoholic Drinks by Sector: Volume 2004 ................. 26
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Table 26 On-trade vs Off-trade Sales of Alcoholic Drinks by Sector: Value 2004..................... 27

Table 27 On-trade vs Off-trade Sales of Alcoholic Drinks by Sector: % Volume 2004 ............. 27
Table 28 On-trade vs Off-trade Sales of Alcoholic Drinks by Sector: % value 2004 ................. 27
Summary 6 Liquor Distribution Channels in Select States 2004..................................................... 28
3.14 Forecast Market Performance............................................................................................................. 29
Table 29 Forecast Sales of Alcoholic Drinks by Sector: Total Volume 2004-2009.................... 31
Table 30 Forecast Sales of Alcoholic Drinks by Sector: Total Value 2004-2009....................... 31
Table 31 Forecast Sales of Alcoholic Drinks by Sector: % Total Volume Growth
2004-2009 .................................................................................................................... 31
Table 32 Forecast Sales of Alcoholic Drinks by Sector: % Total Value Growth 2004-
2009 ............................................................................................................................. 31
3.15 Forecast Market Performance by Region............................................................................................ 32
Table 33 Sales of Alcoholic Drinks by Region: Total Volume 2004-2009................................. 32
Table 34 Sales of Alcoholic Drinks by Region: Total Value 2004-2009 .................................... 32
Table 35 Sales of Alcoholic Drinks by Region: % Total Volume Growth 2004-2009 ............... 33
Table 36 Sales of Alcoholic Drinks by Region: % Total Value Growth 2004-2009................... 33
4. BEER 33
4.1 Sizes and Shares .................................................................................................................................. 33
Table 37 Sales of Beer by Subsector: Total Volume 1999-2004 ................................................ 37
Table 38 Sales of Beer by Subsector: Total Value 1999-2004.................................................... 38
Table 39 Sales of Beer by Subsector: % Total Volume Growth 1999-2004 ............................... 38
Table 40 Sales of Beer by Subsector: % Total Value Growth 1999-2004 .................................. 38
Table 41 Company Shares of Beer by National Brand Owner 2000-2003.................................. 39
Table 42 Company Shares of Beer by Global Brand Owner 2000-2003 .................................... 39
Table 43 Brand Shares of Beer 2000-2003 ................................................................................. 39
Table 44 Forecast Sales of Beer by Subsector: Total Volume 2004-2009.................................. 40
Table 45 Forecast Sales of Beer by Subsector: Total Value 2004-2009 ..................................... 40
Table 46 Forecast Sales of Beer by Subsector: % Total Volume Growth 2004-2009................. 41
Table 47 Forecast Sales of Beer by Subsector: % Total Value Growth 2004-2009.................... 41
4.2 Sector Performance by Region ............................................................................................................ 41
Table 48 Sales of Beer by Region: Total Volume 1999-2004..................................................... 45
Table 49 Sales of Beer by Region: Total Value 1999-2004........................................................ 45
Table 50 Sales of Beer by Region: % Total Volume Growth 1999-2004 ................................... 45
Table 51 Sales of Beer by Region: % Total Value Growth 1999-2004 ...................................... 45
Table 52 Beer Brand Ranking by Region 2003 .......................................................................... 46
Table 53 Forecast Sales of Beer by Region: Total Volume 2004-2009 ...................................... 47
Table 54 Forecast Sales of Beer by Region: Total Value 2004-2009 ......................................... 47
Table 55 Forecast Sales of Beer by Region: % Total Volume Growth 2004-2009..................... 47
Table 56 Forecast Sales of Beer by Region: % Total Value Growth 2004-2009 ........................ 47
4.3 New Product Developments................................................................................................................. 47
Summary 7 Beer: New Product Launches 2003-2004..................................................................... 49
4.4 Pricing................................................................................................................................................. 50
Summary 8 Lager by Price Band 2004............................................................................................ 51
Table 57 Typical Beer Pricing 2004 ........................................................................................... 51
4.5 Lager by Origin ................................................................................................................................... 52
Table 58 Sales of Lager by Origin: Total Volume 1999-2004.................................................... 52
Table 59 Sales of Lager by Origin: Total Value 1999-2004 ....................................................... 53
Table 60 Sales of Lager by Origin: % Total Volume Growth 1999-2004................................... 53
Table 61 Sales of Lager by Origin: % Total Value Growth 1999-2004...................................... 53
Table 62 Brand Shares of Domestic Lager 2000-2003 ............................................................... 53
Table 63 Brand Shares of Imported Lager 2000-2003................................................................ 54
4.6 Distribution ......................................................................................................................................... 54
Table 64 On-trade vs Off-trade Sales of Beer: Volume 1999-2004 ............................................ 56
Table 65 On-trade vs Off-trade Sales of Beer: Value 1999-2004 ............................................... 56
Table 66 On-trade vs Off-trade Sales of Beer: % Volume Growth 1999-2004........................... 56
Table 67 On-trade vs Off-trade Sales of Beer: % Value Growth 1999-2004.............................. 56
Table 68 Off-trade Sales of Beer by Distribution Format: % Analysis 1999/2004..................... 57
5. WINE 57
5.1 Sizes and Shares .................................................................................................................................. 57
Table 69 Sales of Wine by Subsector: Total Volume 1999-2004 ............................................... 61
Table 70 Sales of Wine by Subsector: Total Value 1999-2004................................................... 61
Table 71 Sales of Wine by Subsector: % Total Volume Growth 1999-2004.............................. 62
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Table 72 Sales of Wine by Subsector: % Total Value Growth 1999-2004 ................................. 62

Table 73 Company Shares of Wine 2003.................................................................................... 62
Table 74 Brand Shares of Red Wine 2003.................................................................................. 62
Table 75 Brand Shares of White Wine 2003............................................................................... 63
Table 76 Brand Shares of Other Sparkling Wine 2003............................................................... 63
Table 76 Brand Shares of Fortified Wine for 2003..................................................................... 63
Table 78 Forecast Sales of Wine by Subsector: Total Volume 2004-2009................................. 63
Table 79 Forecast Sales of Wine by Subsector: Total Value 2004-2009 .................................... 64
Table 80 Forecast Sales of Wine by Subsector: % Total Volume Growth 2004-2009................ 64
Table 81 Forecast Sales of Wine by Subsector: % Total Value Growth 2004-2009................... 64
Table 82 Sales of Wine by Region: Total Volume 1999-2004 ................................................... 66
Table 83 Sales of Wine by Region: Total Value 1999-2004....................................................... 66
Table 84 Sales of Wine by Region: % Total Volume Growth 1999-2004 .................................. 67
Table 85 Sales of Wine by Region: % Total Value Growth 1999-2004 ..................................... 67
Table 86 Forecast Sales of Wine by Region: Total Volume 2004-2009 ..................................... 67
Table 87 Forecast Sales of Wine by Region: Total Value 2004-2009 ........................................ 67
Table 88 Forecast Sales of Wine by Region: % Total Volume Growth 2004-2009.................... 68
Table 89 Forecast Sales of Wine by Region: % Total Value Growth 2004-2009 ....................... 68
Summary 9 Wine: New Product Launches 2003-2004.................................................................... 68
5.4 Price Segmentation.............................................................................................................................. 69
Table 90 Sales of Red Wine by Price Segment 2003-2004......................................................... 70
Table 91 Sales of White Wine by Price Segment 2003-2004 ..................................................... 70
Table 92 Sales of Other Sparkling Wine by Price Segment 2003-2004...................................... 70
5.5 Grape/Varietal Type ............................................................................................................................ 71
Table 93 Sales of Still Red Wine by Grape/Varietal Type 1999-2004 ....................................... 71
Table 94 Sales of Still White Wine by Grape/Varietal Type 1999-2004 .................................... 71
5.6 Quality Classification .......................................................................................................................... 71
Table 95 Sales of Still Red Wine by Quality Classification 1999-2004...................................... 72
Table 96 Sales of Still White Wine by Quality Classification 1999-2004 .................................. 72
5.7 Non-grape wine by Type...................................................................................................................... 72
5.8 Distribution ......................................................................................................................................... 72
Table 97 On-trade vs Off-trade Sales of Wine: Volume 1999-2004........................................... 73
Table 98 On-trade vs Off-trade Sales of Wine: Value 1999-2004 .............................................. 73
Table 99 On-trade vs Off-trade Sales of Wine: % Volume Growth 1999-2004.......................... 73
Table 100 On-trade vs Off-trade Sales of Wine: % Value Growth 1999-2004............................. 73
Table 101 Off-trade Sales of Wine by Distribution Format: % Analysis 1999/2004.................... 74
6. SPIRITS 74
6.1 Sizes and Shares .................................................................................................................................. 74
Table 102 Sales of Spirits by Subsector: Total Volume 1999-2004.............................................. 79
Table 103 Sales of Spirits by Subsector: Total Value 1999-2004................................................. 80
Table 104 Sales of Spirits by Subsector: % Total Volume Growth 1999-2004 ............................ 80
Table 105 Sales of Spirits by Subsector: % Total Value Growth 1999-2004 ............................... 81
Table 106 Company Shares of Spirits by National Brand Owner 2000-2003............................... 81
Table 107 Company Shares of Spirits by Global Brand Owner 2000-2003.................................. 82
Table 108 Brand Shares of Spirits 2000-2003 .............................................................................. 82
Table 109 Forecast Sales of Spirits by Subsector: Total Volume 2004-2009 ............................... 84
Table 110 Forecast Sales of Spirits by Subsector: Total Value 2004-2009 .................................. 85
Table 111 Forecast Sales of Spirits by Subsector: % Total Volume Growth 2004-2009.............. 85
Table 112 Forecast Sales of Spirits by Subsector: % Total Value Growth 2004-2009 ................. 86
Table 113 Sales of Spirits by Region: Total Volume 1999-2004.................................................. 89
Table 114 Sales of Spirits by Region: Total Value 1999-2004..................................................... 89
Table 115 Sales of Spirits by Region: % Total Volume Growth 1999-2004 ................................ 89
Table 116 Sales of Spirits by Region: % Total Value Growth 1999-2004.................................... 90
Table 117 Spirits Brand Ranking by Region 2003........................................................................ 90
Table 118 Forecast Sales of Spirits by Region: Total Volume 2004-2009 ................................... 91
Table 119 Forecast Sales of Spirits by Region: Total Value 2004-2009....................................... 91
Table 120 Forecast Sales of Spirits by Region: % Total Volume Growth 2004-2009 .................. 92
Table 121 Forecast Sales of Spirits by Region: % Total Value Growth 2004-2009 ..................... 92
Summary 10 Spirits: New Product Launches 2003-2004.................................................................. 93
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6.4 Pricing................................................................................................................................................. 94
Table 122 Typical Blended Scotch Whisky Pricing 2004............................................................. 95
Table 123 Typical Other Whisk(e)y Pricing 2004 ........................................................................ 95
Table 124 Typical Brandy and Cognac Pricing 2004 ................................................................... 96
Table 125 Typical English Gin Pricing 2004................................................................................ 96
Table 126 Typical Vodka Pricing 2004 ........................................................................................ 97
Table 127 Typical Rum Pricing 2004 ........................................................................................... 98
6.5 Vodka by Flavoured vs Non-Flavoured............................................................................................... 98
Table 128 Sales of Vodka by Flavoured vs Non-Flavoured 2003-2004 ....................................... 98
6.6 Distribution ......................................................................................................................................... 98
Table 129 On-trade vs Off-trade Sales of Spirits: Volume 1999-2004 ......................................... 99
Table 130 On-trade vs Off-trade Sales of Spirits: Value 1999-2004 ............................................ 99
Table 131 On-trade vs Off-trade Sales of Spirits: % Volume Growth 1999-2004........................ 99
Table 132 On-trade vs Off-trade Sales of Spirits: % Value Growth 1999-2004 ........................... 99
Table 133 Off-trade Sales of Spirits by Distribution Format: % Analysis 1999/2004 ................ 100
7. CIDER/PERRY ............................................................................................................................................... 100
7.1 Sizes and Shares ................................................................................................................................ 100
8. FABS 100
8.1 Sizes and Shares ................................................................................................................................ 100
Table 134 Sales of FABs by Subsector: Total Volume 2002-2004............................................. 101
Table 135 Sales of FABs by Subsector: Total Value 2002-2004................................................ 102
Table 136 Sales of FABs by Subsector: % Total Volume Growth 2002-2004 ........................... 102
Table 137 Sales of FABs by Subsector: % Total Value Growth 2002-2004............................... 102
Table 138 Company Shares of FABs by National Brand Owner 2002-2003.............................. 102
Table 139 Company Shares of FABs by Global Brand Owner 2002-2003................................. 103
Table 140 Brand Shares of FABs 2002-2003 ............................................................................. 103
Table 141 Forecast Sales of FABs by Subsector: Total Volume 2004-2009 .............................. 103
Table 142 Forecast Sales of FABs by Subsector: Total Value 2004-2009.................................. 103
Table 143 Forecast Sales of FABs by Subsector: % Total Volume Growth 2004-2009............. 104
Table 144 Forecast Sales of FABs by Subsector: % Total Value Growth 2004-2009 ................ 104
8.2 Sector Performance by Region .......................................................................................................... 104
Table 145 Sales of FABs by Region: Total Volume 2002-2004................................................. 105
Table 146 Sales of FABs by Region: Total Value 2002-2004 .................................................... 105
Table 147 Sales of FABs by Region: % Total Volume Growth 2002-2004 ............................... 105
Table 148 Sales of FABs by Region: % Total Value Growth 2002-2004................................... 105
Table 149 FABs Brand Ranking by Region 2003....................................................................... 106
Table 150 Forecast Sales of FABs by Region: Total Volume 2004-2009 .................................. 106
Table 151 Forecast Sales of FABs by Region: Total Value 2004-2009...................................... 106
Table 152 Forecast Sales of FABs by Region: % Total Volume Growth 2004-2009 ................. 106
Table 153 Forecast Sales of FABs by Region: % Total Value Growth 2004-2009 .................... 106
8.3 New Product Developments............................................................................................................... 107
Summary 11 FABs: New Product Launches 2002-2003................................................................. 107
8.4 Distribution ....................................................................................................................................... 108
Table 154 On-trade vs Off-trade Sales of FABs: Volume 2002-2004 ........................................ 108
Table 155 On-trade vs Off-trade Sales of FABs: Value 2002-2004 ........................................... 109
Table 156 On-trade vs Off-trade Sales of FABs: % Volume Growth 2002-2004....................... 109
Table 157 On-trade vs Off-trade Sales of FABs: % Value Growth 2002-2004 .......................... 109
Table 158 Off-trade Sales of FABs by Distribution Format: % Analysis 1999/2004 ................. 109
9. APPENDIX ...................................................................................................................................................... 110
9.1 Industry Statistics .............................................................................................................................. 110
Table 159 Beer: Production, Imports and Exports: Total Volume 1998-2003............................ 110
Table 160 Beer Exports by Country of Destination: Total Volume 1998-2003.......................... 110
Table 161 Beer Exports by Country of Destination: Total Value 1998-2003 ............................. 111
Table 162 Beer Imports by Country of Origin: Total Volume 1998-2003.................................. 111
Table 163 Beer Imports by Country of Origin: Total Value 1998-2003 ..................................... 112
Table 164 Wine Exports by Country of Destination: Total Volume 1998-2003......................... 112
Table 165 Wine Exports by Country of Destination: Total Value 1998-2003 ............................ 113
Table 166 Wine Imports by Country of Origin: Total Volume 1998-2003................................. 113
Table 167 Wine Imports by Country of Origin: Total Value 1998-2003.................................... 114
Table 168 Spirits Production, Imports and Exports: Total Volume 1998-2003 .......................... 114
Table 169 Whisk(e)y Production, Imports and Exports: Total Volume 1998-2003.................... 115
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Table 170 Brandy and Cognac Production, Imports and Exports: Total Volume 1998-
2003 ........................................................................................................................... 115
Table 171 Vodka Production, Imports and Exports: Total Volume 1998-2003.......................... 115
Table 172 Gin Production, Imports and Exports: Total Volume 1998-2003 .............................. 115
Table 173 Rum Production, Imports and Exports: Total Volume 1998-2003............................. 115
Table 174 Tequila Production, Imports and Exports: Total Volume 1998-2003 ........................ 115
Table 175 Liqueurs Production, Imports and Exports: Total Volume 1998-2003 ...................... 116
10. DEFINITIONS ................................................................................................................................................ 116
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ALCOHOLIC DRINKS IN INDIA
1. EXECUTIVE SUMMARY
FABs bubbled and wine uncorked as penetration increases
FABs (flavoured alcoholic beverages) recorded dramatic growth over the review period, emerging as the fastest
growing sector within the Indian alcoholic drinks market in both volume and value terms, albeit from a small
sales base. FABs effectively meet consumers' desire for lower alcohol content drinks, flavour variations, image
and individuality, especially among women. Effective marketing campaigns by Bacardi-Martini have found
favour among women and the younger generation, who look to these alcoholic beverages as new status symbols.
The growing wine culture and the increasing popularity of white spirits also led to sales of alcoholic beverages
growing at robust rates over the review period. Moving away from the leading cities within each region,
manufacturers are increasingly focusing on the second tier cities, with considerable success. Growth has been
driven by a combination of a more relaxed attitude towards alcohol consumption, Westernisation and exposure
to other foreign cultures, and growing affluence, supported by new product launches, intense advertising and
promotional campaigns.
The established sectors of beer and spirits still achieved the highest volume sales in 2004, with Indian whisky
remaining the most popular alcoholic drink amongst the older population, whilst beer grew in popularity
amongst the younger age groups. In beer, smaller pack sizes of 250ml and 330ml were instrumental in
stimulating product trials and repeat purchases.
Value growth surges ahead due to upgrading in spirits
Although India is a country known for its price sensitivity, value sales of alcoholic drinks grew more strongly in
value terms than volume terms over the review period, due to a combination of price rises and trading up by
consumers. More specifically, there were price hikes within spirits – the dominant sector – as a result of the
failure of the sugarcane crop in several parts of the country, leading to a shortage of the molasses used to make
potable alcohol. Further, the continued strong performance of the higher priced wines imported from Australia
and Chile helped drive value growth.
Total volume growth was held in check due to the marginal growth rates registered by the large and relatively
mature drinks such as Indian whiskies (captured under "other whiskies" under Euromonitor's definitions),
brandy and rum.
UB Group's leadership sails on amidst a concentrated operating environment
Local manufacturer UB Group continued to lead sales within spirits and beer in 2003. International labels,
despite their financial might and superior global marketing experience, have been unable to challenge the
position of the company, with its long list of subsidiaries, including Millennium Alcobev, Triumph Distillers &
Vintners, Herbertsons Ltd, United Breweries and McDowell & Co Ltd. The company owns the top selling
brands in beer and spirits, Kingfisher and Bagpiper, respectively.
However, the merger of SABMiller and the brewing business of Shaw Wallace in 2003 created ripples, as
United Breweries had to engage in a series of initiatives to protect its position in the market, and trade experts
are predicting intense market rivalry during the forecast period. The industry was somewhat quieter in 2004
after the flurry of mergers and acquisitions of non-profitable breweries and distillers in 2002 and 2003.
Combined, UB Group and SABMiller accounted for over 50% and 74% of volume sales in beer and spirits,
respectively, in 2003.
Cheers and toasts to a rosy drinking culture
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In tandem with the continued progress of the Indian economy, and rising affluence and purchasing power,
alcoholic drinks are predicted to record a compound annual growth rate (CAGR) of 5% in constant value terms
between 2004 and 2009. The alcoholic drinks market is expected to benefit from increased consumer interest,
arising from new launches, shrewd marketing, smaller consumer pack sizes of 180ml, 250ml and 330ml, and a
continued review of the tax structure of the domestic alcoholic industry.
With India's 2001 inclusion within the WTO, the 2003 merger of SABMiller and Shaw Wallace, and now the
potential sale of the Shaw Wallace spirits business, there is expected to be heightened market competition
between UB Group and Shaw Wallace. In addition, with the annual reduction in customs duties, international
labels of beer and spirits are expected to flood the Indian market and provide alternative choices for consumers.
FABs, vodka and wine are expected to be the star performers due to their trendy, upmarket image and, in the
case of wine, purported health benefits, while beer and spirits (such as Indian whiskies, rum and brandy) will
still lead sales in volume terms.
2. OPERATING ENVIRONMENT
2.1 Consumer Expenditure on Alcoholic Drinks
Consumer spending on alcoholic drinks in 2004 stood at Rs97 million, up by 8% on 2003. With the lowering of
import duties, more and more foreign labels in wine like Chianti Ruffino and Caballo Loco No 6, and imported
vodka, such as Absolut, Vladivar and Smirnoff, are establishing a presence felt in the country. Consequently,
consumer spending on alcoholic drinks has spiralled upwards from just under Rs70 billion in 1999. With rising
disposable incomes, spending on alcoholic drinks is also, rising and this trend is expected to persist in the
forecast period.
However, it is not the foreign brands alone that are fuelling growth. The country has an overwhelming presence
of cheap "country liquor" satisfying the needs of the poor in the country to go on a high. However, consumer
migration from country liquor to cheaper branded spirits was apparent during the review period, albeit slowly.
Nevertheless unorganised country liquor sales, at close to 2 billion litres per annum, continue to be much larger
than sales of branded alcoholic drinks.
Spirits accounted for over 63% of total spending on alcoholic drinks in 2003. Beer accounted for 26% and wine
11% of total expenditure. This consumption pattern is a clear reflection of the consumption habits of the Indian
men who constitute the bulk of consumers of alcoholic drinks. However, over the 1999-2004 period, wine saw
the fastest rise in consumer expenditure, at over 43%. Growing from a comparatively small base, wine has seen
rapid growth as wineries have appeared in the country, due to consumption of wine becoming increasingly
fashionable.
Table 1 Retail Consumer Expenditure on Alcoholic Drinks 1999-2004
Rs million
1999 2000 2001 2002 2003 2004
Total 69,748.0 73,098.0 77,106.0 81,855.0 89,230.0 96,713.4

Source: Euromonitor International from national statistical office
2.2 Taxation and Duty Levies

Profusion of taxes
The regulatory framework for the alcoholic drinks market in India is highly complex. This is largely due to the
practice that whilst the central and the state governments issue licences for production units, it is the state
government that administers duty rates and excise, as well as retailing legislation. The government, on the one
hand, works towards the social objective of reducing alcohol consumption while, on the other hand, uses it as a
cash cow to fill its coffers.
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Each of the different state governments also administers a different set of legislation that alcoholic beverage
manufacturers have to abide by. There exists a plethora of rules and regulations in one state, which are often
completely different from another state. This has resulted in a number of anomalies, and has also restricted the
growth of the domestic alcoholic beverages industry. Such rules/policies govern licensing and regulation of
distilleries/breweries, bottling units, warehousing, wholesale and retail sale, import and export, transport,
pricing, labelling and packaging, location instructions, registration of brands, limit on possession, duties and
fees etc.
While imported products from foreign countries are subject to customs duty, the domestic industry is subject to
levies on sales of liquor from one state to another, as well as literage fee, vend fee, assessment fee, sales fee and
transport fee. The individual states have the authority to impose excise duties on domestically manufactured
liquor, but their jurisdiction does not extend to imported products.
In brief, each state has:

• State excise duty on the production of alcohol in the state;
• An import duty on any alcoholic products coming from outside the state;
• An export duty on all alcoholic products manufactured in the state, leaving the state for consumption
outside the state.
Andhra Pradesh – one of the largest alcoholic drinks consuming states in India – charges excise duty or import
duty as the case may be, and 70% first point sales tax on all alcoholic drinks produced in the state or brought
into Andhra Pradesh from other states. A first point sales tax means that when the Andhra Pradesh Beverages
Corporation Ltd, for example, sells to the retailer, a levy of 70% is made on the purchase price for the retailer.
It is noteworthy that in Andhra Pradesh – as is the case with a number of other states – wine and spirits are
coupled together, and taxed at the same rate in spite of the difference in alcohol content.
The taxation of alcoholic drinks varies from state to state, with the rates and also the classification of alcoholic
drinks often being completely different. For example, Maharashtra has close to zero excise duty and 4% sales
tax on wine. Tamil Nadu, which has a protectionist policy favouring manufacturers in the state, does not
expressly allow sale of brands manufactured outside the state, except Scotch whisky and wine that cannot be
produced in the state. Again the taxation structure is different in Tamil Nadu with two categories for spirits with
rates of Rs113.24 and Rs93.24 per proof litre. The sales tax stands at 70% for Scotch whisky and 55% for
domestic whisky. As a result of the inconsistencies across each state, some states come up levying a heavier tax
structure on alcoholic beverages and others as more lenient.
Prohibition no longer an alternative
Alcoholic drinks carry a very heavy tax burden in India, and constitute a major source of revenue for the central
and state governments. Some states that previously advocated total prohibition have found it difficult to enforce
and even harder to find alternative revenue sources to replace lost alcohol taxes. The Andhra Pradesh
government, for example, imposed prohibition in 1994, only to revoke its decision in 1997 in the wake of
diminishing tax revenues. A state government that currently enforces total prohibition is the West Indian state of
Gujarat. What prohibition has essentially done is to deplete a major income source for the Gujarat government
and also to give a fillip to bootlegging of spirits.
For the majority of states, revenue from excise duty on liquor is among the largest revenue sources. The
proportion of total tax revenues derived from alcohol can be as high as 29% in the case of Himachal Pradesh,
whilst in Maharashtra it was only 9% in 2003. Generally, the proportion of revenue from liquor taxation is much
higher in the case of North Indian states than in the other regions.
Import duties for spirits reduced as per WTO commitments
In order to comply with World Trade Organisation (WTO) commitments, the Indian central government reduced
customs duties on alcoholic beverages in January 2004. The basic import duty on liquors other than wine and
beer was reduced to 150%, in compliance with WTO stipulations, although additional duties have been retained.
The additional duty was imposed on bottled imported spirits as a countervailing duty in lieu of state excise tax
when quantitative restrictions were removed in April 2001. However, the industry has been pushing towards the
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removal of the additional duties as they are considered to be inconsistent with the provisions of the General
Agreement on Tariff and Trade 1994.
The additional duty stands at:

• Imports priced below US$10 per case of nine litres carry an additional duty of 150%;
• Those priced above US$10 and US$20 per case attract additional tax of 100%
• Those priced between US$20 and US$40 per case attract additional tax of 50%
• Imports priced above US$40 per case carry additional duty of 25%
The special additional duty of 4% that was present on all import items, including wine and beer, has been
abolished. However the Scotch Whisky Association has been demanding a flat additional rate of duty of US$30
per case in the event the government continues to keep the additional duty structure.
Table 2 Taxation and Duty Levies on Beer 2004
Rs per litre
2004
Excise tax 5
Import tax 2
Sales tax 70%
Other tax (export tax) 2
Source: Official sources (Prohibition and Excise Department – Andhra Pradesh), trade interviews
Note: Based on excise duties on beer in Andhra Pradesh
Table 3 Taxation and Duty Levies on Wine and Spirits 2004
Rs per litre
2004
Excise tax
– Category O 35
– Category A 45
– Category B,C,D 65
Import tax 2
Sales tax 70%
Other tax (Export tax) 2
Note: Based on excise duties on wine and spirits in Andhra Pradesh
Table 4 Categorisation of Wine and Spirits in Andhra Pradesh 2004
Rs per case
2004
Category O <275
Category A 275-400
Category B 400-600
Category C 600-900
Category D >900
Notes: Based on excise duties on wine and spirits in Andhra Pradesh
A case is defined as 12 bottles of 1,000ml, 12 bottles of 750ml, 24 bottles of 375ml, 48 bottles of 100ml and 96
bottles of 90ml. The typical case sizes are 12 bottles of 750ml and 24 bottles of 375ml
Table 5 Typical Wholesaler and Retailer Off-trade Mark-ups by Sector 2004
Euromonitor Page 4
%
Beer C/p FABs Wine Wh BC
Wholesaler 10 0 8 10 15 12
Retailer 20 0 15 20 20 18
WS Rum T L OS
Wholesaler 13 13 0 0 0
Retailer 18 18 0 0 0
Source: Trade interviews
Key: C/p = Cider/perry; Wh = Whisk(e)y; BC = Brandy and cognac; WS = White spirits; T = Tequila (and mezcal); L =
Liqueurs; OS = Other spirits
Table 6 Selling Margin of a Typical Beer Brand 2004
% share of retail price

2004
VAT 0.0
Excise 26.0
Retailer 16.7
Distributor 7.5
Manufacturer 49.8
TOTAL 100.0
Source: Euromonitor International store checks
Notes: Based on Kingfisher premium lager, Rs53, 650ml, specialists, 5% abv
Excise includes import tax and any other tax as relevant
Table 7 Selling Margin of a Typical Wine Brand 2004

2004
VAT 0.0
Excise 0.0
Retailer 16.7
Distributor 6.9
Manufacturer 76.4
TOTAL 100.0
Notes: Based on Carlo Rossi California Red,Rs700, 750ml, specialists,12.5% abv
Excise duty above is nil as the brand considered is an imported one
Table 8 Selling Margin of a Typical Spirits Brand 2004

2004
VAT 0.0
Excise 0.0
Retailer 16.7
Distributor 10.9
Manufacturer 72.4
TOTAL 100.0
Notes: Based on Johnnie Walker Black Label, Rs2,600, 750ml, specialists,40% abv
Excise duty above is nil as the brand considered is an imported one
Euromonitor Page 5
2.3 Legislation
Advertising
Advertising of liquor products is expressly banned in the country in both television and in the press. According
to Rule 7 (2) of the Cable Television Networks Rules 1999, no broadcaster is permitted to show advertisements
which promote, directly or indirectly, the sale or consumption of tobacco products, wine, liquor or other
intoxicants. The central government may serve show cause notices on television channels which screen
advertisements which appear to be in contravention of the law.
With the myriad of laws and regulations governing the advertising of alcoholic drinks brands, some companies
resort to blurring product names and brand extensions to circumvent advertising laws. Restrictions on
advertising notwithstanding, liquor companies spend close to 10% to 15% of their annual total sales on
promotional activities. Since direct advertising is prohibited, companies resort to surrogate advertising for their
brands. mineral water, apple juice, mixers, music CDs etc have been used as surrogates. Example include the
McDowell's and Kingfisher brands of bottled water, 8 PM Apple juice and Bacardi music CDs. The companies
also sponsor fashion shows, awards, rock concerts, musical nights and football clubs. Companies such as
Foster's, McDowell & Co, Seagram and Shaw Wallace support sports like Golf, Formula 1 racing and Polo in
order to give prominence to their brands.
Another common practice adopted by companies is to offer gifts such as pens, glasses and lighters. These carry
the brand logo and the brand name on them, but without any reference to liquor. On-trade advertising is also
common, with point of purchase displays typically placed inside retail shops.
Drink driving
The Motor Vehicles Act 1988 established a blood alcohol concentration limit of 30mg per 100ml of blood.
Breathalyser tests are undertaken, with the maximum permitted Breath Alcohol Concentration being 0.10g
alcohol per two hundred and ten liters of breath. The administration of such testing by the police department is
under the state government's jurisdiction, similar to the administration of excise duty. Even within a single state,
the penalties for drink driving differ, depending on the gravity of the offence. A typical punishment for drunken
driving for a first time offender is a penalty of Rs2,000, and in some cases imprisonment of up to six months.
Subsequent offences attract more severe penalties.
Checks are conducted randomly, especially around local festive days and public holidays, when alcohol
consumption increases. Offenders are sometimes lets off the hook by corrupt officials who accept a lower bribe
and do not levy the fine. Driving licences are rarely suspended, except in the event of a fatal crash.
Legal drinking age
The legal drinking age varies from state to state. The drinking age is generally correlated with a person enjoying
adult suffrage at the age of 18. Most of the South Indian states have their legal drinking age fixed at 18 years.
However, some other states, such as Maharashtra in the West, have the drinking age fixed at 21 years. The
highest cut off for the legal drinking age is in the case of Delhi, at 25 years. The high cut off age means that one
can vote, drive and even get married, but not drink.
Be it 18, 21 or 25, the enforcement of the law is extremely poor, with bars, pubs and off-trade outlets rarely
conducting age checks. With the huge numbers involved, coupled with the fear of losing clientele, all that is
done is a perfunctory glance at the buyer by the retailer to check the age, and random checks by the authorities.
Laws aside, teenagers generally get their first taste of alcohol as early as 16 years old, kicking off with some
form of mild beer. The fact that drinking is generally considered a "forbidden fruit" makes it all the more
tempting for teenagers.
Opening hours
The opening hours for on-trade channels vary from state to state and city to city. Some on-trade channels open
at 11:00hrs and remain open till midnight. The higher end on-trade channels, such as five star hotels, have
greater liberty, and hence the operating hours extend well beyond midnight into the early hours of the morning.
Pubs usually open in the evening after 19:00hrs, to catch the after-work crowd. Bars attached to restaurants
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usually offer alcohol during lunch and dinner hours, typically between 11:00hrs and 15:00hrs, and 19:00hrs to
midnight.
2.4 Contraband/Parallel Trade

The black market for alcoholic drinks in India is extremely vibrant, and only an estimated 45% of total alcohol
volume consumption is actually conducted through the legal channel where duties are appropriately paid. For
domestic brands, the price difference across the different states as a result of inter-state differences in taxes acts
as an incentive to smuggle from states where the brand is available more cheaply. While the smuggling of
domestic brands is carried out on a small scale, it is imported brands, like Johnnie Walker, which are the main
focus of bootleggers.
With a high rate of import duty of 150%, the margins involved in smuggling imported brands are much higher.
For example, Johnnie Walker Blue and Black Labels are priced at more than Rs2,500 per 750ml bottle in
official channels, compared with around Rs1,500 for the same products purchased from bootleggers. Though
there is no regular crackdown on contraband trade, Customs officials do conduct raids in important transit points
like airports and seaports, often based on tip-offs.
2.5 Duty-Free
The international terminals of the major airports in India carry duty-free brands, especially imported ones. Since
January 2004, a passenger coming from abroad is permitted to bring two litres of spirits or wine duty-free into
the country. The previous limit was one litre.
Duty-free sales comprise almost entirely spirits and, to a small extent, wine. Single malt and blended Scotch
lead sales in duty-free outlets. Premium brands such as Glenfiddich, Johnnie Walker Blue Label, Chivas Regal,
Ballantine's and Absolut vodka are in great demand. With a rise in the number of Indians travelling abroad,
duty-free sales are also on the rise. Typically, imported premium spirits and wine products can be found only in
duty-free stores and luxury hotels across India. Off-trade specialist stores are not keen to stock premium brands,
especially imported products such as Scotch and Irish whisky, cognac and tequila, as these are priced way above
the economic means of the average Indian consumer and suffer from very low brand awareness and demand.
Dubai-based operator Flamengo has been given permission to run duty-free outlets in six Indian airports starting
February 2004, not including Mumbai and Delhi. The government-owned India Tourism Development
Corporation runs the majority of the other duty-free shops in the airports in the country.
2.6 Country Liquor

The country liquor business in India is exceptionally large, and production is entirely serviced by the
unorganised sector. This is not included within Euromonitor's research. Using alcohol derived from molasses,
oranges, cashew nuts and coconuts, this business thrives amongst poor rural consumers and the working class.
India has a very large income divide, with a significant proportion of its population at the lower end of the scale,
and this offers a significant consumer base for country liquor, which is very much cheaper than products in the
organised channel.
Country liquor has different variants and different nomenclature in different states. Country liquor is normally
produced from sugarcane in the North, coconut in the South and from cashews in Goa, in West India. Official
data sources estimate the production of country liquor in India at close to 1.5 billion litres in 2003, with 19%
with year-on-year growth from 2002.
The largest markets for country liquor are the rural areas, where the majority of the brands are too costly for the
populace. Uttar Pradesh, Punjab, Rajasthan, Maharashtra and Haryana are some of the big markets for country
liquor. The market is almost completely accounted for by the unorganised sector, with Radico Khaitan being the
only major branded player, with its brands Jhoom and Masti being sold in the state of Uttar Pradesh. Shaw
Wallace also entered the market in 2004, after waiting and watching for more than two years. Shaw Wallace is
targeting the states of Maharashtra and Uttar Pradesh, and aims to generate volume sales of close to 45 million
litres in the first year of its operations in 2004-2005.
Table 6 Production of Country Liquor 1999-2003
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'000 litres
1999 2000 2001 2002 2003
Production 58,008 63,171 96,607 124,700 148,608

Source: Official statistics (Central Statistical Office, Government of India)
2.7 Spurious Liquor

A major problem from which a number of Indian states suffer is spurious alcohol. Industrial spirit meant for the
manufacture of medicine is smuggled and used surreptitiously for the manufacture of alcoholic drinks. The
ingredients that go into the manufacture of such alcohol can be as varied as dead animal parts for quick
fermentation of the alcohol. The target customers for spurious liquor are the working class. This spurious
alcohol more often that not has a variety of chemicals added to it that may result in poisoning and at times even
death.
In December 2004, close to 100 people in Mumbai died as a result of drinking spurious liquor which was
brewed from jaggery (unrefined brown sugar made from palm sap) and a chemical called Navsar, and had
methyl alcohol added to it. Almost all the victims were casual labourers who had consumed the liquor on 25
December 2004, with the effects of consumption appearing 24 hours later. Though the state government has
ordered an investigation into the incident, given the nexus between such illicit distillers, the police and
politicians, it is only a matter of time before the spurious liquor becomes available once again.
3. ALCOHOLIC DRINKS
3.1 Sizes
2004 headlines
• Alcoholic drinks value growth at 11% outshines volume growth
• Wineries sprout in Maharashtra with incentives from the government
• FABs see fast-paced growth in North and West India
• Vodka emerges as a popular spirit
• Small package sizes ensure beer success as Shaw Wallace challenges United Breweries
Value growth expected to outshine volume growth in 2004
Alcoholic drinks in India are estimated to have grown by a healthy 7% volume in 2004, to almost 1.6 billion
litres. Spirits and beer continued to dominate, with the two together accounting for over 99% of total volume
sales. Wine and FABs, though minuscule in comparison, saw the fastest volume growth rates between 1999 and
2004, in the range of 17% to 22%. For the millions of men and women under the age of 30, it is becoming more
fashionable to be seen with a glass of wine or a can of flavoured alcoholic beverage rather than with a glass of
hard liquor.
Value growth exceeded volume growth in 2004, at just under 11%. Value sales reached an estimated Rs646
billion in 2004. Value growth has been fuelled by increases in the spirits prices. For example, McDowell's No 1
Whisky, which was available in Kolkata for Rs255 for a 750ml bottle in 2003, saw its price rise to Rs267 in
2004.
The price rises of spirits in 2004 were a result of the failure of the sugarcane crop in several parts of the country,
leading to a shortage of the molasses used to make potable alcohol. Growth in imported brands of wine, which
sell at prices higher than domestic ones, also helped to push value growth in alcoholic drinks, with wine
growing by an estimated 21% in value in 2004. Wine value sales grew significantly between 1999 and 2004, by
200%, as more and more domestic and foreign players stepped up their efforts to cater to rising demand for wine
in the country.
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Winning with wines and wineries
Value sales of wine tripled from Rs1.3 billion in 1999 to Rs3.9 billion in 2004. Meanwhile, volume sales more
than doubled to 4.3 million litres in 2004, from 1.8 million litres in 1999.
Wine is now imported into the country from various parts of the globe, including Australia, South Africa and
Chile. Domestic producers are also on the increase, with start-up companies operating in the "Napa Valley of
India": the Nashik wine-growing region in Maharashtra in West India. New World wines dominate sales of
wine, with 90% of volume sales of wine being New World wines. Indians tend to prefer New World wines to
Old World ones as they are cheaper and more readily available.
The industry is also being helped by some state governments, a prominent example being the waiving of excise
duty by the Maharashtra government on all wines produced in the state, starting in September 2001 for a period
of 10 years. The move is seen as a shot in the arm for domestic producers in a state that accounts for more than
half of the total wine production in the country. Nevertheless, imported brands are expected to continue their
flow into India, as the number of wine drinkers in the country grows.
Fabulous FABs
Bacardi-Martini launched its flavoured alcoholic beverage brand Bacardi Breezer in October 2002, which
created an interest in FABs that was hitherto unknown in the country. Though McDowell's had tried to gain an
early mover advantage with the launch of its Romanov Shotz in August 2002, it was Bacardi Breezer that really
took the market by storm. As might be expected in a country where spirits dominate alcoholic drinks sales,
almost all the brands that were launched were spirit-based. Women and young drinkers took to FABs and more
so of Bacardi Breezer due to its flavour variations, low alcohol content and trendy image. The long list of new
flavours launched in 2003 and 2004 included strawberry, peach, orange, lemon, blackcurrant, grapefruit and
cranberry, amongst many others.
Sales of FABs stood at just under 4 million litres in 2004, but are expected to see continued rapid growth in the
forecast period. The states of South India and also the smaller towns in the majority of the states in North, West
and East and Northeast India have yet to see the launch of Bacardi Breezer. The product had also not been
launched in the South Indian states of Karnataka, Tamil Nadu and Kerala at the time of writing. While the
current Tamil Nadu government does not permit the sale of alcoholic drinks manufactured outside the state,
Karnataka has yet to decide on the taxation structure for FABs.
White is the spirit of the season
India is amongst the largest Asia-Pacific markets in terms of volume sales of spirits. With volume sales standing
at around 846 million litres in 2004, Indians are the largest tipplers in absolute volume terms after the Chinese,
Japanese, Thais and the South Koreans. The sector was worth just under Rs565 billion in 2004.
"Other whiskies" continues to be the largest subsector within spirits, with volume sales of close to 581 million
litres in 2004, accounting for just under 69% of total spirits sales. Cheaper Indian whiskies are the
overwhelming favourite among the lower income class, who find blended Scotch and single malt unaffordable.
However, there is a growing preference among middle- and high-income consumers for blended Scotch and
imported single malt whiskies.
Dark spirits, such as dark rum and brandy, are experiencing a slowdown in growth, due to their relative maturity
compared to white spirits. Volume growth for spirits in 2004 was a steady 7.4%, with particularly rapid growth
coming from vodka, with an increase of 22.5%. Younger consumers, and women in particular, are taking to
vodka like never before, due to its neutral taste. A string of international vodka labels made their entry into the
market in 2003-2004, including Absolut, Vladivar, Fling and Belvedere.
Soft drinks model of small pack sizes aids beer growth
While 650ml remains the leading pack size for beer in India, it is the 250ml and 330ml packaging that is
creating consumer interest and encouraging beer trials and repeat purchases. New launches such as that of
Kingfisher Strong Mini and Kingfisher Strong Pint in various states stimulated further penetration, especially in
areas away from the leading cities in each region.
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The 2003 merger of Shaw Wallace and SABMiller continued to create ripples, as the combined entity, Shaw
Wallace Breweries Ltd, worked to create more competition for the sector leader, United Breweries. Frequent on-
and off-trade price cuts were observed as United Breweries sought to protect its position. While United
Breweries continued to be ahead in 2003, the gap between it and Shaw Wallace Breweries diminished
significantly.
While Kingfisher Premium Lager continued to be the leading beer brand in 2003, it was strong variants, such as
Kingfisher Strong and Haywards, that experienced the healthier growth.
At the same time, international beer brands continued to indicate their confidence in the growth potential of the
Indian market by committing to domestic production (such as that for Cobra Lager) and introducing their brands
on a more national basis, as was the case with Foster's.
Table 10 Sales of Alcoholic Drinks by Sector: Total Volume 1999-2004
Million litres
1999 2000 2001 2002 2003 2004
Beer 527.5 568.3 611.0 673.9 701.4 740.7

Cider/perry - - - - - -
FABs (flavoured - - - 0.7 3.1 3.8
alcoholic beverages)
Wine 1.8 2.2 2.6 3.1 3.7 4.3
Spirits 571.0 620.7 673.1 728.7 787.7 845.7
Alcoholic drinks 1,100.3 1,191.2 1,286.6 1,406.3 1,495.9 1,594.6
Source: Trade associations (All India Distillers' Association, Scotch Whisky Association, Tamil Nadu State Marketing
Corporation), trade press (Economic Times of India, Financial Express, Times of India, Hindu Business Line,
India Infoline, Domain-b, Rediff, Exchange4media, Business Standard, Express Hotelier & Caterer, just-
drinks.com, BeverAsia, Wine & Spirit International, Drinks International), company research, store checks, trade
interviews, Euromonitor International estimates
Table 11 Sales of Alcoholic Drinks by Sector: Total Value 1999-2004
Rs million
1999 2000 2001 2002 2003 2004
Beer 42,485.1 48,220.9 54,015.0 67,162.6 71,526.3 76,958.6

FABs (flavoured - - - 135.2 613.1 730.5
Wine 1,282.6 1,639.1 2,059.6 2,592.2 3,182.9 3,847.2
Spirits 324,354.5 364,667.7 407,882.5 456,440.5 508,274.7 564,991.9
Table 12 Sales of Alcoholic Drinks by Sector: % Total Volume Growth 1999-2004
% total volume growth

2003/04 1999-04 CAGR 1999/04 TOTAL
Beer 5.6 7.0 40.4

Cider/perry - - -
FABs (flavoured alcoholic beverages) 22.6 - -
Wine 17.5 19.6 144.9
Spirits 7.4 8.2 48.1
Alcoholic drinks 6.6 7.7 44.9
Euromonitor Page 10
Table 13 Sales of Alcoholic Drinks by Sector: % Total Value Growth 1999-2004
% local currency, current value growth

2003/04 1999-04 CAGR 1999/04 TOTAL
Beer 7.6 12.6 81.1

Cider/perry - - -
FABs (flavoured alcoholic beverages) 19.1 - -
Wine 20.9 24.6 200.0
Spirits 11.2 11.7 74.2
3.2 Market Performance by Region

South India tops alcohol consumption
Accounting for 37% of total volume sales of alcohol in the country, South India is the largest region for alcohol
consumption, although the West leads in value terms. The states of Andhra Pradesh, Tamil Nadu, Karnataka and
Kerala are among the largest states in the country for alcohol consumption. A total of 596 million litres of
alcohol, valued at slightly more than Rs194 billion, was sold in the Southern states in 2004. This represented
6.5% volume growth in 2004, ahead of West India, which saw a rise of 6%. In on-trade terms, South India was
behind West India as the second largest on-trade region in volume terms, with over 110 million litres sold in
2004. The on-trade in South India is characterised by stand-alone bars, apart from Bangalore, which has a
number of pubs. Only regular drinkers visits these bars, with the younger generation and women staying away
from them as these outlets do not provide the ambience they are looking for.
South India is one of the largest regions for the sale of brandy, with over 65% of all brandy sales arising from
South India alone. However, there has been a slow shift in preference towards white spirits, mirroring national
trends, as locally made cheap white spirits like MGM Vodka in Apple and Orange flavours have become
available in states like Tamil Nadu. Almost all the states of South India are yet to see the launch of FABs, as
state legislation has kept FABs from being launched in Karnataka, Kerala and Tamil Nadu.
The sale of liquor in almost all the South Indian states is routed through the government, with the corresponding
state beverage corporation retaining a fixed margin on the sales made. Growth in the state of Karnataka has been
aided by the active involvement of the state government in the sales of alcoholic drinks, starting in mid-2003.
The state had always been well-known for the sale of seconds, or products on which duty had been avoided. The
state government set up the Karnataka State Beverages Corporation Ltd in June 2003 and, from then on, the sale
of liquor had to be channelled through this body. The companies had to sell to the corporation, which in turn
would sell to the distribution channel. This effectively reduced the sales of duty-evaded alcoholic drinks in
Karnataka. A further contribution was the reduction in excise duties in 2003 in Karnataka across all segments,
by close to 50%, thereby allowing companies to tap new consumers and also enabling consumers to migrate to
higher priced brands.
West is the best to wine and dine
West India, with volume sales of 458 million litres in 2004, continues to lag South India in total alcohol sales,
but leads in sales of wine. The region, with its more trendy and sophisticated consumers, centred in Mumbai and
Pune in Maharashtra, accounts for close to 42% of total volume sales of wine in India, compared with a 29%
share in alcoholic drinks as a whole. Production and consumption of wine is concentrated in the state of
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Maharashtra, which has favourable climatic conditions, and benefits from government policies encouraging the
setting up of wineries in the state.
West India typically sees the bulk of new launches, especially when the target consumers are the wealthy. Single
malt whiskies, wines from different countries and FABs are generally test marketed in West India before being
rolled out in other parts of the country. FABs, for example, were initially launched in the state of Goa in West
India, then Mumbai, and then later rolled out in other parts of the country. Among the more important reasons
for launches taking place in West India are the liquor-friendly policy of state governments like Maharashtra and
Goa in the region, coupled with the willingness of consumers to experiment with new products.
Though West India lags in terms of volume sales, it is the leading region in terms of value sales. Sales of over
Rs208 billion in 2004 reflect the slightly more sophisticated and upmarket nature of the West Indian consumer.
Compared to the South, which is typified by lower priced brands with greater alcohol content, the West has
more upmarket brands across all categories. Consequently, the majority of the companies consider Maharashtra
to be one of the most profitable markets for their products. West India also leads in terms of on-trade sales, with
close to 113 million litres of alcoholic drinks sold in the on-trade in 2004. On-trade outlets like beer parlours,
dance bars and pubs serving alcoholic drinks are very common in states like Maharashtra and Goa in West
India.
Country liquor gives the organised channel a tough fight in the North
363 million litres of alcoholic drinks were sold in North India in 2004, up by just over 7% on 2002. In value
terms, the market was estimated at Rs175 billion in 2004. North India accounted for 23% of total alcohol
volume sales in the country in 2004, a distant third when compared with the South and the West.
The brands sold in the North face stiff competition from country liquor, which is widespread in almost all of the
North Indian states. Some of these brands are prepared in clay furnaces and have a much higher alcohol content
than the branded ones. Within the Northern region, Delhi and its suburbs – called the National Capital Region –
is one of the largest markets for the consumption of liquor products in North India. Delhi, in particular, has a
number of pubs attracting the younger generation and women, with on-trade sales in North India standing at 79
million litres in 2004.
North India has traditionally been the bastion of whisky drinkers, with consumption levels here second only to
South India. The North accounts for close to 27% of total volume sales of whisky in India. This is in stark
contrast with brandy, where the North's share is less than 10%. There is also a seasonal nature to the market in
North India, with consumption of dark rum rising in the winter months of November, December and January.
East and Northeast still the smallest market
The market for alcoholic drinks in the East and Northeast remains the smallest, with an 11% volume share of the
national total. Low-income consumers with poor purchasing power, coupled with inaccessibility of some of the
regions, especially the Northeast, are major factors hindering the growth of the region. Very little consumption
takes place outside Kolkata and smaller cities like Patna, Jamshedpur, Siliguri and Guwahati.
The only exception to the low consumption trend in the East is the preference for dark rum in East and
Northeast India. East and Northeast India accounted for 24% of total dark rum volume in 2004, with sales of
48.5million litres. The preference for dark rum, especially in the Northeast, can be attributed to the slightly
cooler temperatures in the region, which provides the ideal excuse to indulge in dark rum to keep oneself warm.
East and Northeast India has one of the most porous borders in the country, freely allowing the passage of
counterfeit and smuggled products. The products flow in from the neighbouring countries of Nepal and
Bangladesh. Consumers are not averse to buying such products, thereby affecting the legitimate sales of
domestic manufacturers. The organised liquor market also faces competition from the country liquor present in
almost all the Northeastern states, such as Assam, Sikkim, Mizoram and Nagaland. Some licensed outlets sell
only country liquor.
Table 14 Sales of Alcoholic Drinks by Region: Total Volume 1999-2004
Million litres
Euromonitor Page 12
1999 2000 2001 2002 2003 2004
East and Northeast India 118.2 127.8 137.9 151.0 163.6 176.9
North India 245.9 265.8 286.8 316.6 339.1 363.4
South India 418.5 450.4 485.8 528.0 559.8 595.9
West India 317.7 347.2 376.1 410.7 433.4 458.4
TOTAL 1,100.3 1,191.2 1,286.6 1,406.3 1,495.9 1,594.6
Table 15 Sales of Alcoholic Drinks by Region: Total Value 1999-2004
Rs million
1999 2000 2001 2002 2003 2004
East and Northeast India 40,334.9 44,749.0 49,452.6 55,284.1 61,482.7 68,826.3
North India 98,685.6 110,672.9 124,156.7 141,336.5 157,285.5 175,062.7
South India 112,063.7 126,697.8 141,992.4 159,946.5 176,471.0 194,428.8
West India 117,038.0 132,407.9 148,355.4 169,763.4 188,357.9 208,210.4
TOTAL 368,122.2 414,527.7 463,957.1 526,330.6 583,597.0 646,528.2
Table 16 Sales of Alcoholic Drinks by Region: % Total Volume Growth 1999-2004

2003/04 1999-04 CAGR 1999/04 TOTAL
East and Northeast India 8.1 8.4 49.6

North India 7.1 8.1 47.8
South India 6.5 7.3 42.4
West India 5.8 7.6 44.3
TOTAL 6.6 7.7 44.9
Table 17 Sales of Alcoholic Drinks by Region: % Total Value Growth 1999-2004

2003/04 1999-04 CAGR 1999/04 TOTAL

North India 11.3 12.1 77.4
South India 10.2 11.7 73.5
West India 10.5 12.2 77.9
TOTAL 10.8 11.9 75.6
Euromonitor Page 13
3.3 Market Performance by Rural-Urban Split

70% population but only 35% consumption in rural areas
The market for alcoholic drinks continues to be dominated by the major cities and the smaller towns, which
accounted for 65% of off-trade volume sales in 2004. Though the rural population in India is estimated at close
to 70% of the total, the rural areas account for only 35% of off-trade sales. Beer and spirits dominate the rural
channels, whilst wine has a near-negligible presence, and FABs have yet to appear in the rural markets. In
addition, it is economy and standard brands within beer and spirits that have a stronger following within the
rural areas, while the market leaders and premium brands continue to be an urban phenomenon.
With all the taxes included in the products, the prices of beer, wine and spirits remain out of the reach of the
low-income rural population. Country liquor is thus more popular in the rural areas. Having a completely
different pricing structure, with lower taxes and also completely different retail channels, country liquor is
significantly cheaper. Apart from country liquor, which is sold through outlets licensed by the state
governments, illegal brewing and sale of alcohol takes place in the rural areas, which once again hinders the
growth of branded alcoholic drinks.
FABs completely an urban product
Although FABs are beginning to emerge in India, with the launch of Bacardi Breezer, they continue to be found
only on urban retail shelves. The smaller towns have yet to see such products. It is unlikely that FABs will ever
generate substantial sales in rural areas. The high price of FABs, at Rs40 for a 270ml can, and their low alcohol
content, mean that they are unlikely to be purchased by people who prefer a stronger and cheaper drink after a
hard day's labour.
Wine sees growth in rural areas
A notable trend is the increasing preference for wine among rural consumers in some states. This growth is
concentrated in the wine-producing belt in the state of Maharashtra, and also among the more affluent farmers in
the states of Haryana and Punjab. Consumers in some of the smaller towns in the rural areas have a preference
for port wine, such as Goa Port from Vinicola Pvt Ltd, and cheaper wines with a price of around Rs150 for a
750ml bottle. However, 91% of off-trade sales of wine – at 2.58 million litres – still come from the urban areas.
Wine manufacturers and importers have been driving growth in the urban areas through wine tasting sessions
and wine clubs.
Cheaper spirits preferred in rural areas
With the significant presence of illegal spirits and country liquor, spirits sales in rural areas stem mainly from
domestic brands, which are cheaper than any other brands available. 30% of total off-trade spirits volume sales
in 2004 were from the rural areas. This share rose over the review period, aided by improvements in distribution
by manufacturers and the slow shift in preference of rural consumers from unbranded cheap variants towards
branded varieties.
In the rural areas, Indian whisky leads spirits sales, after which regional preferences diverge, with brandy
popular in the South, and dark rum placed second in the North, and East and Northeast. In terms of value, urban
sales are well ahead of rural sales, as urban consumers have greater access to premium and standard brands,
such as McDowell's No 1 and Honeybee brandy, while rural consumers mainly opt for economy brands, such as
Haywards whisky and Binnie Rum.
While domestic whisky does find takers in the rural areas, sales of Scotch whisky are negligible in rural areas.
Even within urban areas, sales of blended Scotch whisky outside the larger cities like Mumbai, Delhi, Chennai,
Kolkata and Bangalore are small. Consumers do not have the necessary purchasing power, whilst retailers are
not inclined to devote valuable space to brands that rarely move from the shelves.
Pints allow for suburban penetration
Over the review period, penetration of beer in the rural areas continued to make good progress, following the
introduction of beer pints of 330ml in 2001 as compared to the usual 650ml bottle, to encourage trial by the less
Euromonitor Page 14
wealthy. The share of volume sales accounted for by the rural areas rose to 40% in 2004. Given the maturing
status of the leading cities of Mumbai, Chennai and Bangalore, companies such as United Breweries and Shaw
Wallace have been concentrating their growth initiatives outside these cities, and their efforts have continued to
pay rich dividends.
There are differences in drinking preferences in the rural areas as compared to the urban areas. Almost 70% of
total beer consumption in the rural areas is generated from strong beer brands such as Haywards 5000 and
Kingfisher Strong, while this figure drops to 55% in the urban areas. Strong beer with over 6% alcohol content
gives a relatively high level of intoxication at an affordable price, and is a better substitute for hard liquor. In the
urban areas, milder beer brands, such as Kingfisher Premium Lager and Haywards 2000, meet with considerable
success.
Increasing focus on the suburban areas
A host of companies are focusing on expansion plans beyond the traditional metropolitan areas, towards the
suburbs and selected rural states, due to India's large regional population base.
This growth strategy is expected to be more pronounced over the forecast period. More importantly, with market
competition and market shares hotly contested within the leading cities of Mumbai, Chennai, Bangalore,
Kolkata and New Delhi, companies are seeking for new pastures in which to flourish.
Table 18 Sales of Alcoholic Drinks by Rural-Urban % Analysis 2004
Urban Rural Total
India 65.5 34.5 100.0

Source: Trade press (Economic Times of India, Financial Express, Times of India, Hindu Business Line, India Infoline,
Domain-b, Rediff, Exchange4media, Business Standard, Express Hotelier & Caterer, just-drinks.com,
BeverAsia, Wine & Spirit International, Drinks International), company research, store checks, trade interviews,
Euromonitor International estimates
3.4 Key Trends and Developments

Only one way for alcohol consumption
Ever since liberalisation, India has seen rampant economic growth, led mainly by the services sector. The
number of double income families has increased, as has disposable income. People are much more travelled and
aware of global culture now than 10 years ago, when air travel was considered a luxury, and travel outside the
country unimaginable unless for work. The influence of global culture has been evident in Indian society, with
an example being increased acceptance of alcohol consumption, which was hitherto considered one of the most
serious vices.
Women and teenagers are increasingly driving consumption of white spirits, as are attracted to the neutral,
odourless nature of the drinks compared with, for example, whisky. Wine, which tended to be regarded in the
same light as beer and spirits, is increasingly considered a healthy drink for the sophisticated. The classification
of wine as a food product from November 2004 in the state of Maharashtra in West India, thereby reducing the
sales tax from 20% to 4%, is a pointer to the direction of general acceptance for some alcoholic drinks. As
incomes rise and as consumers become more attuned to global trends, consumption of alcoholic drinks in India
will inevitably increase, with lower alcohol content drinks being the catalyst of growth.
3.5 Competitive Environment

Domestic companies continue to dominate
The alcoholic drinks industry in India is highly protected, with domestic players dominating the scene in almost
all the sectors. UB Group is the largest player, with a value share in beer and spirits of more than 35% in 2003.
The company has breweries and distilleries spread along the length and breadth of the country, and thus benefits
from economies of scale in production. Following UB Group is Shaw Wallace, another well-established player
within spirits and beer.
Euromonitor Page 15
However, as the government is lowering duties, in line with WTO requirements, foreign players are making
their presence felt. Some of them, like Seagram and Allied Domecq, which have their own distilleries in India,
have already carved a niche for their products. Seagram's Royal Stag Indian whisky has sales of over a million
cases, whilst the blended Scotch portfolio of Allied Domecq has also proved successful.
Though international brands will increasingly establish a presence in India as import duties decrease, it will be
some time before they can compete with domestic brands, which will continue to hold ground with their all-
round strengths in production, pricing, brand building and distribution.
The domestic liquor industry looks headed for consolidation in the years to come, as the country's second largest
distiller, Shaw Wallace & Co Ltd, was put up for sale in late 2004, and the UB Group has emerged as one of the
leading bidders. If the UB Group is able to bid successfully for Shaw Wallace, the face of the domestic spirits
industry is likely to change, with the UB Group holding close to monopolistic control over domestic spirits
sales.
3.6 Leading Companies – Allied Domecq Spirits & Wine (India) Pvt Ltd
Company background
Incorporated in September 1994 in India, Allied Domecq Spirits & Wine (India) Pvt Ltd (ADSWI), is today the
market leader within Scotch whisky in India. Headquartered in New Delhi, the company has offices and depots
spread across the country. Allied Domecq is completely owned by Allied Domecq Plc.
When ADSWI was incorporated, Jagatjit Industries was a joint venture partner, with a 50% shareholding. Clan
Morgan became the 50:50 joint venture partner with ADSWI in India after ADWSI terminated the agreement
with Jagatjit Industries in 1997. The shareholding in Clan Morgan was raised by Allied to 74% in 2001. Finally,
in October 2004, ADSWI became a wholly owned subsidiary of Allied Domecq when the buyout was
completed.
ADWSI has close to a 40% volume share of total sales within Scotch whisky in India. The continued
introduction of brands from its international portfolio is one of the growth strategies being adopted by the
company. The latest on the cards is the top of the range Ballantine's 17 Year Old, expected to be launched in
India in 2004-2005.
ADSWI was the first foreign spirits and wines company to introduce a leading Scotch brand, Teacher's
Highland Cream, in India. Subsequently, Teacher's 50, a 12-year-old premium Scotch, was developed specially
for the Indian market, and has been a success since its launch in 1997. The only brand that ADWSI has which is
targeted at the mass market is Old Smuggler, another India-specific brand. The brand is likely to be sold in the
defence channels in 2004-2005.
With its own manufacturing facility in Behror, Rajasthan, the company has made considerable investment in
technology transfer to introduce distilling facilities which are world class. It is also a founding member and
leading participant in the Society for Alcohol & Social Policy Initiative (SASPI) whose agenda is to promote
responsible drinking.
Allied Domecq is also one of the largest suppliers of imported liquor to the Indian Tourism Development
Corporation, and to duty-free sectors such as airports and diplomatic circles. It is also the largest supplier to
Indian Airlines and Air India, the two government-owned airlines in the country. Beyond alcoholic drinks,
ADSWI holds a 40% stake in Maharashtra Dairy Products Manufacturing Co Pvt Ltd, the makers of Baskin
Robbins ice creams, with India's Ghai family holding the rest.
Competitive positioning
Five brands in ADSWI's Scotch portfolio account for an estimated 90% of overall volume sales. Its flagship
brands are Teacher's Highland Cream and Teacher's 50. Allied Domecq has expanded its product portfolio to
include a diverse range of brands, such as Old Smuggler and Long John Scotch. Old Smuggler has been further
extended with the launch of Old Smuggler Rum, Old Smuggler Gin and Old Smuggler Brandy.
Euromonitor Page 16
Though unable to compete on the same level as local players like McDowell and Shaw Wallace, its Teacher's
blended Scotch whisky has established itself as a leading brand. In the face of intense competition, Allied
Domecq has improved its distribution and sales network, and has built up relationship management with its
distributors and retailers. Teacher's 50 is the leading brand of imported whisky, with a volume share of blended
Scotch whisky of more than 30% in the off-trade in 2003.
ADSWI's target customers essentially belong to the higher income strata in the over 35-age group, with a
monthly income of Rs35,000-50,000 per month. The company strongly believes its products attract people with
a genuine understanding of Scotch, who are more professional in their approach and seek good quality.
Marketing through awards
About 85% of the company's advertising spend is focused on the Teacher's brand. The Teacher's Achievement
awards, instituted in 2001 for excellence in five different fields – sports, business, communication,
entertainment and Teacher's lifetime achievement awards – account for the bulk of its marketing spend.
Teacher's has proven successful in India because of its wide availability in retail outlets and because of the high
quality of the products available. There has been significant demand among consumers for international
products, which has benefited Teacher's. Being a player in the premium segment of whiskies/Scotch, the
company is more resilient in the face of economic slowdown since its target group is the high income strata.
Scotch to be the focus for Allied
Company sources reveal that the corporate focus during the forecast period will continue to be on the Teacher's
brand, since India remains predominantly a whisky market. The company concentrates largely on its global
brands, while using local brands like Old Smuggler to obtain cost and distribution advantages. With India
emerging as a focus market for Teacher's Scotch Whisky, the company has made significant efforts to spread
awareness, especially within the on-trade. It undertakes extensive Scotch workshops for serving staff and
bartenders in leading hotels across India.
Table 19 Allied Domecq Spirits & Wine (India) Pvt Ltd Shares of Alcoholic Drinks by Subsector
2000-2003
% total volume
2000 2001 2002 2003
Whisk(e)y 0.1 0.1 0.1 0.1

Rum 0.5 0.5 0.5 0.3
Spirits 0.1 0.1 0.1 0.1
Source: Trade associations (All India Distillers' Association, Scotch Whisky Association), trade press (Economic Times
of India, Financial Express, Times of India, Hindu Business Line, India Infoline, Domain-b, Rediff,
Exchange4media, Business Standard, Express Hotelier & Caterer, just-drinks.com, BeverAsia, Wine & Spirit
International, Drinks International), company research, store checks, trade interviews, Euromonitor International
estimates
3.7 Leading Companies – Champagne Indage Ltd

Company background
Champagne Indage was established in 1982 as a 100% export-oriented company for the export of wine, and
continued to be so until 1988, when the company started selling its popular sparkling wine Marquise De
Pompadour in India. Champagne Indage, along with its associate company Champagne Vineyards, which
supplies grapes to Champagne Indage, was a pioneer in the wine industry in the country. While Champagne
Vineyards takes care of viticulture, Champagne Indage takes care of producing and selling wines.
Champagne Indage is by far the largest wine producer in India, with both domestic and export brands. Although
other companies, such as Grover Vineyards and Somant Soma, are also present, these distant rivals do not pose
a threat to Indage, which produces a wide variety of wines spanning all price bands. Indage produces and sells
wine under the brand names Figueira (used for red and white port wines), Riveria (cheaper red and white wine
Euromonitor Page 17
varieties), Chantilli (premium varieties), Ivy (the most expensive red and white varieties from Indage), and
Marquise De Pompadour, Ivy Brut and Joie (sparkling wines) in the domestic market. The company also has a
tie-up with wineries in France, Australia, South Africa, Germany and Chile, selling red and white varieties
under a mutually decided brand name.
The company's more popular brands include its Chantilli and Riviera ranges of still wines, and Marquise de
Pompadour sparkling wine. These are marketed locally, as well as exported to other countries such as France,
the UK, the US, Japan and other parts of Asia. Champagne Indage has pioneered the use of ancient Indian
varieties of grape like Arkesham and Arkavati, along with Thomson seedless and Bangalore Purple.
The company established its third winery with a capacity of 4.5 million litres close to Pune, in 2004. The
winery, which cost Rs70 million, has been established mainly to cater to export markets. Champagne Indage is
also toying with the idea of launching wine in tetra packs and plastic bottles in 2004-2005. Mr Ranjit Chougule,
Director of Champagne Indage was quoted in the trade press saying, "We are looking at an entire range of
packing options for wine, which will allow for greater conveniences like affordability and carry home".
Summary 1 Champagne Indage Ltd Operational Indicators 2003

Sales 2003 Rs254.0 million
% growth over 2002 11
Year end 31 March
Net profit 2003 Rs29.4 million
Production capacity 3.5 million litres per annum
Domain-b, Rediff, Bombay Stock Exchange, Exchange4media, Business Standard, Express Hotelier & Caterer,
just-drinks.com, BeverAsia, Wine & Spirit International, Drinks International), company research, store checks,
trade interviews
Champagne Indage is the leader seller of wine in India with 30% volume share representing 1.1million litres
sold in 2003. Indage has increased its production capacity in April 2004 in order to cater to increasing demand
for wines in India. The production capacity of all wineries put together is estimated to be in the region of 3.5
million litres per annum. Champagne Indage while diversifying its options has started brewing strong and mild
beer under the brand names Hammer and Tantra for the export market. Champagne Indage with wines in tetra
packs and plastic bottles and with prices less than Rs100 is looking to bring in new wine consumers into its fold
by inducing trial. This if successful should bode well for the wine industry as it did for soft drinks when
consumer base swell on the introduction of the smaller 200ml bottle.
3.8 Leading Companies – McDowell & Co Ltd

Company background
McDowell & Co Ltd is the flagship spirits company of the United Breweries Group, and is India's largest spirits
conglomerate. McDowell & Co was founded by Mr Angus McDowell in 1826 in Scotland, and was
incorporated in India in 1898. The company initially functioned as an importer of wine and spirits into India.
The company was taken over by Mr Vittal Mallaya in 1953, which heralded a number of change in its
operations. The company started manufacturing two French brandies, Bisquit Cognac and Dorville. The
company also started producing its own brands, notably with the introduction of McDowell's No 1 Brandy in
1963. McDowell's has since been developed successfully as an umbrella brand.
During the years of prohibition between 1977 and 1980, the company purchased manufacturing facilities
cheaply across the length and breadth of the country, which continue to be vital in its operations. McDowell has
grown to be the country's undisputed leader in spirits, accounting for more than 27% of total spirits volume sales
in India in 2003.
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World's fourth largest spirit marketer
2003 was a watershed year in the history of the company, as McDowell, along with its subsidiary Herbertsons
Ltd, emerged as the fourth largest spirit marketer in the world, as ranked by Impact International, a research
digest of the international alcoholic beverage industry. McDowell and Herbertsons together sold over 35 million
cases in 2003, and held fourth place behind Diageo, Pernod Ricard and Allied Domecq. However, the above
sales volume includes sales to the defence sector which, being institutional sales, are not included in
Euromonitor's coverage.
The company owns a number of brands with annual sales exceeding one million 9-litre cases each. These
brands, almost all of which are either mid-priced or economy brands, are McDowell's No 1 whisky, McDowell's
No 1 Celebration rum, Old Cask rum, McDowell's No 1 brandy, Honeybee brandy, Kerala Malt whisky, Vin
whisky, Majestic XXX rum and Blue Riband gin. The company benefits from having a presence with its leading
brands across all subsectors in spirits.
The following operational indicators are from the consolidated statement of McDowell & Co Ltd as the
company and almost all of its subsidiaries are engaged in the business of liquor. The sales figure includes excise
duty paid, but does not include income from brand franchise and other income. Though McDowell's turnover
grew in 2003, there was a decrease in net profit for the year.
Summary 2 McDowell & Co Ltd Operational Indicators 2003

Sales 2003 Rs16,114 million
Year end 31 March
Net profit 2003 Rs363 million
% growth over 2002 -5.1
Advertising expenditure 2003 Rs1,439 million
Number of employees (approx) 3,750
interviews
A plethora of brands
McDowell had a portfolio of over 60 brands at the beginning of 2004 and a large and well-positioned
manufacturing base, which consists of 12 company-owned distilleries, all of which are ISO 9002 compliant.
Additionally, McDowell sources its brands from over 27 contract distillers. This spread of manufacturing
facilities is a source of competitive advantage in view of the costs of interstate commerce involved in the
alcoholic drinks trade in India.
The company certainly benefits from its distribution superiority due to the UB Group's combined leadership
position in both spirits and beer. The company has established itself nationwide through aggressive marketing
initiatives, including a high profile advertising strategy in sports like golf, which focuses on its leading brands.
McDowell has successfully leveraged the use of surrogates for the purpose of promoting its brands. Some of
these surrogates, like Kingfisher mineral water, have become fully-fledged brands in their own right, with the
company using separate distribution channels for the products. Though the company was in talks with Concha y
Toro, the largest producer of wine in Chile, and Australia-based Sandalford for bringing imported wine brands
into the country, nothing has materialised so far. McDowell has for some time also been considering launching
country liquor, but has yet do so and thus remains focused on branded spirits.
trimmed down in 2004
Euromonitor Page 19
McDowell stopped the manufacture of three of its economy brands – Kerala Malt Whisky, Majestic XXX Rum
and Vin Whisky – in 2004, as the margins of the three brands were being squeezed due to the rising price of
extra neutral alcohol, a major raw material. The rise in price was a result of a decline in the acreage for
sugarcane cultivation, and also because of the government strategy to mix ethyl alcohol with petroleum
products, thereby reducing its availability. It is notable that the brands which were withdrawn all had annual
sales of over a million cases, thus UB Group is likely to be looking to replace the brands with new, higher priced
versions. The company has turned its attention, at least for the time being, towards brands which may not be the
largest generators of volume sales, but nevertheless have substantial margins.
but still McDowell reigns supreme
McDowell continues to be the largest spirits company in India with close to a 27% total volume share in 2003.
The company managed to increase its volume share between 2000 and 2003, even in the wake of competition
from global companies. McDowell has advantages in production as well as distribution. The company has
distilleries in all the major states, which gives it cost advantages and avoids interstate taxes and duties.
McDowell has been unable to carry its success in spirits sales over to FABs. McDowell's foray into FABs has
met with little success. A number of brands, like Vodka Cruiser, Havana Gold and Stinger, which were made
available in select markets failed to make any impact. Even Romanov Shotz, which was rolled out in almost all
states, failed to make any substantial impact, and lagged behind Bacardi Breezer.
McDowell has put forward a bid of Rs11 billion for Shaw Wallace & Co Ltd, which industry sources estimate to
be the highest offer. If successful, McDowell has plans to merge with Shaw Wallace, Herbertsons Ltd and
Triumph Distillers & Vintners Ltd under the banner United Spirits. This would result in significant
consolidation of the domestic spirits industry, with the group holding more than half of all volume sales of
spirits in India.
Table 20 McDowell & Co Ltd Shares of Alcoholic Drinks by Subsector 2000-2003
% total volume
2000 2001 2002 2003
Spirits-based FABs - - 10.0 10.0

FABs (flavoured alcoholic - - 10.0 10.0
beverages)
Whisk(e)y 19.3 16.2 15.9 16.6
Brandy and Cognac 42.6 44.7 41.5 46.3
White spirits 61.7 59.4 57.7 55.5
Rum 35.8 38.7 46.8 52.3
Spirits 25.8 24.3 24.9 26.8
3.9 Leading Companies – Mohan Meakin Ltd

Company background
Mohan Meakin Ltd was incorporated in 1934 to take over the business of Dyer Meakin & Co Ltd in India. The
name of the company was changed from Dyer Meakin Breweries Ltd, to Mohan Meakin Breweries Ltd in
November 1966. The name was once again changed to Mohan Meakin Ltd in 1980.
The company is engaged in the production of alcoholic drinks such as whisky, rum, brandy, vodka, gin and beer,
along with other products such as fruit juice, vinegar, bottled water and breakfast foods. The company has a
strong presence in the western and northern areas of the country. Mohan Meakin, with its Old Monk rum and
Red Knight whisky, was among the market leaders in the 1970s, along with UB Group. However, Mohan
Meakin has since lost its strong position in the market in the wake of increased competition.
Euromonitor Page 20
The following operational indicators for Mohan Meakin include sales of all its products, not only the income
from sales of alcoholic beverages. Turnover does not include other income and stock adjustments.
Summary 3 Mohan Meakin Ltd Operational Indicators 2003

Sales 2003 Rs3,566.1 million
% growth over 2002 3.8
Year end 31 March
Source: Trade associations (All India Distillers' Association), trade press (Economic Times of India, Financial Express,
Times of India, Hindu Business Line, India Infoline, Domain-b, Rediff, licmutual.com, Exchange4media,
Business Standard, Express Hotelier & Caterer, just-drinks.com, BeverAsia, Wine & Spirit International, Drinks
International), company research, store checks, trade interviews
Within the Indian alcoholic drinks market, the company ranks among the top five manufacturers within beer and
spirits. Its product portfolio includes prominent brands like Old Monk dark rum, Golden Eagle Deluxe Premium
Beer, Golden Eagle Doctor brandy, Golden Eagle Lager, Meakin's 10000 Super Strong Beer, Guru Beer, and
MMB Whisky.
Old Monk rum was once among the largest brands in the country, but has steadily lost share of the market due to
competition. Whilst in 2000, the company's volume share in rum stood at 44%, this had declined to 33% in
2003. Old Monk's sales have been declining over the years as Mohan Meakin has done little in terms of brand
building in the wake of increasing competition from Celebration Rum from McDowell's, which has been
growing at double digit rates. Old Monk, which generates close to one third of its sales from the defence sector,
is facing increasing competition on that front as well from McDowell & Co Ltd and Radico Khaitan Ltd.
Another of Mohan Meakin's brands which has been feeling the heat is Golden Eagle lager beer, which has
slipped from the 36% volume share of domestic standard lager it held in 2000 to 29% in 2003. Mohan Meakin
has been facing increasing competition from Knock Out from Shaw Wallace Breweries Ltd, which has been
slowly consolidating its position at the top. Mohan Meakin also has a presence within brandy, with 6% volume
share through brands like Golden Eagle Doctor Brandy, Napoleon Doctor Brandy and Triple Crown Brandy.
Mohan Meakin's share in brandy held steady between 2000 and 2003. Mohan Meakin has, however, been losing
share within beer and spirits. In beer, its volume share declined from 10% in 2000 to less than 8% in 2003,
whilst in the case of spirits the decline has been from over 7% in 2000 to less than 6% in 2003. If the company
continues with its existing practice of little or no focus on brand building, it is quite likely that the trend of
declining shares will continue.
Though Mohan Meakin has its presence in all regions, its home area, North India, is among its largest markets.
An important state for Mohan Meakin is Uttar Pradesh, which is among the larger beer markets in North India.
Uttar Pradesh was the first state in the country to separate beer from the Indian Made Foreign Liquor trade
(which essentially is other whiskies as per Euromonitor's definitions), thus paving the way for lower taxes on
beer, which has a lower alcohol content than wine and spirits. The state, which is where Mohan Meakin's is
based, has three breweries. The Meakin family owns two, and the third, Narang Breweries, located in Lucknow,
belongs to SABMiller.
Table 21 Mohan Meakin Ltd Shares of Alcoholic Drinks by Subsector 2000-2003
% total volume
2000 2001 2002 2003
Lager 10.0 10.0 8.5 7.7

Beer 10.0 10.0 8.5 7.7
Rum 44.3 40.8 38.0 32.2
Spirits 7.2 6.7 6.3 5.5
Euromonitor Page 21
Times of India, Hindu Business Line, India Infoline, Domain-b, Rediff, Exchange4media, Business Standard,
Express Hotelier & Caterer, just-drinks.com, BeverAsia, Wine & Spirit International, Drinks International),
company research, store checks, trade interviews, Euromonitor International estimates
3.10 Leading Companies – Radico Khaitan Ltd

Company background
Radico Khaitan, formerly known as Rampur Distilleries, was established in 1943. The company derived its
name from the place where it started off its operations – Rampur in Uttar Pradesh in North India – but changed
its name to the present Radico Khaitan Ltd in 1992. The initial operations of the company were confined to the
manufacture of extra-neutralised alcohol and other spirits for other liquor manufacturers.
The 1990s marked a changed in operations of the company, as it moved over from being a raw material supplier
to a seller of its own branded products in 1995. Radico Khaitan enjoys a strong position in the defence sector
with the majority of its brands such as Contessa performing well in the canteen department stores of the defence
sector. Among the brands that Radico Khaitan has successfully launched over the years are Special
Appointment, 8 PM, Old Admiral and Contessa. Radico Khaitan continues to be the only major branded spirits
manufacturer in the country selling country liquor. Radico sells country liquor in Uttar Pradesh under the brand
names Jhoom and Masti.
Radico Khaitan entered into a 51:49 joint venture with Bacardi Group in 2001, under the name Whytehall India
Ltd, for the manufacture of domestic liquor with the brand name Whytehall. In July 2004, Radico Khaitan
bought out the entire stake of Bacardi in Whytehall India Ltd, for Rs315 million. The move is seen as important
for Radico, as it provides the company with the brand Whytehall, which enjoys a degree of consumer loyalty,
and also brings with it additional manufacturing capacity for Radico's other brands at the state of the art malt
plant in Rampur.
Radico also has an international division – Radico International – which supplies international brands to the
domestic market. Among the brands handled by Radico International are Beck's from Brauerei Beck GmbH &
Co, and New World wine brands from E&J Gallo Winery, such as Gallo of Sonoma County, Turning Leaf,
Wine Cellars, Carlo Rossi and that of Andre.
Radico has its head office in Delhi, with four zonal offices and six regional offices spread across the country.
The offices coordinate and supply products from a total of 26 bottling units to the different channel partners
across the length and breadth of the country. The company is also looking at more options for organic growth as
well as growth by acquisitions. The company has a number of surrogate brands, including 8 PM apple juice and
Special Appointment apple juice.
The sales given below for Radico Khaitan include excise duty but exclude sales of tie-up units and other
income. The production capacity given below does not include capacity of plants with which Radico has tie-ups
for additional capacity.
Summary 4 Radico Khaitan Ltd Operational Indicators 2003

Year end 31 March
Production capacity 60 million litres per annum
company research, store checks, trade interviews
Euromonitor Page 22
Radico Khaitan is among India's foremost spirits manufacturers, with a 5% volume share of the sector in 2003.
Radico Khaitan, which was hitherto completely absent from South India, is slowly making its presence felt with
a slew of launches in 2003 and 2004 in the markets of Kerala and Tamil Nadu, the latter of which is among the
largest liquor markets in the country. The move is expected to enable the company garner substantial volume
sales from the state.
Radico Khaitan increased its total volume share within "other" whisky to over 4% in 2003. Radico Khaitan has
also made inroads into the South Indian market with the phased launch in Kerala of Old Admiral VSOP Brandy,
starting in late 2002. With its launch in Karnataka in mid-2003, the company garnered close to a 6% total
volume share of brandy and cognac in 2003. Radico Khaitan also launched Old Admiral VSOP Brandy in Tamil
Nadu in June 2004, and the brand is expected to do well.
Radico Khaitan has tied up with Golden Midas Distillers Pvt Ltd for the purpose of contract bottling of Old
Admiral VSOP Brandy, Contessa XXX Rum and 8 PM Whisky in Tamil Nadu. The company set a target of 11
million cases or 99 million litres in sales, inclusive of sales to the defence sector and export sales, in the
financial year 2004-2005.
Table 22 Radico Khaitan Ltd Shares of Alcoholic Drinks by Subsector 2000-2003
% total volume
2000 2001 2002 2003
Whisk(e)y 3.6 3.9 4.2 4.0

Brandy and Cognac - - - 5.6
Rum 13.8 11.7 9.5 9.8
Spirits 4.5 4.4 4.3 5.0
3.11 Leading Companies – Shaw Wallace & Co Ltd

Company background
Shaw Wallace started off its operations in India as early as 1886, as an importer and agent for other companies
in the country. Shaw Wallace was incorporated in 1946 as a private company, and converted into a public
company in 1947. Shaw Wallace did not manufacture spirits in the early years of its existence, but acted as a
distributor for the products of Bengal Distilleries Co Pvt Ltd, the manufacturer of Haywards Whiskey, Brandy
and Gin. In 1959 Bengal Distilleries Co Pvt Ltd was bought by Shaw Wallace, and the companies merged in
1966.
Shaw Wallace has subsequently grown to become the second largest spirits company in the country. Part of the
Jumbo Group of companies in India, leading liquor player Shaw Wallace is engaged in the manufacture,
marketing and export of alcoholic beverages.
Shaw Wallace is one of the few companies that can boast of a varied yet successful product portfolio, from
spirits to beer, wine and FABs. The company is particularly strong in beer and whisky, where its products are
targeted at the upper tier of consumers. Within beer and spirits, Shaw Wallace is the second largest
manufacturer, after UB Group. Shaw Wallace has set up a state-of-the-art technical centre at Maharashtra
Distilleries. Apart from standardising and monitoring raw material, the plant also converts molasses to extra
neutral alcohol.
The following operational indicators are of the parent company Shaw Wallace & Co Ltd, and do not include the
details of it subsidiaries. Turnover includes excise duties paid but excludes other income.
Summary 5 Shaw Wallace & Co Ltd Operational Indicators 2003
Euromonitor Page 23

% growth over 2002 -24
Year end 31 March
Net profit (loss) 2003 (Rs179.5 million)
Advertising expenditure 2003 Rs1,439 million
company research, store checks, trade interviews
Shaw Wallace has been steadily losing ground in spirits. From the 17% volume share in spirits that Shaw
Wallace held in 2000, the share of the company has declined to 14% in 2003. The larger number of players and
brands within spirits, domestic and international ones alike, has led to the decline in share of Shaw Wallace. The
company's turnover has also been declining, with a significant fall of 24% in 2003.
Shaw Wallace had a quiet year in terms of new launches in 2004, as its only new product was White Mischief
Brandy, an extension of its popular vodka brand, which was introduced in August 2004 in the South Indian state
of Kerala. Shaw Wallace invested substantial amounts in brand building activities, consolidating and
strengthening its existing brands in rum, whisky and white spirits in 2004. The company has already changed
the packaging of almost all its brands, in addition to applying a hologram on its Director's Special Whisky that
helps protect it from counterfeiting.
Shaw Wallace, in concert with Kyndal, launched the vodka brands Vladivar, in 2002, and Absolut, in late
December 2003. Vladivar captured close to 2% of total volume sales of vodka in 2003, by targeting premium
consumers especially in on-trade channels. Almost all the domestic brands of Shaw Wallace straddle the
economy and mid-priced segments. Prominent among them are Director's Special and Haywards, with 5% and
4% volume shares, respectively, in "other" whisky, and John Exshaw and Haywards brandy, both with 9%
volume shares in 2003. While Haywards brandy was able to hold to its volume share from 2003, Director's
Special, Haywards whisky and John Exshaw lost volume share in 2003, in the wake of increasing competition
from McDowell &Co Ltd's brands.
The future of Shaw Wallace will depend on its sale in 2005. Though bids have been invited, with the UB Group
and Mason & Summers Alcobev Pvt Ltd in the fray, given that Shaw Wallace & Co has shares held by founding
members of Shaw Wallace, the late Mr Manu Chabbria, the industry is still unsure if a sale will actually go
through. The purchase of Shaw Wallace by the UB Group would lead to significant consolidation in the
industry, with the group having over 50% of volume sales in the country. However, a purchase of Shaw Wallace
by Mason & Summers would leave things much more open, as Mason & Summers does not currently have a
major presence in the alcoholic drinks market in India.
Table 23 Shaw Wallace & Co Ltd Shares of Alcoholic Drinks by Subsector 2000-2003
% total volume
2000 2001 2002 2003
Whisk(e)y 18.7 17.6 15.4 14.4

White spirits 9.0 9.1 9.0 9.8
Rum 0.5 0.5 0.5 0.5
Spirits 17.2 16.5 15.0 14.1
3.12 Emerging and Niche Companies
Euromonitor Page 24
Samant Soma Wines Ltd
Samant Soma Wines Ltd came into being when its founder Rajeev Samant, a Stanford-trained engineer, quit his
job at Oracle in Silicon Valley in 1993 and started farming on family-owned land in Nasik, planting alphonso
mangoes. After a little study, he was convinced that the Nasik climate was perfect for wine grapes, on a par with
wine growing regions in Spain, California and Australia. Samant took the revolutionary step of planting
Sauvignon Blanc and Chenin Blanc grapes, varieties that had never been planted in India before.
With over 120 acres of vineyards, Samant Soma still produces the only Sauvignon Blanc, Chenin Blanc (both
white varietals) and Blush Zinfandel (rosé wine) in India. Other brands in its product portfolio include sparkling
wines like Sula Brut, Sula Seco, Madera White Wine from Nashik Valley, and red wines like Cabernet Shiraz,
Sula Satori Merlot and Madera Red Wine. Amongst its rosé wine brands, the company has the California-style
Sula Blush Zinfandel and Sula Rave. The brands compete with the likes of Grover Vineyards Ltd and
Champagne Indage Ltd, which have similar brands in each category in the fledgling but lucrative Indian wine
sector.
Samant Soma began importing Italian Chianti Ruffino, South African Two Oceans and Pacific Chardonnay
wine from the US in 2003 and 2004. This ensures that the company gets a share of the growing demand for
foreign wines as the sector expands. Samant Soma continues with the practice of holding wine tasting sessions
to educate the public about wine and also for creating awareness of Samant Soma brands.
Samant Soma had a 10% volume share of the wine sector in India in 2003. In spite of being among the latest
entrants, Samant Soma has successfully carved a niche for itself. The company has built its brand through a host
of wine tasting and other promotional activities, coupled with offering wines at comparatively low prices.
Samant Soma is expected to do well in the years to come as it already sells all that it produces, and is looking at
increasing wine yard acreage and production capacity.
Seagram India Ltd
In 2002, Seagram's liquor business was merged with Pernod Ricard globally, and Seagram India Ltd is now the
fully owned subsidiary of the Pernod Ricard Group in India. The company recently completed the acquisition of
Seagram's business in India, and will focus on merging and consolidating operations.
Seagram is the second largest manufacturer of Scotch whisky in India, after Allied Domecq. Euromonitor
estimates that Seagram accounted for close to 28% of total blended Scotch whisky volume sales in 2003.
Seagram has earned the reputation of being the only international company which has successfully tapped the
Indian whisky market. While Allied Domecq, Bacardi and Diageo have exited the Indian whisky subsector,
Seagram has been growing from strength to strength. From the less than 3% volume share in Indian whisky that
Seagram held in 2000, the company has grown to having close to an 8% share in 2003. The most successful
among the Seagram's brands has been Royal Stag, which sells more than 2 million cases annually in the
domestic market. Seagram's success is also notable since Seagram does not sell any mass-market or cheap
brands in the country.
The company promotes it products through fashion shows and music. One of the major target segments for
Seagram is the younger age group, hence the use of these promotional tools. Seagram has also tapped into the
country's national pastime – cricket – to promote its Royal Stag brand. The company uses an array of Indian and
international cricketers to push sales of its products.
In 2003 and 2004, Seagram moved into markets in which it had hitherto lacked a presence. These were wine and
vodka; ones which are seeing very strong growth. In July 2003, the company introduced the Australian wine
Jacob's Creek, whilst in vodka it has begun distributing the Fling brand, in both flavoured and non-flavoured
varieties.
3.13 Distribution
On-trade vs off-trade sales
Off-trade channels dominate volume sales
Euromonitor Page 25
Off-trade channels dominate sales of alcoholic drinks with close to 79% of total volume sales of all alcoholic
drinks. The only sector in which less than 70% of volume sales are accounted for by off-trade channels is wine.
Wine has seen substantial volume sales being generated from the on-trade channels. Close to 34% of total wine
sales takes place through on-trade channels. The leading domestic wine manufacturers hold regular wine tasting
sessions in on-trade channels to spur growth. Since wine is yet to feature in the regular diet of the Indian
consumer, people seem to be more comfortable experimenting with different varietals and vintages in such
tastings, rather than buying by the bottle.
The significant price difference in off-trade channels, and also the consumer preference for mass-market,
cheaper brands results in the bulk of volume sales taking place through off-trade channels. Prices in on-trade
channels are much higher, as the various state governments levy a variety of taxes and charges in the form of
licensing fees which, apart from the normal premium charged for the ambience and service, keeps on-trade price
much higher than those in the off-trade.
On-trade channels are crippled by the red tape that has to be endured before permission is obtained to open an
on-trade outlet. The licence fees that need to be paid for pubs and bars to operate are also deemed to be very
high, with some sources estimating it to be more than Rs0.2 million per annum for a bar in most of the states in
India. On top of this, the bar owners ends up paying a host of bribes and other duties to the authorities, as well
as having to supply free drinks on a regular basis to some enforcers of the law. The circumstances for on-trade
outlets are brought into relief when a comparison is made with soft drinks. There are only an estimated 40,000
beer dispensing outlets in the country, compared with over a million for soft drinks. However, state governments
consider the levies on pubs and bars as an important source of revenue, and hence they tend to increase the
number of licences issued every year. This, coupled with the increasing pub culture among the youth of India,
has kept on-trade volume and value sales on an upward curve.
The trend of off-trade outlets bringing in the bulk of the volume sales is expected to continue, as consumers find
these outlets a cheaper option, and as state governments rely on alcoholic drink taxes as an important source of
revenue. The growing pub culture and the growth of dual-income families with large amounts of disposable
income are also expected to keep on-trade sales growing, albeit slowly.
Table 24 Off-trade Sales of Alcoholic Drinks by Sector and Distribution Format: % Analysis 2004
% off-trade
B C/P FABs W S
Supermarkets/hypermarkets 1.0 0.0 0.5 0.0 0.0

Independent food stores 0.0 0.0 0.0 0.0 0.0
Convenience stores 0.0 0.0 0.0 0.0 0.0
Discounters 0.0 0.0 0.0 0.0 0.0
Specialists 99.0 0.0 99.5 99.5 100.0
Direct sales 0.0 0.0 0.0 0.5 0.0
Others 0.0 0.0 0.0 0.0 0.0
Total 100.0 0.0 100.0 100.0 100.0
Source: Trade associations (All India Distillers' Association, Tamil Nadu State Marketing Corporation), trade press
(Economic Times of India, Financial Express, Times of India, Hindu Business Line, India Infoline, Domain-b,
Rediff, Exchange4media, Business Standard, Express Hotelier & Caterer, just-drinks.com, BeverAsia, Wine &
Spirit International, Drinks International), company research, store checks, trade interviews, Euromonitor
International estimates
Key: B = beer; C/P = cider/perry; FABs = flavoured alcoholic beverages; W = wine; S =spirits
Table 25 On-trade vs Off-trade Sales of Alcoholic Drinks by Sector: Volume 2004
Off-trade On-trade TOTAL
Beer (Million litres) 578.8 161.9 740.7

Cider/perry ('000 litres) - - -
FABs (flavoured alcoholic beverages) 2,700.7 1,124.6 3,825.3
('000 litres)
Wine (Million litres) 2.8 1.5 4.3
Spirits ('000 litres) 670,392.2 175,315.4 845,707.6
Euromonitor Page 26
Alcoholic drinks (Million litres) 1,254.8 339.8 1,594.6

Table 26 On-trade vs Off-trade Sales of Alcoholic Drinks by Sector: Value 2004
Rs million
Off-trade On-trade TOTAL
Beer 42,023.2 34,935.4 76,958.6

Cider/perry - - -
FABs (flavoured alcoholic beverages) 436.6 293.8 730.5
Wine 1,372.1 2,475.1 3,847.2
Spirits 293,491.2 271,500.7 564,991.9
Alcoholic drinks 337,323.1 309,205.1 646,528.2
Table 27 On-trade vs Off-trade Sales of Alcoholic Drinks by Sector: % Volume 2004
% volume analysis
Off-trade On-trade Total
Beer 78.1 21.9 100.0

Cider/perry - - -
Wine 65.6 34.4 100.0
Spirits 79.3 20.7 100.0
Table 28 On-trade vs Off-trade Sales of Alcoholic Drinks by Sector: % value 2004
% value analysis
Off-trade On-trade Total
Beer 54.6 45.4 100.0

Cider/perry - - -
Wine 35.7 64.3 100.0
Spirits 51.9 48.1 100.0
Wholesaler activity
Euromonitor Page 27
As the alcoholic drinks industry is a highly regulated one, with large amounts of revenue associated with it, the
distribution of liquor products assumes great significance. There is a lack of consistency in terms of distribution
of liquor, as with changes in state governments, interests vary and so do the policies. For example, in Tamil
Nadu, private retailing was permitted until November 2003, when the state government decided to abolish it and
let the state marketing corporation run the retail outlets and bars in the urban areas, and the cooperative
societies, as its agency, assume control in rural areas.
There are essentially three types of markets in the different states that permit the sale of liquor. They are open
market, auction market and government controlled markets.
Open markets are the most liberal form of selling liquor, where companies are permitted to appoint their own
distributors in the state and channel the sale of their products through these distributors. Wholesalers need to
obtain the requisite license before they can start to function. In auction markets, the governments auction off the
wholesale and retail shops at the beginning of each financial year. In the case of government controlled
distribution, the government, through one or more of its undertakings, controls the wholesale and/or retail
business.
Retailer activity
While data collection and distribution tracking remains highly inconsistent and outdated, trade experts estimate
that there are close to 27,000 alcoholic drinks specialists in the country. Mumbai city alone has 600 Indian-
Made Foreign Liquor vendors. While some of the states in India have private retailers, in others, retail sales are
completely handled by various government corporations. For example, private participation in retail trade is
permitted in the more liberal state of Maharashtra, whilst in the South Indian states of Tamil Nadu and Kerala,
retail trade is handled by the respective beverage corporations of the state. Almost all sales are through
specialists. Wherever private participation is permitted, sales take place only through licensed specialists, with
no other channel given permission.
Private retailers have a significant role in the popularising, availability and performance of a brand as they have
a virtual monopoly over the distribution of liquor in each state. The retailers charge manufacturers a premium
for renting their display windows and shelves. With the numerous laws and regulations governing the
advertising and promotion of alcoholic drinks, the sales point acts as an extremely important medium for
influencing consumer attitudes.
Often promotional activities are carried out on premises in terms of price discounts, such as product bundling,
typically for beer. In addition, discount schemes and free gifts are offered to retailers, which in turn may pass
these benefits on to the consumers.
More importantly, as an extra incentive to push particular brands, liquor manufacturers offer free cases or larger
trade discounts to retailers which record good sales of that particular brand. This is a highly controversial yet
successful strategy, with specialist storeowners are often seen pushing the popular Kingfisher lager, Teacher's or
Haywards brands. As such, the bigger brands and manufacturers, such as UB Group, Shaw Wallace and Allied
Domecq, are able to sustain their dominant market presence due to their ability to indulge in such promotional
strategies.
Summary 6 Liquor Distribution Channels in Select States 2004

State Wholesaling Retailing
South India
Andhra Pradesh Government controlled Private retailing through licensing
Karnataka Government and private Private retailing through licensing
wholesalers
Tamil Nadu Government controlled Government controlled
Kerala Government controlled Government controlled
West India
Maharashtra Private wholesalers through Private retailing through licensing
licensing
Euromonitor Page 28
Madhya Pradesh Private wholesalers through Private retailing through licensing

licensing
Goa Private wholesalers through Private retailing through licensing
licensing
East and Northeast India
West Bengal Private wholesalers through Private retailing through licensing
licensing
Orissa Government controlled Private retailing through licensing
Bihar Private wholesalers through Private wholesalers through
licensing licensing
Jharkhand Private wholesalers through Private wholesalers through
licensing licensing
Assam Private wholesalers through Private retailing through licensing
licensing
North India
Delhi Government controlled Government controlled
Punjab Private wholesalers through Private retailing through auction
auction
Haryana Private wholesalers through Private retailing through auction
auction
Uttar Pradesh Private wholesalers through Private retailing through licensing
licensing
Rediff, Exchange4media, Business Standard, Express Hotelier & Caterer), store checks, trade interviews
Internet sales
Given the regulatory nature of the alcoholic drinks industry in India, the sale of alcoholic drinks over the
Internet is not expressly permitted. Though the UB Group launched its Kingfishernet shop in 2001, the site was
subsequently closed down as it lacked permission from the government.
Private label trends
Due to the very high overheads and fixed costs associated with the brewing and distilling businesses, along with
a myriad of oppressive government laws and regulations, there remains no presence of private labels in India for
alcoholic drinks.
3.14 Forecast Market Performance

6% annual volume growth for alcoholic drinks
The market for alcoholic drinks in India is predicted to grow by over 6% per annum in volume between 2004
and 2009 to over 2 billion litres. Growth will be slower than the 7.7% CAGR of the 1999-2004 review period.
Growth will be strongest in emerging sectors like wine and FABs. FABs are predicted to see a CAGR of close
to 20%, whilst wine is forecast annual average growth of 12%.
India and Vietnam are predicted to spearhead alcoholic drinks volume growth in Asia-Pacific over the 2004-
2009 period. The younger adult population of India and also women, who have hitherto stayed away from
alcoholic drinks, are expected to emerge as the segments of consumers targeted by alcoholic drinks companies
in India. Though beer and spirits are expected to see slower growth than wine and FABs, there are likely to be
areas of growth within these more mature sectors. While premium lager is expected to do well within beer,
within spirits, white spirits like vodka will keep growth buoyant.
Euromonitor Page 29
Imported spirits brands set to make their presence felt
As barriers to entry for imported brands come down on an annual basis, with the lowering of import duties,
more and more imported brands are likely to appear in the Indian market. Prominent among them are expected
to be Scotch whisky brands and New World wines. Over the past couple of years, the market has seen more
international brands than ever before, and this trend is predicted to continue.
The alcoholic drinks market is expected to witness a slightly more rapid increase in volume sales over the
forecast period, at over 6%, than in constant value sales, at 5%. Some analysts believe that imported, premium
labels will enjoy no more than a marginal presence in the Indian alcoholic drinks market, due to the inherent
price sensitivity of the Indian population. Thus it will still be the local Indian brands, positioned at the economy
end of the market, which will account for the bulk of sales.
Nonetheless, with greater westernisation and increasing affluence, Indians, particularly those belonging to the
upper income strata, are expected to shift towards these premium, imported brands from their local counterparts.
This trend is already evident in the growing preference for Scotch whisky brands in India, which was hitherto
unheard of. For the upper income strata, the reduction of import duties has enabled them to try more single malt
whiskies, like Glenlivet and Glenfiddich, in high-end on-trade channels. While the high price of these brands is
expected to limit their presence in off-trade channels, it is expected that their presence in on-trade channels will
grow over the forecast period, as more and more consumers with rising disposable incomes are able to afford
them. To cater specifically to this category, companies like Allied Domecq Spirits & Wine (India) Pvt Ltd and
Bacardi-Martini India Ltd are expected to focus increasingly on their international portfolio.
Beer forecast to see exciting times ahead, given SABMiller-SW strength
The beer sector is expected to see intense competition in the future, given the strength of Shaw Wallace
Breweries Ltd, following the merger of SABMiller and Shaw Wallace in the second quarter of 2003. The
consolidated entity is giving market leader United Breweries a run for its leadership, given that it now is just a
few percentage point in share behind it. More importantly, this acquisition gives SABMiller not only a presence
for its international and local brands in the Indian market, it also brings into its fold breweries in various areas of
the country. This is extremely important, given the high level of tax that is levied on the movement of alcoholic
drinks from state to state within the country.
Over the forecast period, SABMiller is looking to further consolidate and improve its position in the domestic
beer sector by focusing on key brands such as Haywards, Royal Challenge and Knock Out, while at the same
time withdrawing regional brands that have sluggish sales. Industry sources suggest that United Breweries can
expect to lose more ground if is does not engage in radical initiatives to protect its market position.
At the same time, the continued launch of beer in pint sizes and smaller packages of 250ml will be instrumental
in stimulating beer trial as well as encouraging repeat purchases.
Despite their negligible presence to date, the continued interest of international breweries such as Heineken and
Carlsberg in gaining a share of the Indian market will help to stimulate consumer interest further. This is
especially so given the rising saturation of the global beer market and the tremendous growth potential offered
by the large Indian population.
On the taxation front, there is a continued push by manufacturers for taxes on beer to be levied based on alcohol
content rather than the current volume basis. While talks remain ongoing, if this does get the go ahead, product
price reductions can be expected, and this will act to stimulate sales, given the extreme price sensitivity nature
of the Indian population. Currently, beer is taxed at the same rates as alcoholic beverages of higher alcoholic
content, such as spirits and wine. Consequently, consumers are more inclined to consume harder spirits based on
the price versus alcohol content equation.
Consolidation on the cards?
With Shaw Wallace having been put up for sale in 2004, and with UB Group emerging as one of the strong
contenders, the spirits sector in India looks headed for consolidation. In the event of UB Group being successful
in its attempt, it is expected that McDowell & Co Ltd, Herbertsons Ltd, Triumph Distillers & Vintners Pvt Ltd
and Shaw Wallace & Co Ltd will all be merged under a single company, United Spirits. The chairman of UB
Group, Mr Vijaya Mallya has shares in McDowell, Herbertsons and Triumph Distillers & Vintners. Such a
Euromonitor Page 30
consolidation would lead to United Spirits accounting for over 50% of market volume sales. Moreover, it would
help the company gain efficiencies in production and savings in overheads.
Table 29 Forecast Sales of Alcoholic Drinks by Sector: Total Volume 2004-2009
Million litres
2004 2005 2006 2007 2008 2009
Beer 740.7 792.3 864.1 939.9 1,011.4 1,077.7

FABs (flavoured 3.8 5.1 6.1 7.2 8.3 9.4
Wine 4.3 5.0 5.7 6.4 7.1 7.7
Spirits 845.7 900.0 949.6 995.1 1,036.8 1,074.7
Source: Euromonitor International estimates
Table 30 Forecast Sales of Alcoholic Drinks by Sector: Total Value 2004-2009
Rs million
2004 2005 2006 2007 2008 2009
Beer 76,958.6 80,499.9 86,410.3 93,496.1 100,741.4 107,414.4

FABs (flavoured 730.5 923.5 1,051.8 1,180.6 1,309.8 1,435.5
Wine 3,847.2 4,462.0 5,084.4 5,696.2 6,281.0 6,827.9
Spirits 564,991.9 599,895.4 632,589.4 662,828.9 689,805.2 713,199.8
Table 31 Forecast Sales of Alcoholic Drinks by Sector: % Total Volume Growth 2004-2009

2004-09 CAGR 2004/09 TOTAL
Beer 7.8 45.5

Cider/perry - -
FABs (flavoured alcoholic beverages) 19.7 145.9
Wine 12.4 79.1
Spirits 4.9 27.1
Alcoholic drinks 6.4 36.1
Table 32 Forecast Sales of Alcoholic Drinks by Sector: % Total Value Growth 2004-2009
% local currency, constant value growth

2004-09 CAGR 2004/09 TOTAL
Beer 6.9 39.6

Cider/perry - -
Wine 12.2 77.5
Spirits 4.8 26.2
Alcoholic drinks 5.1 28.2
Euromonitor Page 31
3.15 Forecast Market Performance by Region

South and West India to grow at 6% per annum in volume
South and West India are expected to see the slowest growth rates among the four regions between 2004 and
2009, at around 6% per annum in volume. At 4.6%, the constant value CAGR in South India is expected to be
slower than volume growth, as South India has traditionally been a market where sales of economy and mid-
priced brands have been high.
South India, which includes Andhra Pradesh, Tamil Nadu, Karnataka and Kerala, is already the largest market
for spirits and beer in volume terms, and it is likely that growth in spirits sales will slow in the forecast period.
One of the major volume drivers for spirits in the South is the huge consumption of brandy. Consumers are
likely to migrate to other spirits varieties, like vodka, which is increasingly seeing acceptance in the region.
Market volume growth is expected to be aided by the launch of FABs in South India in 2005. Bacardi Breezer,
which held 85% of total volume sales of FABs nationally in 2003, is expected to be launched in South India in
2005, providing impetus for growth in the region.
West India, particularly Mumbai, one of the single largest markets, has a penchant for the latest products.
Mumbai is already one of the leading markets for wine and FABs. Increasing consumption of vodka, wine and
FABs, driven in part by the desire to try the "in-thing" is likely to occur at the expense of other hard liquor, with
brandy likely to see the slowest total volume CAGR, at less than 4% over the 2004-2009 period. As more and
more people in West India are becoming well travelled and being influenced by foreign cultures where
consumption of alcoholic drinks is accepted, young people and women are increasingly trying out alcoholic
drinks. Forecast volume and value growth is expected to be higher in the event of the lifting of the prohibition of
alcoholic drinks currently in force in the state of Gujarat in West India.
East and Northeast and North India see 7% growth
East and Northeast India and North India are expected to see faster volume growth than South and West India
between 2004 and 2009, at almost 7% per annum. The smaller base from which sales are growing is one of the
reasons why East and Northeast India is predicted to see among the fastest volume and value growth. At 177
million litres in 2004, East and Northeast India accounts for only 11% of all alcoholic drinks sales in India. The
city of Kolkata in West Bengal apart, consumption is being driven by smaller cities in the states of Bihar,
Jharkhand and the Northeast. Over the forecast period, companies are expected to increase their presence in the
East and Northeast in order to cater to the demands of some areas that have been previously ignored by new
launches, especially of economy brands. However, the companies will have to overcome competition from
country liquor and also smuggled liquor, which is rampant in these parts of the country.
North India, especially Delhi, is emerging as the largest market for wine in the country. With a forecast CAGR
of over 12% between 2004 and 2009, total volume growth for wine in North India is expected to be second only
to that of West India. Delhi is one of the preferred areas of focus for manufacturers of new premium products, as
it has a large number of high-end hotels and pubs, which serve premium alcoholic drinks. It is likely that
consumers in North India will upgrade their purchases due to rising disposable incomes, with the consumers
who previously purchased cheap Indian whiskies moving up the value chain to premium varieties of Indian
whiskies and Scotch whisky.
Table 33 Sales of Alcoholic Drinks by Region: Total Volume 2004-2009
Million litres
2004 2005 2006 2007 2008 2009
North India 363.4 389.3 418.9 449.8 478.5 505.1
South India 595.9 635.3 679.3 722.0 761.7 797.8
West India 458.4 487.4 522.6 557.4 590.4 620.6
TOTAL 1,594.6 1,702.4 1,825.5 1,948.5 2,063.6 2,169.5
Table 34 Sales of Alcoholic Drinks by Region: Total Value 2004-2009
Euromonitor Page 32
Rs million
2004 2005 2006 2007 2008 2009
North India 175,062.7 186,499.5 197,761.4 208,593.7 218,082.3 225,813.9
South India 194,428.8 205,203.5 215,858.8 225,955.2 235,127.8 243,226.0
West India 208,210.4 220,386.8 233,083.1 245,652.8 257,658.2 268,712.0
TOTAL 646,528.2 685,780.9 725,135.9 763,201.7 798,137.4 828,877.6
Table 35 Sales of Alcoholic Drinks by Region: % Total Volume Growth 2004-2009

2004-09 CAGR 2004/09 TOTAL
East and Northeast India 6.8 39.1

North India 6.8 39.0
South India 6.0 33.9
West India 6.2 35.4
TOTAL 6.4 36.1
Table 36 Sales of Alcoholic Drinks by Region: % Total Value Growth 2004-2009

2004-09 CAGR 2004/09 TOTAL

West India 5.2 29.1
TOTAL 5.1 28.2
4. BEER
4.1 Sizes and Shares
2004 headlines
• Volume growth in 2004 stronger than that of 2003
• April 2003 merger of SABMiller and Shaw Wallace continues to show positive effects
• United Breweries and Shaw Wallace kill off market competition
• Undeterred, foreign, international brands continue to strive for share of sector
• As global markets mature, attention shifts to the Indian market, with projected robust growth
2004 growth superior to that of 2003
In 2004, sales of beer in India reached over 740 million litres, registering growth of just under 6% on the
previous year. This growth marked a rebound from the weak 4% growth registered in 2003, when an
exceptionally heavy monsoon adversely impacted sales. While heavy rain is good news for much of the Indian
agricultural industry, a heavy monsoon affects beer sales as it means a poor summer, and beer consumption in
India typically peaks in the summer months of April, May and June.
Euromonitor Page 33
While volume growth in 2004 was superior to that of 2003, the industry did not rebound back to 2002 rates due
to the widespread prevalence of pre-monsoon showers in areas such as Andhra Pradesh, Karnataka and Kerala
in May.
Current value sales surged ahead of volume sales in 2004 due to a combination of factors. Higher taxes, rising
costs of production due to inefficiencies, inflation and the rise in on-trade consumption due to the expanding
pub culture contributed significantly to price increases. Further, there was a shortage of bottles as the soft drinks
market in India experienced a year of robust expansion, requiring manufacturers to pay more for second-hand
bottles and/or source foreign supplies of beer bottles. The concurrent growth of both industries led to supply
pressures on the bottling industry as soft-drink companies Coca-Cola and Pepsi were pushing 200ml returnable
glass bottles. Leading brewers are thus dealing with an acute shortage of glass bottles.
Acquisition of 2003 continues to shore up positive market initiatives
The merger of Shaw Wallace and SABMiller in the second quarter of 2003, caused some anxiety in the industry,
as this included a shift of its corporate office to Bangalore, which is where United Breweries is based. The new
entity is considered a threat to United Breweries' operations, given that it now boasts a portfolio of brands
including Knock Out, Haywards 2000 and 5000, Royal Challenge and Castle Lager, with an expanded
production capacity.
In response, United Breweries rolled out a slew of initiatives in 2004 in a bid to retain its leadership position.
These included brand relaunches, price cuts, and aggressive marketing and distribution, as well as the
acquisition of smaller breweries to ensure cost efficiencies. In addition, the company rolled out smaller variants
in 250ml and 330ml to further stimulate product trials and repeat purchases. The company also focused heavily
on boosting on-trade consumption, with frequent price discounts and a slew of marketing initiatives.
With this heightened competition in Bangalore, Foster's India Ltd has decided to focus on other cities and
markets, and work towards marketing Foster's as a national brand. This is a significant move away from its
previous desire to strengthen the brand's presence in Bangalore before focusing on the other Indian cities. The
company has appointed a local marketing team to look into and understand local consumers' desires and
motivations where beer consumption is concerned.
Strong variant preferred over mild
While Euromonitor classifies beer into lager, dark beer, stout and non-/low alcohol, the Indian industry
embraces a different set of classifications. The Indian industry typically thinks of beer as being of two types –
mild and strong, depending on the alcohol content. Strong beers have alcohol content in excess of 5%, while
mild beers are classified as those with a lower alcohol content. Sales of draught beer are negligible.
The Indian consumer typically values an alcoholic beverage on the basis of its "kick" factor versus its price.
Besides cultural factors and low disposable incomes limiting beer growth, excessive taxes applied on beer
products have also proved instrumental in stifling the brewing industry's growth by encouraging consumption of
cheap hard liquor in almost all states. Unlike the international market, where beer is considered a common
beverage and is marketed in department stores and supermarkets, in India it is treated in the same way as hard
liquor, and attracts the same duties as drinks with a higher alcohol content. As a result, beer in India is taxed
according to volume and not alcoholic content.
The growth of strong beer can also be explained by the fact that it offers better margins for beer manufacturers,
as consumer price differentials between strong and mild beer are higher than the cost differentials to
manufacturers. This has led to a greater push behind strong beer brands, with continued high volume growth
coming from strong beer brands such as Haywards 5000 and Kingfisher Strong. Consumers prefer strong beer
because they want to avoid spirits and strong beer is seen as better value for money than mild beer. The share of
strong beer in India is estimated at 68% of total volume sales, with the mild variant accounting for the rest.
Beer drinking in India is generally limited to men, with an estimated 80% of male beer drinkers aged between
18 and 35. Increasingly, however, women are expanding this consuming base, and mild beer has the stronger
following among women consumers. Women beer drinkers are more attracted to speciality micro brewed beers
than they are to the big brands, possibly because of their greater variety.
Euromonitor Page 34
Beer small in comparison to country liquor and spirits
Consumption of beer in India is still low compared to other alternative alcoholic beverages such as spirits and
country liquor. Traditionally, Indians prefer drinks with a high alcohol content, such as whisky, rum and brandy.
As such, beer as an alcoholic beverage is still very much in its infancy in the country, with considerable
potential for further market penetration. Whilst per capita consumption in the US stood at 85 litres in 2004, in
India the figure was only 0.7 litres.
Growth in the industry has been held back in part by a variety of regulatory constraints. Most significantly, the
regulation and taxation regime for beer is the same as that of spirits, despite its much lower alcohol content.
Globally, beers and wines are treated on a different footing, especially in regard to the taxation. Taxes on
alcoholic drinks in India are amongst the top three largest revenue earners for state governments. High taxation
has worked to encourage the robust growth of cheap and illicit liquor.
Negligible presence of stout and non-/low beers as lagers rakes in volume sales
The consumption of beer in India continues to be limited to lager, with all other beer variants registering
negligible or no sales in 2004. Dark beer, stout and low-alcohol beers have either no demand or serve a very
limited niche market, consisting of tourists and new consumers, and sales are generated mainly through the on-
trade channel. Amongst these, non-/low-alcohol beers saw a new launch in July 2003, with the introduction of
Castle.
Concentrated brewing business in India as UB looks to pints and minis
There are some 57 breweries spread across the country and the UB Group owns some 21 of them, followed in
number by Shaw Wallace. Collectively, the two companies accounted for some 72% of the country's total beer
volume sales in 2003. Haywards 5000 remained the most popular strong beer brand, while Kingfisher Premium
Lager was still the overall leading brand, with a 21% brand share in 2003. UB's Millennium Alcobev also
performed well, with brands such as Zingaro and Sandpiper, allowing it to hold onto the third position within
lager.
Despite intense competition posed by Shaw Wallace following its merger with SABMiller in 2003, United
Breweries continues to lead the Indian beer sector. Its Kingfisher Premium Lager is the single largest beer brand
in the country while Kingfisher Strong is the fastest growing strong beer. Besides national dominance, the
company also has brands that have established themselves in regional niches, including UB Export in
Karnataka, Kalyani Black Label in Delhi and Tamil Nadu and London Pilsner in Mumbai.
Despite the national blanket ban on advertising, the company has circumvented this by sponsoring key social
events such as Fashion Week and sports events as part of its brand building initiatives.
With the ever-intensifying market competition, United Breweries has been attempting to spur volume sales
through aggressive pricing of smaller packs. This trend was evident in 2002 and 2003, and continued to be the
company's key marketing strategy in 2004. In December 2001, the company launched UB Export beer in a
330ml size in Karnataka, priced at Rs17, which met with considerable success in an area where the strong beer
segment was traditionally dominated by rival brand Knock Out. More importantly, even though profit margins
were reduced by these cheaper products, the affordably priced sizes significantly added to the company's
volume sales.
In 2002 and 2003, the company extended the initiative to the eastern parts of the country, by pushing Kalyani
Black Label brand in the 330ml size. The company continued with this marketing strategy with the introduction
of Kingfisher Strong Pint and Kingfisher Strong Mini in a 250ml size, to aid further market penetration.
In March 2004, United Breweries also overhauled its brand's logo. While the Kingfisher bird has been
traditionally portrayed as static, the new design captured the bird in flight, and the strong variant now comes
with a red label, whilst the mild version carries a white label for easy differentiation.
Despite the keen market competition from Shaw Wallace, the UB Group is looking to increase its share within
the Indian beer sector through its slew of current market initiatives.
Euromonitor Page 35
Next phase of action for SABMiller via Shaw Wallace
With the completion of the acquisition of Shaw Wallace & Co Ltd, and with it a large number of breweries and
local beer brands, SABMiller is ready to move onto its next phase of development within India. The company,
via Shaw Wallace Breweries Ltd, will look to consolidate its operations in the country by focusing on the four
core beer brands of Castle Lager, Haywards, Royal Challenge and Knock Out, while gradually phasing out
regional ones, such as Lal Toofan and Bengal beer, which it acquired from Shaw Wallace and Mysore
Breweries, respectively.
Over the forecast period, SABMiller is also proposing to introduce international brands such as Miller and
Peroni in the country. SABMiller is widely viewed as the most aggressive player in recent years, having
acquired breweries such as Narang Breweries, Rochees, Mysore Breweries, Deccan Breweries and Shaw
Wallace Breweries. Due to the complex tax structure found in the country, the company plans to maintain or set
up breweries in different locations in the country.
The company believes that this combination of corporate strategies will boost its share within the beer sector
and give it might to compete with United Breweries over the forecast period but tapping on the local distribution
strength of Shaw Wallace and the international experience of SABMiller. The combined entity was able to
increase its share significantly from 28% in 2002 to almost 35% in 2003. This places the combined entity only
marginally behind United Breweries.
Millennium Alcobev takes third spot as Mohan Meakin declines
In January 2002, Scottish & Newcastle and United Breweries entered into a strategic partnership, with both the
companies holding 40% stake in a joint venture named Millennium Alcobev, and the JV management team,
headed by Ravi Jain, holding the remaining 20%. The company saw over 25% sales growth in 2003, with sales
of at least eight million cases of 7.8 litres each, up from six million cases in the previous year. Its flagship strong
beer, Zingaro, witnessed extremely robust growth, along with the mild beer brand Sandpiper.
Mohan Meakin continued to suffer a decline in share in 2003, due to the steady decline of the Golden Eagle
brand. This standard beer brand has been losing ground to other brands such as London Pilsner and Knock Out,
which are similarly priced. These other two brands benefit from strong brand equity and higher marketing
budgets their manufacturers, United Breweries and Shaw Wallace, respectively.
Strong growth projected in the forecast period
The Indian beer industry offers tremendous opportunities for new and existing players, and is poised to see
strong growth in the future, with the overall beer sector expected to grow at a volume CAGR of 8%, with the
smaller 330ml sizes driving sales. Value growth is expected to be lower than that experienced in the review
period, and below the forecast period volume growth, due to an expected decline in beer prices. Along with
competition from foreign imports entering the domestic arena, India will face further pressures to fulfil its WTO
commitments by reducing customs duties to its trading partners. Imported brands will be in direct competition
with premium brands like Kingfisher, Haywards and Royal Challenge, again applying pressure on product
prices.
With income levels in India on the upward growth trajectory aligned with its economic progress, Indian beer
consumption in all parts of the country is expected to continue growing. Further, with increasing urbanisation
and international exposure, acceptance of alcohol consumption, especially of beer, is also expected to increase.
More consumers, including women, are turning to beer as a beverage rather than liquor. This, together with a
rising number of consumers turning away from hard spirits to alternatives such as beer and soft drinks, will
expand beer's potential consumer base.
India's per capita volume consumption is also considerably lower than that of most other countries, and this is an
indication of the tremendous potential for future market penetration. Another key impetus for growth is the
heightened global interest in the Indian market, with the international arena for beer at, or close to maturity.
International brewers remain interested despite continued low sales
The robust double digit growth over much of the review period drew the interest of various international
brewers, such as Carlsberg, Beck's, Heineken and Foster's. Foster's and Castle Lager are also looking to expand
Euromonitor Page 36
their operations nationally. Cobra Beer, a UK brand, paid testimony to this immense growth potential within the
Indian market by committing itself to local production for the domestic market via Mount Shivalik in April
2004, and is on the lookout to acquire two more breweries in the country or enter into brewing agreements to
make the brand available nationally. With the global market for beer fast approaching maturity, international
brewers are keen to focus on the large Chinese and Indian markets for their future growth, as these countries
have large population bases.
However, these foreign brands have remained marginal compared to popular local brands such as Haywards,
Knock Out and Kingfisher, due to their premium pricing, late entrance and limited distribution networks. As
these brands are imported and subject to multi-layer duties and taxes, their end product prices are generally 30-
40% higher than those of local brands. These imported labels are available mainly in cans, and this has also
worked against their popularity. Cans are perceived as a luxury packaging and are therefore not widely
purchased by the average Indian.
Domestically, Champagne Indage is expected to enter beer bottling, marketing and distribution during the
forecast period. United Breweries, with its alliance partner Scottish & Newcastle, is also expected to launch a
few new brands in the forecast period. Industry rumours suggest that the manufacturer from the neighbouring
country of Pakistan plan to move ahead with introducing the Murree brand of beer in India.
Removing the seasonality aspect of beer consumption
United Breweries Ltd, amongst other players, is looking to boost on-trade consumption and, more importantly,
promote beer as a beverage for all seasons, beyond just the summer months. With beer increasingly mirroring
FMCG style sales, pricing, advertising and perhaps even distribution, the industry is convinced that there is
considerable room for further penetration.
Further liberalisation expected
The industry has started to seek a different status in terms of sales and marketing for beer from alcoholic drinks
that have higher alcohol content, and will work to reduce the excise duties and other taxes applied to beer. This
will ultimately reduce prices of beer to consumers. Low prices have eternal appeal in India, as it is a highly
price-conscious country with low levels of economic development in the rural areas.
Various manufacturers, such as United Breweries, are pressuring the Indian government to give beer and wine a
separate status from spirits, and position beer alongside soft drinks instead. The beer industry can expect to see
other states following in the footsteps of Himachal Pradesh and Uttar Pradesh in liberalising beer sales. Both
states have imposed separate tax structures on beer and sprits, with lower taxes applied to the former.
Furthermore, Uttar Pradesh and Haryana have started to acknowledge the different consumer demand for strong
and mild beer, and, in an attempt to wean the local population away from the more popular hard variant, lower
taxes are imposed on mild beer. Trade sources suggest that this demarcation will actually increase the states'
revenue through higher taxes on strong beer, as they do not foresee a substantial shift from the strong variant to
the milder one.
Other beer types to continue to be negligible
Stout, dark beer and low-alcohol beer are not expected to achieve more than a very limited presence in India
over the forecast period. Low-alcohol beer was only recently introduced in the country in 2001 and, to date,
there are only a few brands serving a very small niche market, despite new launches in 2003 and 2004. Despite a
positive response from market players regarding the performance of these new introductions, low-alcohol beers
are unlikely to see significant demand, as strong beer continues to be the preferred choice.
Table 37 Sales of Beer by Subsector: Total Volume 1999-2004
Million litres
1999 2000 2001 2002 2003 2004
Lager 527.5 568.3 611.0 673.9 701.4 740.7

- Premium lager 388.0 418.1 449.9 501.0 523.2 554.9
- Standard lager 139.4 150.2 161.0 172.8 178.2 185.8
Euromonitor Page 37
- Economy lager - - - - - -
Dark beer - - - - - -
Stout - - - - - -
Non-/low-alcohol - - - - - -
Beer 527.5 568.3 611.0 673.9 701.4 740.7
Source: Trade associations (Tamil Nadu State Marketing Corporation), trade press (Economic Times of India, Financial
Express, Times of India, Hindu Business Line, India Infoline, Domain-b, Rediff, Exchange4media, Business
Standard, Express Hotelier & Caterer, just-drinks.com, BeverAsia, Wine & Spirit International, Drinks
International), company research, store checks, trade interviews, Euromonitor International estimates
Table 38 Sales of Beer by Subsector: Total Value 1999-2004
Rs million
1999 2000 2001 2002 2003 2004
Lager 42,485.1 48,220.9 54,015.0 67,162.6 71,526.3 76,958.6

- Premium lager 33,940.4 38,543.9 43,203.1 55,006.0 58,738.2 63,372.6
- Standard lager 8,544.7 9,677.1 10,811.9 12,156.6 12,788.1 13,586.0
Dark beer - - - - - -
Stout - - - - - -
Beer 42,485.1 48,220.9 54,015.0 67,162.6 71,526.3 76,958.6
Table 39 Sales of Beer by Subsector: % Total Volume Growth 1999-2004

2003/04 1999-04 CAGR 1999/04 TOTAL
Lager 5.6 7.0 40.4

- Premium lager 6.0 7.4 43.0
- Standard lager 4.3 5.9 33.3
- Economy lager - - -
Dark beer - - -
Stout - - -
Non-/low-alcohol - - -
Beer 5.6 7.0 40.4
Table 40 Sales of Beer by Subsector: % Total Value Growth 1999-2004

2003/04 1999-04 CAGR 1999/04 TOTAL
Lager 7.6 12.6 81.1

- Premium lager 7.9 13.3 86.7
- Standard lager 6.2 9.7 59.0
- Economy lager - - -
Dark beer - - -
Stout - - -
Non-/low-alcohol - - -
Beer 7.6 12.6 81.1
Euromonitor Page 38
Table 41 Company Shares of Beer by National Brand Owner 2000-2003
% total volume
Company 2000 2001 2002 2003
Foster's India Ltd 2.6 2.6 2.2 2.0

Millennium Alcobev 8.6 8.1 7.1 8.5
Mohan Meakin Ltd 10.0 10.0 8.5 7.7
Mysore Breweries Ltd (MBL) 5.8 - - -
SABMiller India Ltd - - 7.0 -
Shaw Wallace Breweries Ltd 23.3 28.1 27.9 34.9
South African Breweries India Ltd - 5.9 - -
United Breweries Ltd 31.9 33.3 35.3 36.9
Others 17.8 12.1 11.9 10.0
Total 100.0 100.0 100.0 100.0
Table 42 Company Shares of Beer by Global Brand Owner 2000-2003
% total volume
Company 2000 2001 2002 2003
UB Group 40.5 41.4 42.4 39.2

Shaw Wallace & Co Ltd 23.3 28.1 27.9 27.9
SABMiller Plc - - 7.0 7.0
Millenium Alcobev Ltd - - - 6.2
Foster's Group Ltd 2.6 2.6 2.2 2.0
Mysore Breweries Ltd (MBL) 5.8 - - -
South African Breweries Plc - 5.9 - -
Others 17.8 12.1 11.9 10.0
Total 100.0 100.0 100.0 100.0
Table 43 Brand Shares of Beer 2000-2003
% total volume
Brand (Global Brand Company 2000 2001 2002 2003
Owner)
Kingfisher Premium United Breweries Ltd 22.3 21.8 21.4 20.9

Lager (UB Group)
Haywards 5000 (Shaw Shaw Wallace Breweries 13.7 15.5 17.4 17.5
Wallace & Co Ltd) Ltd
Kingfisher Strong United Breweries Ltd 5.6 7.0 8.9 11.1
(UB Group)
Golden Eagle Mohan Meakin Ltd 9.5 9.5 8.0 7.4
Knock Out Shaw Wallace Breweries - - - 7.0
(SABMiller Plc) Ltd
Royal Challenge Shaw Wallace Breweries 5.7 8.8 6.8 6.8
Premium (Shaw Ltd
Wallace & Co Ltd)
Euromonitor Page 39
UB Export Lager United Breweries Ltd 1.0 0.9 2.3 2.6
Beer (UB Group)
Zingaro (Millenium Millennium Alcobev - - - 2.2
Alcobev Ltd)
Foster's (Foster's Foster's India Ltd 2.6 2.6 2.2 2.0
Group Ltd)
Sandpiper Millennium Alcobev - - - 1.7
(Millenium Alcobev
Ltd)
Kalyani Black Label Millennium Alcobev 1.4 1.5 1.0 1.2
Strong (UB Group)
Bullet Super Strong Millennium Alcobev 1.8 1.5 1.0 1.1
Beer (UB Group)
Kalyani Black Label United Breweries Ltd 2.3 1.8 1.3 1.1
Premium Lager (UB
Group)
London No 1 Strong United Breweries Ltd - 0.4 0.5 0.5
(UB Group)
Marco Polo Millennium Alcobev - - - 0.5
(Millenium Alcobev
Ltd)
UB Ice Premium Beer United Breweries Ltd 0.5 0.5 0.4 0.2
(UB Group)
London Pilsner (UB United Breweries Ltd - 0.3 0.2 0.2
Group)
Taj Mahal Lager United Breweries Ltd 0.1 0.1 0.1 0.1
Beer (UB Group)
Marco Polo (UB Group) Millennium Alcobev 0.8 0.7 0.7 -
Knock Out (South South African Breweries - 5.9 - -
African Breweries India Ltd
Plc)
Sandpiper (UB Group) Millennium Alcobev 1.1 1.1 1.3 -
Knock Out Mysore Breweries Ltd (MBL) 5.8 - - -
Knock Out SABMiller India Ltd - - 7.0 -
(SABMiller Plc)
Zingaro (UB Group) Millennium Alcobev 1.9 2.0 2.0 -
Others 20.6 14.7 14.0 12.6
Total 100.0 100.0 100.0 100.0
Table 44 Forecast Sales of Beer by Subsector: Total Volume 2004-2009
Million litres
2004 2005 2006 2007 2008 2009
Lager 740.7 792.3 864.1 939.9 1,011.4 1,077.7

- Premium lager 554.9 595.5 652.1 713.2 771.4 826.1
- Standard lager 185.8 196.8 211.9 226.7 240.0 251.6
Dark beer - - - - - -
Stout - - - - - -
Beer 740.7 792.3 864.1 939.9 1,011.4 1,077.7
Table 45 Forecast Sales of Beer by Subsector: Total Value 2004-2009
Rs million
Euromonitor Page 40
2004 2005 2006 2007 2008 2009
Lager 76,958.6 80,499.9 86,410.3 93,496.1 100,741.4 107,414.4

- Premium lager 63,372.6 66,392.2 71,416.8 77,558.0 83,965.4 89,911.9
- Standard lager 13,586.0 14,107.8 14,993.4 15,938.1 16,776.1 17,502.4
Dark beer - - - - - -
Stout - - - - - -
Beer 76,958.6 80,499.9 86,410.3 93,496.1 100,741.4 107,414.4
Table 46 Forecast Sales of Beer by Subsector: % Total Volume Growth 2004-2009

2004-09 CAGR 2004/09 TOTAL
Lager 7.8 45.5

- Premium lager 8.3 48.9
- Standard lager 6.2 35.4
- Economy lager - -
Dark beer - -
Stout - -
Non-/low-alcohol - -
Beer 7.8 45.5
Table 47 Forecast Sales of Beer by Subsector: % Total Value Growth 2004-2009

2004-09 CAGR 2004/09 TOTAL
Lager 6.9 39.6

- Premium lager 7.2 41.9
- Standard lager 5.2 28.8
- Economy lager - -
Dark beer - -
Stout - -
Non-/low-alcohol - -
Beer 6.9 39.6
4.2 Sector Performance by Region

Growth amidst plethora of changes in the Southern region
South India continued to be the leading beer drinking region in 2004, in both value and volume terms. Growth in
value and volume in 2004 – of 7.7% and 5.9%, respectively – also remained above the national averages, of
7.6% and 5.6%. Beer continues to perform well due to the shift in consumer's preferences away from hard
liquor, such as brandy and rum, in favour of drinks with a trendy image, such as beer.
As well as a shift in consumer preferences, there has also been an expansion of the consumer base for alcoholic
drinks, with new drinkers brought into the fold. The heightened competition stirred up by SABMiller/Shaw
Wallace and United Breweries in the South, especially Bangalore, is expected to continue to have a positive
impact on total volume sales in 2005.
In terms of production capacity in each of the southern states, Karnataka and Andhra Pradesh have five
breweries each, followed by Tamil Nadu and Kerala with three breweries each. The region boasts the second
largest number of breweries in India, as brewers look to avoid the high import and excise taxes levied on the
Euromonitor Page 41
movement of alcoholic drinks in and out of any state. In terms of volume sales, Andhra Pradesh and Tamil Nadu
come first, followed by Karnataka and Kerala. Except in Andhra Pradesh, each state in South India has adequate
capacity to meet consumer demand.
Tamil Nadu abolishes private retail trade
The Tamil Nadu government abolished private retail in November 2003, after which the beer sector in the state
was initially affected by the absence of refrigerators in the new government controlled retail shops. Thus,
consumers, who normally preferred to buy or have their beer chilled as takeaway drinks from retail channels
switched to hard drinks like rum. In addition, the importing of beer was banned in the state from 2003 onwards.
This change in drinks choice was reversed in the latter half of 2004, and shops are now beginning to keep
refrigerators to stock beer. Moreover, consumers have also got used to having their beer warm, or taking it to
their homes, where they chill it in their own refrigerators.
while government control is enforced in Karnataka
In the alcoholic drinks market in Karnataka, there was no government control before July 2003. After July 2003,
Karnataka State Beverages Corporation Ltd (KSBCL) came into the picture in a bid to reduce the flourishing
grey market, which had resulted in significant tax evasion. Under the new system, the manufacturer/company
supplies directly to KSBCL, which in turn supplies to the distributors and the carrying and forwarding agents,
which then provide the stocks for retailers.
Slowdown in volume expansion in West India as demand matures
Volume sales of beer in West India grew by 4% in 2004, the lowest rate of growth amongst all the regions in the
country. At 250 million litres, West India accounts for 34% of national consumption of beer. Key factors that
contributed to sluggish volume sales included smaller pack sizes, dampened demand due to surprise elections
which led to suspension of sales of alcohol in bid to promote a healthy governing image, when demand fell in
states such as Madhya Pradesh and Rajasthan, extended monsoons, regulatory issues at regional level, and parts
of Madhya Pradesh turning "dry" after cities such as Ujjain and Amarkantak were declared holy cities. Value
growth of 7% in 2004 was also the lowest in the country.
Within West India, cities in Maharashtra have the highest volume sales of beer, with Mumbai alone accounting
for almost half of the region's total volume consumption. Pune, Goa and Jaipur are also major consumers of
beer. Collectively, Maharashtra, Andhra Pradesh and Tamil Nadu in the South account for close to half of the
total beer volume sales in the country. Some industry sources suggest that Andhra Pradesh has overtaken
Maharashtra as the highest beer consuming state.
As West India is typically at the forefront of innovations and consumer sophistication, United Breweries slashed
the prices of its Kingfisher beer in cans in Mumbai by Rs4 to Rs26, in an attempt to drive sales of this
packaging format. Also, while Kingfisher and Haywards continue to be the most popular brands, imported
premium brands, such as Cobra and Beck's, experience a better consumer response in West India than in any
other region.
Changing consumer profile in West India as more women sip beer
Women in the region are now more open to drinking mild beer and draught beer. The female drinking
population in West India consists mainly of those who have either studied or worked abroad, or are employed by
multinational companies.
This development has been aided by changes made by the Maharashtra state government to the tax and excise
structure regarding mild beer in early 2004. Mild beer sales are expected to rise due to a drop in bottle prices
from Rs38 to Rs30. At present, the ratio of strong to mild beer sales is 68:32 in volume terms and this ratio is
expected to shift in favour of mild beer over the forecast period.
Non-alcoholic malt beers launched in West and South India
Whilst non-/low-alcohol brands such as Beck's and Heineken have not been formally launched, they are
available in a few supermarkets, imported by individual enterprises. SABMiller is the only company to have
formally launched a non-alcoholic beer brand in West and South India, with its Castle brand, and consumers'
Euromonitor Page 42
response to the product has been encouraging so far. In recognition of the significance of this market,
Millennium Alcobev Ltd is believed to be test marketing a non-alcoholic brand as well.
Smallest market for beer among the country
East and Northeast India is the smallest market for beer in India, accounting for only 7% of total volume sales in
2004. The primary reason for this is the poor socioeconomic condition of the region. The state governments in
the region also depend heavily on the liquor industry for revenue collection, with high excise rates adding to the
difficulties of manufacturers. In spite of favourable weather conditions for the industry (long spells of warm
weather in summer, followed by good monsoons), beer demand has been held back due the limited economic
development of the region, and the tendency of state governments to resort to higher rates of duties, taxes and
levies on the industry.
Sales of country and illicit liquor in the region are amongst the highest in the country. The beer sector faces a
strong threat from country liquor in rural areas, as licensing rules and regulations lead to most outlets in rural
areas being unable to sell beer or spirits, and only country liquor is stocked. A few imported brands, like
Heineken, Budweiser and Corona, are available in the region, though demand for imported brands is very
limited compared to domestic brands such as Kingfisher.
The target consumer for beer is typically younger people in the 18-30 age group, as older people tend to drink
spirits. However a new segment is opening up, with increasing health awareness and the positioning of beer as a
healthier drink with a much lower alcohol content than spirits and country liquor. Due to what is popularly
known as the "more kick per rupee concept", strong beer accounts for 86% of total beer volume sales, with only
14% accruing to mild beer. Some of the cheaper brands of spirits, like whisky and rum, also compete with
strong beer, as 180ml "nip" bottles are available at around Rs50, offering a "stronger kick".
but the fastest growing
Demand for beer in East and Northeast India grew rapidly over the review period due to socio-demographic
factors. Income levels have risen, which has had a positive effect on beer consumption. Further, as a
consequence of the high birth rates prevalent until the 1990s, a large proportion of the Indian population is in the
20-34 age group. Consumers in this age group are product aware and are keen to try new beverages that their
parents or forefathers did not experiment with, at an age where they have freedom and financial independence.
Further, there were considerable changes in acceptance levels of drinking in society in the review period. East
India, in particular, was marked by a deep-seated traditional social aversion to alcohol consumption until the
middle 1990s. However, as urban consumers are being exposed to Western lifestyles, largely due to the
influence of media and foreign travel, attitudes towards alcohol have relaxed. Consequently, more men and
women are consuming beer, although beer drinkers still represent only a small proportion of the regional
population.
Two majors dominate Eastern market
United Breweries and Shaw Wallace are two largest players in the regional beer market, as in the national
market, accounting for some three quarters of volume sales. While United Breweries is overwhelmingly
dominant in East India, the Northeast remains a weak spot for the company due to logistical problems. In total,
United Breweries is slightly ahead of Shaw Wallace, with its flagship Kingfisher brand enjoying some 32-35%
of regional volume sales. Shaw Wallace's Haywards 5000 follows at a close second, with a 25-30% share.
Noteworthy among the regional competitors for these two giants is Yuksom Breweries of Sikkim, which has
brands like Himalayan Blue and Yeti Special Strong Beer. Thunderbolt of Shivalik Breweries also has a good
market in West Bengal, Bihar and Jharkhand. He-Man 9000 brewed by Yuksom Breweries Ltd is very popular
in the Northeast. It is also available in select outlets in Calcutta.
A new brewery called Iceberg Industries has been set up in Bihar. The brewery launched two brands – Rock
Premium Strong Beer and Ice Premium Lager Beer – in the middle of 2004. Apart from Bihar, these two brands
are also available in a few off-trade outlets in Kolkata, though they have yet to make much of an impact. Foster's
India Ltd is another new entrant in the region. Imported brands such as Beck's and Heineken are mostly sold in
urban markets like Kolkata, Guwahati and Siliguri.
Euromonitor Page 43
Spirits preferred in North India
Despite its large regional population base, the North is not a major regional market for beer. Per capita
consumption in this region lags behind the West and South, and is higher only than the East and Northeast in
absolute terms. On a national level comparison, per capita consumption of beer in the West, South, North, and
East and Northeast was an estimated 1.14 litres, 1.25 litres, 0.47 litres and 0.18 litres, respectively, in 2004. The
fundamental reason for low levels of beer consumption in the North is the overwhelming preference for spirits.
Uncompetitive pricing of beer products compared with spirits, due to the many taxes imposed has significantly
contributed to this consumption pattern.
Sales of beer in this region in 2004 were an estimated 152 million litres and Rs17.2 billion. Sales of beer are
entirely restricted to lager, unlike in the South and West, where there is marginal consumer demand for low-
alcohol and dark beer. National sales of stout and dark beer remain at negligible levels as consumers typically
purchase these products through the grey market, due to the much lower prices in this channel.
Forecast performance by region
Forecast period volume growth in beer sales in India is expected to be highest in the East and Northeast, at over
9% per annum, reaching some 84 million litres by 2009. Strong beer will continue to drive growth while the
other key growth drivers will be a longer summer season encouraging beer sales, lower price points, and the
launch of new brands to encourage consumer trial.
However, this region will remain the smallest in the country as its consumption will remain confined to the more
affluent and product aware individuals with sufficient purchasing power. In addition, spirits remain the preferred
alcoholic drink, due to their higher alcohol content and similarities to the popular country liquor. This region is
also home to the lowest number of breweries in India, and with the significant excise taxes applicable to the
movement of beer across states, consumers will continue to prefer the cheaper and stronger country liquor.
Pint size to add penetration in North
After East and Northeast India, North India is projected to register the next highest volume CAGR of 9.2%
between 2004 and 2009. North India currently has very low per capita volume consumption of beer compared
with the South and West, and trade experts suggest that consumers in the region are willing to experiment with
other alcoholic beverages than spirits. There is also common consensus amongst regional and national players
that the focus of forecast period marketing and distribution initiatives will be concentrated here, especially with
the already high rates of penetration in the South.
Over the forecast period, strong beer sales of brands such as Kingfisher Strong and Haywards 5000 will spur the
overall beer sector, especially since strong beer sales account for at least 80% of total volume sales. The major
growth drivers here will be increasingly long spells of warm weather in summer and inadequate monsoon rains,
and, more importantly, the continued popularity of 330ml packs, which are based on the carbonated soft drinks
model, particularly amongst the younger population, since they are easily affordable. With the introduction of
Kingfisher Strong Mini and Kingfisher Strong Pints in 2003 and 2004, trade sources are confident that increased
penetration is only a matter of time. United Breweries has also recently expanded production capacity in the
North region.
The decision of the Uttar Pradesh state government in 2002 to de-link beer from the spirits industry will provide
a much needed boost to beer in the region. Coupled with the lifting of prohibition in Haryana, this will
contribute to a rise in beer purchases.
Further penetration in the suburbs
Unlike North, and East and Northeast India, where forecast period growth is expected to be concentrated in the
leading cities of New Delhi and Kolkata, respectively, growth in beer sales in South and West India is likely to
be driven by the second tier cities, rather than Chennai, Bangalore and Mumbai. Penetration in these cities is
already high, and manufacturers will be looking to focus their marketing efforts on the not-so-penetrated cities
such as Cochin and Ahmedabad. Beer sales in both regions are predicted to expand by just over 7% annually in
volume terms between 2004 and 2009, which is below the national average of 7.8%.
Euromonitor Page 44
The continued interest in and launch of smaller sized beer bottles will help to stimulate product trials and repeat
purchases, due to their lower unit prices. Strong beer will be the focus of the regional beer sector, although mild
beer is expected contribute to rising consumption as well. Rising incomes, changing lifestyles and the phased
changes in the tax regime will all contribute to the growth of beer in the West region.
In both these regions, imported premium beer brands, such as Heineken, Corona and Castle Lager, can expect to
perform better, given a higher level of consumer appreciation. The local brewing of Cobra Beer and the focused
expansion of Foster's throughout the country in 2004 will pay dividends, as these brands can expect to make
considerable inroads, especially via the on-trade channel.
Table 48 Sales of Beer by Region: Total Volume 1999-2004
Million litres
1999 2000 2001 2002 2003 2004
North India 104.2 112.1 120.1 135.8 142.4 151.8
South India 204.9 218.7 235.2 257.5 268.4 284.3
West India 182.3 198.7 213.8 233.8 241.1 251.6
TOTAL 527.5 568.3 611.0 673.9 701.4 740.7
Table 49 Sales of Beer by Region: Total Value 1999-2004
Rs million
1999 2000 2001 2002 2003 2004
North India 9,023.7 10,151.0 11,301.0 14,944.3 15,897.3 17,177.6
South India 16,445.9 18,715.9 20,976.6 24,507.2 26,326.1 28,352.1
West India 14,348.3 16,354.2 18,394.6 23,689.0 24,979.0 26,711.1
TOTAL 42,485.1 48,220.9 54,015.0 67,162.6 71,526.3 76,958.6
Table 50 Sales of Beer by Region: % Total Volume Growth 1999-2004

2003/04 1999-04 CAGR 1999/04 TOTAL

West India 4.3 6.7 38.0
TOTAL 5.6 7.0 40.4
Table 51 Sales of Beer by Region: % Total Value Growth 1999-2004

2003/04 1999-04 CAGR 1999/04 TOTAL
Euromonitor Page 45

West India 6.9 13.2 86.2
TOTAL 7.6 12.6 81.1
Table 52 Beer Brand Ranking by Region 2003
Brand (Company) S W E&NE N
Black Knight Super Strong X - - -

Deluxe (Mohan Meakin Ltd)
Budweiser (Anheuser-Busch Cos - - X -
Inc)
Corona Extra (Modelo SA de CV, - - X -
Grupo)
Foster's (Foster's India Ltd) - X - X
Golden Eagle (Mohan Meakin Ltd) X X - X
Haywards 2000 (Shaw Wallace - - X 5
Breweries Ltd)
Haywards 5000 (Shaw Wallace 2 2 2 2
Breweries Ltd)
Heineken (Heineken NV) - - X -
He-Man 9000 Ultra Super Strong - - 4 -
Beer (Yuksom Breweries)
Himalayan Blue (Yuksom Breweries) - - X -
Hunter Extra Strong (Som - - X -
Distilleries & Breweries Ltd)
Kalyani Black Label Premium X 5 5 3
Lager (Millennium Alcobev)
Kingfisher Premium Lager 1 1 X 1
(United Breweries Ltd)
Kingfisher Premium Strong - - 1 -
Kingfisher Strong (United - 4 - -
Breweries Ltd)
Kingfisher Super Strong Premium 5 - - -
Knock Out (Shaw Wallace 4 X - X
Breweries Ltd)
London Diet (United Breweries - - - X
Ltd)
London Pilsner (United - - - X
Breweries Ltd)
Marco Polo Pilsner (Millennium X - - -
Alcobev)
Marco Polo Premium Lager X - - -
(Millennium Alcobev)
Royal Challenge Premium (Shaw - - X -
Wallace Breweries Ltd)
Royal Challenge Premium Lager 3 3 - 4
(Shaw Wallace Breweries Ltd)
Thunderbolt (Mount Shivalik - X 3 -
Industries Ltd)
UB Export (United Breweries Ltd) - X - -
Yeti Special (Yuksom Breweries) - - X -
Euromonitor Page 46
Note: 1) Rankings by order, with (1) representing highest sales in a given region.
2) In no particular order, (x) represents other popular brands, outside of the top 5 ranked earlier in a given
region.
3) In no particular order, (-) represents other less commonly found brands in a given region.
Table 53 Forecast Sales of Beer by Region: Total Volume 2004-2009
Million litres
2004 2005 2006 2007 2008 2009
North India 151.8 163.7 180.7 200.2 218.5 235.8
South India 284.3 303.9 329.8 355.6 379.4 401.1
West India 251.6 267.0 290.2 313.8 336.3 357.1
TOTAL 740.7 792.3 864.1 939.9 1,011.4 1,077.7
Table 54 Forecast Sales of Beer by Region: Total Value 2004-2009
Rs million
2004 2005 2006 2007 2008 2009
North India 17,177.6 18,041.3 19,402.1 21,186.8 23,039.3 24,735.4
South India 28,352.1 29,650.2 31,739.4 33,958.5 36,061.2 37,902.8
West India 26,711.1 27,817.9 29,881.0 32,426.6 35,075.7 37,570.9
TOTAL 76,958.6 80,499.9 86,410.3 93,496.1 100,741.4 107,414.4
Table 55 Forecast Sales of Beer by Region: % Total Volume Growth 2004-2009

2004-09 CAGR 2004/09 TOTAL

West India 7.3 42.0
TOTAL 7.8 45.5
Table 56 Forecast Sales of Beer by Region: % Total Value Growth 2004-2009

2004-09 CAGR 2004/09 TOTAL

West India 7.1 40.7
TOTAL 6.9 39.6
4.3 New Product Developments

Fewer new launches as sector consolidates
Euromonitor Page 47
Throughout the country, the number of new launches in 2003 and 2004 was small compared to earlier years of
the review period, as the beer sector is India is underwent a period of consolidation. Rather, there were more
initiatives in term of packaging revamps, new pack sizes and the introduction of brands in regions outside their
existing sphere of operations.
Amongst the new launches was that of United Breweries' Kingfisher Gold Premium in Tamil Nadu, South India.
While previously found largely only in Karnataka (South India), SABMiller's Castle Lager was made available
across the country, including Kolkata and Mumbai. Available in an attractive amber coloured bottle with its
famous red and gold label, Castle Lager is aimed at beer enthusiasts across the age group of 25-40. Foster's was
also made available in more Indian states, away from its initial Maharashtra presence.
United Breweries has extended the Kingfisher Strong range with smaller packs – Kingfisher Strong Pint 330ml
& Kingfisher Strong Mini 250ml. In addition, the company has also introduced bottle returns and refunds to cut
down the cost of beer and thus make it affordable to the majority of consumers. The new smaller packs are
expected to give a strong boost to sales.
Not to be over shadowed by its traditional rival, Shaw Wallace launched its Haywards 2000 H2K in November
2003 in Karnataka, and in January 2004 in Mumbai. This strong beer brand is targeted at the mass market.
A new brewery called Iceberg Industries has been set up in Bihar. The brewery launched two brands – Rock
Premium Strong Beer and Ice Premium Lager Beer – in the middle of 2004. Apart from Bihar, these two brands
are also available in a few off-trade outlets in Kolkata.
Non-alcoholic launch for niche consumer market
SABMiller has introduced Castle Non Alcoholic Malt Beer in selected Indian cities such as Bangalore, Mumbai
and Hyderabad. The launch comes at a time when there is growing interest in the non-alcoholic beer category,
which is though to have sizeable market potential in itself, as well as offering surrogate branding possibilities
for the heavily regulated beer industry. The imported product is priced at Rs40 for 330ml. Heineken is also
believed to be planning to launch a non-alcoholic beer variant for the Indian market sometime over the forecast
period.
It is uncertain whether such products will perform well in the long run, given the extremely limited demand for
non-/low-alcohol beer in India. The trade is convinced that if this product variant is to succeed, its key consumer
group will be women, who place less emphasis on the alcohol content as compared to the trendy and fashionable
image of alcohol consumption.
Relaunches/repackaging galore
With the increasingly competitive operating environment, relaunch exercises were also undertaken to stimulate
brand recall and sales. For example, Shaw Wallace relaunched Royal Challenge beer nationally, as did
SABMiller with its Castle brand in Andhra Pradesh. In a bid to strengthen Royal Challenge Premium Lager's
market share, Shaw Wallace Breweries Ltd has introduced the mild beer brand in a new packaging that it claims
boosts its stylish and distinct characteristics. Besides a brand new look and international packaging, the beer
promises a "refreshingly smoother" with its brewing period being 20% longer than conventional beers.
The introduction of Foster's beer in more Indian cities was accompanied by a revamp of its product labelling.
The earlier bottles sported a squatting kangaroo, which used to be featured on top of the neck label, while the
current logo has a leaping kangaroo placed on the bottom of the label, over the gold band. Other brands which
benefited from new packaging included Shaw Wallace's Haywards 5000.
The big and the small
While the industry in general has been moving towards smaller pack sizes to stimulate brand trial, United
Breweries launched its Kingfisher beer in large 5-litre kegs (equivalent to 15 mugs of draught beer), priced at
Rs340, of which Rs250 is a refundable deposit. The beer is targeted at the younger age groups for whom value
for money is a great attraction. The company hopes to drive at-home sales among those who have frequent
parties in their homes.
Euromonitor Page 48
At the other end of the spectrum, Kingfisher Strong mini bottles of 250ml at Rs22 were launched in Karnataka.
Rs3 is refundable if the bottle is returned. This new launch is based on the soft drink model, targeting young
people because of its economy pricing.
Amberro Premium Lager, a product of international quality, was launched in the West with an introductory offer
of Rs100 for a pack of five 330ml bottles, and is expected to be extended to the North in 2005. While Amberro
was launched in both the mild and strong variants, the mild one has not performed as well the strong one. To
meet concern that ultra violet rays penetrating through the bottle compromise the flavour of beer, the brand is
being made available in amber coloured glass bottles.
Summary 7 Beer: New Product Launches 2003-2004

Brand name Company Product type Launch date
Kingfisher Strong Pint United Breweries Ltd 330ml available at Rs19 October 2004
Castle Lager SABMiller India Ltd South African beer June 2004
launched in Hyderabad,
Mumbai and Kolkata,
amongst others, in 330ml
and 650ml sizes
Foster's Fosters India Ltd Launch of brand in May 2004
southern India, from its
previous western
presence, with an
accompanying change in
label
Royal Challenge Shaw Wallace Breweries Relaunch of brand in April 2004
Ltd South India
Rock Premium Strong Iceberg Industries Cheap domestic standard April 2004
Beer brand, expected to do
well in B and C class
towns and outlets
Ice Premium Lager Beer Iceberg Industries Cheap domestic standard April 2004
brand, expected to do
well in B and C class
towns and outlets
Kingfisher Lager Beer United Breweries Ltd India's leading mild beer March 2004
Can brand, relaunched with
new packaging design
Royal Challenge Shaw Wallace Breweries New packaging – the March 2004
Premium Lager Ltd colour scheme of the can
has been changed to
sport a youthful look, with
green as the background
colour. New packs
highlight longer brewing
period with the tagline –
"Taste the difference
extra time makes –
Brewed Longer – Brewed
Better"
Amberro Lager Premium Foster's India Ltd Smaller pack sizes of March 2004
330ml premium lager
beer launched in 2002
Haywards 2000 H2K Shaw Wallace Breweries Brand extension of tap on November 2003 -
Ltd the brand's strong equity Karnataka, January 2004
within mild beer – Mumbai
Haywards 5000 Shaw Wallace Breweries New packaging December 2003
Ltd
Euromonitor Page 49
Kingfisher Gold Premium United Breweries Ltd Regional launch to further December 2003
the brand's limited
presence in the certain
Southern states
Kingfisher Strong Mini United Breweries Ltd Based on soft drink November 2003
model with economy
pricing of Rs16 for 250ml,
and further extended
nationally in the second
half of 2004
Royal Challenge Shaw Wallace Breweries Launched in Kerala October 2003
Premium Lager Ltd
Kingfisher United Breweries Ltd 5-litre keg compact October 2003
container that holds
freshly brewed draught
beer; priced at Rs354
Amberro Mild Foster's India Ltd Mild variant of Amberro September 2003
Strong, launched in 2002.
Company emphasises
that amber bottles
preserve product quality
Castle Non Alcoholic Malt SABMiller India Ltd First formal launch of July 2003
beer non-alcoholic beer in
Indian markets. Targeted
at the significant non-
alcohol drinking
population in India
International), company research, store checks, trade interviews
4.4 Pricing
Regional pricing differences results due to differing tax structures
Individual states' excise policies and their heavy dependence on taxes on alcoholic drinks for revenues are the
key reasons for high beer prices in India. In addition, as a consequence of the different tax regimes employed in
the different regions, there are differences in beer prices for the same brand across the 28 states and their
respective cities. In general, prices are observed to be the highest in the South and lowest in West India.
Popular premium brands include Kingfisher Premium Lager, Royal Challenge Premium Lager and Haywards
5000, while Knock Out and Golden Eagle Lager are among the leaders in the standard segment.
Strong brand loyalty
Unusually for a country well known for its price sensitiveness, regular beer consumers tend to prefer premium
brands to standard labels. The small price differential between premium, standard and economy brands is one of
the key factors in this.
There is not a substantial difference in pricing between a premium lager beer like Kingfisher Premium Lager
and standard beer brands such as Knock Out and Golden Eagle. The price of 650ml Kingfisher Premium Lager
is Rs55 whereas the price of 650ml Golden Eagle is Rs50. In addition, off-season discounts for leading brands
such as Kingfisher and Haywards are often offered to retailers to push sales, and this often brings the discounted
price of the premium brands to the level of standard ones.
The wide distribution reach and strong brand equity of the key premium brands from United Breweries and
Shaw Wallace gives them superior product visibility.
Euromonitor Page 50
Summary 8 Lager by Price Band 2004

Sector Price range per litre (Rs)
Premium >80
Standard 70-80
Economy <70
International), company research, store checks, trade interviews, Euromonitor estimates
Table 57 Typical Beer Pricing 2004
Rs
Brand name Local company Pack size Price
Imported premium lager

Budweiser Anheuser-Busch Cos Inc 330 ml 320.0
Heineken Heineken NV 500 ml 350.0
Beck's Radico Khaitan Ltd 330 ml 350.0
Budweiser Anheuser-Busch Cos Inc 330 ml 425.0
Carlsberg Carlsberg A/S 330 ml 320.0
Corona Modelo SA de CV, Grupo 500 ml 300.0
Amstel Light Heineken NV 330 ml 395.0
Asahi Asahi Breweries Ltd 330 ml 275.0
Beck's Radico Khaitan Ltd 330 ml 250.0
Carlsberg Carlsberg A/S 330 ml 275.0
Domestic premium lager

Castle Lager Shaw Wallace Breweries Ltd 650 ml 125.0
Charger United Breweries Ltd 650 ml 60.0
Foster's Foster's India Ltd 650 ml 50.0
Foster's Lager Foster's India Ltd 330 ml 115.0
Haywards 2000 Shaw Wallace Breweries Ltd 650 ml 90.0
Haywards 5000 Shaw Wallace Breweries Ltd 650 ml 95.0
Haywards 5000 Super Strong Shaw Wallace Breweries Ltd 650 ml 150.0
Kalyani Black Label United Breweries Ltd 650 ml 220.0
Premium Lager
Kalyani Black Label United Breweries Ltd 650 ml 150.0
Strong Lager
Kingfisher Premium Lager United Breweries Ltd 650 ml 150.0
Domestic standard lager

Black Knight Super Strong Mohan Meakin Ltd 650 ml 90.0
Deluxe
Amberro Mild Foster's India Ltd 650 ml 40.0
Golden Eagle Deluxe Mohan Meakin Ltd 650 ml 51.0
Golden Eagle Lager Mohan Meakin Ltd 650 ml 45.0
Kingfisher Diet Beer United Breweries Ltd 650 ml 30.0
Knock Out Shaw Wallace Breweries Ltd 650 ml 65.0
London No 1 Strong Beer United Breweries Ltd 650 ml 150.0
London Pilsner United Breweries Ltd 650 ml 45.0
Thunderbolt Super Strong Mount Shivalik Breweries Ltd 650 ml 50.0
Lager Beer
Golden Eagle Lager Mohan Meakin Ltd 650 ml 50.0
Stout
Guinness Draught United Distillers & Vintners 330 ml 350.0
India Ltd
Non-/low-alcohol
Beck's Non Alcoholic Malt Radico Khaitan Ltd 330 ml 45.0
Beverage
Zingaro Non Alcoholic Beer Millennium Alcobev Ltd 330 ml 45.0
Euromonitor Page 51
Note: Price indicated is per bottle
4.5 Lager by Origin

Indian brands overwhelmingly dominate
As a direct consequence of the high customs duties imposed on imported beer brands, domestic brands
monopolise sales of beer in India. This consumption trend applies to both the on- and off-trade channels. There
are a total of 57 breweries located in different parts of the country, and of these, more than 20 are controlled by
UB Group, with a large proportion of the remainder in the hands of other leading companies such as Shaw
Wallace and Mohan Meakin.
To avoid attracting the various taxes that are levied on the movement of products from one state to another,
most domestic manufacturers have invested heavily in procuring existing breweries as well as establishing new
manufacturing plants in the various states. This strategy has helped not only keep to down the final product
prices of their popular brands, such as Haywards and Kingfisher, but also at the same time, restrict any potential
threat from international big names such as Foster's and Heineken.
Imported brands perform better via on-trade channel
Since the removal of quantity restrictions in 2001, following India's entry into the WTO as well as the
subsequent reduction in import duties, as per its commitment to the WTO, a host of internationally popular beer
brands have been launched in India. As the global market for beer appears to be reaching maturity, these global
brewers are keen to establish themselves quickly in emerging markets such as China and India, whose large
population bases offer very attractive growth prospects.
However, despite the continued strong foreign interest in launching international beer labels in India,
international brands continue to perform poorly in the Indian beer sector. Imported brands are perceived as very
expensive and face lacklustre demand. Internationally brewed brands, such as Corona, Heineken, Budweiser,
Cobra and Castle Lager, account for only a very small fraction of total beer volume consumption in India, and
are found mainly in the on-trade channel, though a few of them can be located in off-trade outlets in major cities
like Mumbai and Bangalore. Imported products are usually manufactured and/or re-exported from Middle
Eastern or South East Asian countries, such as Thailand, Singapore and Malaysia, and are popular with visiting
tourists who are familiar with these brands, or with Indians who have had exposure to international travel and
media.
The lack of success of these international brands stems from the fact that imported beer brands continue to
attract high customs duties of 166% in India, compared to less than 70% in China. This significantly increases
the final product prices of imported beer brands and puts them out of reach of the average Indian beer consumer.
It is due to this that Foster's chose to undertake local brewing for its Foster's brand, while industry speculation
has it that Castle Lager and Cobra are likely to begin to be brewed locally in the near future.
A further reason for these international beer brands' failure to establish themselves in the Indian market is that
they consist mainly of mild variants (less than 5% alcohol content), which are generally less popular in India
than beers with higher alcohol content.
Table 58 Sales of Lager by Origin: Total Volume 1999-2004
Million litres
1999 2000 2001 2002 2003 2004
Lager 527.5 568.3 611.0 673.9 701.4 740.7

- Imported - - - 10.0 10.7 11.7
- Domestic 527.5 568.3 611.0 663.9 690.7 729.1
Euromonitor Page 52
Table 59 Sales of Lager by Origin: Total Value 1999-2004
Rs million
1999 2000 2001 2002 2003 2004
Lager 42,485.1 48,220.9 54,015.0 67,162.6 71,526.3 76,958.6

- Imported - - - 6,442.0 6,909.5 7,496.2
- Domestic 42,485.1 48,220.9 54,015.0 60,720.6 64,616.8 69,462.4
Table 60 Sales of Lager by Origin: % Total Volume Growth 1999-2004

2003/04 1999-04 CAGR 1999/04 TOTAL
Lager 5.6 7.0 40.4

- Imported 8.6 - -
- Domestic 5.6 6.7 38.2
Table 61 Sales of Lager by Origin: % Total Value Growth 1999-2004
% current total value growth

2003/04 1999-04 CAGR 1999/04 TOTAL
Lager 7.6 12.6 81.1

- Imported 8.5 - -
- Domestic 7.5 10.3 63.5
Table 62 Brand Shares of Domestic Lager 2000-2003
% total volume
Owner)
Kingfisher Premium United Breweries Ltd 22.3 21.8 21.7 21.2

Lager (UB Group)
Kingfisher Strong United Breweries Ltd 5.6 7.0 9.0 11.3
(UB Group)
Golden Eagle Mohan Meakin Ltd 9.5 9.5 8.1 7.5
Knock Out Shaw Wallace Breweries - - - 7.1
(SABMiller Plc) Ltd
Royal Challenge Shaw Wallace Breweries 5.7 8.8 6.9 6.9
Euromonitor Page 53
Premium (Shaw Ltd

Wallace & Co Ltd)
UB Export Lager United Breweries Ltd 1.0 0.9 2.3 2.6
Beer (UB Group)
Zingaro (Millenium Millennium Alcobev - - - 2.3
Alcobev Ltd)
Foster's (Foster's Foster's India Ltd 2.6 2.6 2.3 2.0
Group Ltd)
Sandpiper Millennium Alcobev - - - 1.7
(Millenium Alcobev
Ltd)
Kalyani Black Label Millennium Alcobev 1.4 1.5 1.1 1.2
Strong (UB Group)
Kalyani Black Label United Breweries Ltd 2.3 1.8 1.4 1.1
Premium Lager (UB
Group)
London No 1 Strong United Breweries Ltd - 0.4 0.5 0.5
(UB Group)
Marco Polo Millennium Alcobev - - - 0.5
(Millenium Alcobev
Ltd)
UB Ice Premium Beer United Breweries Ltd 0.5 0.5 0.4 0.2
(UB Group)
London Pilsner (UB United Breweries Ltd - 0.3 0.2 0.2
Group)
Taj Mahal Lager United Breweries Ltd 0.1 0.1 0.1 0.1
Beer (UB Group)
Knock Out Mysore Breweries Ltd (MBL) 5.8 - - -
Zingaro (UB Group) Millennium Alcobev 1.9 2.0 2.0 -
Sandpiper (UB Group) Millennium Alcobev 1.1 1.1 1.3 -
Marco Polo (UB Group) Millennium Alcobev 0.8 0.7 0.7 -
Knock Out SABMiller India Ltd - - 7.1 -
(SABMiller Plc)
Knock Out (South South African Breweries - 5.9 - -
African Breweries India Ltd
Plc)
Others 22.3 16.2 13.7 12.4
Total 100.0 100.0 100.0 100.0
Table 63 Brand Shares of Imported Lager 2000-2003
% total volume
Owner)
Heineken Heineken NV - - 4.0 4.4

Others - - 96.0 95.6
Total - - 100.0 100.0
4.6 Distribution
On-trade vs off-trade trends
Euromonitor Page 54
Off-trade sales dominate as pub culture only just emerging
Off-trade sales accounted for an estimated 80% of overall volume sales of beer in 2004, with the remainder
accounted for by on-trade sales through restaurants, pubs, discos and bars. This percentage does, however, vary
across the various regions, with the lowest share of off-trade sales registered in West India, and the highest in
South India. In addition, the number of on-trade establishments varies significantly across the various states. In
South India for example, Bangalore and Hyderabad are the only two cities that boast a significant number of
bars and pubs, while the number of on-trade establishments is lower in Chennai, Madurai and Coimbatore.
There is a strong pub culture in West India, which generates high on-trade sales. There are approximately
50,000 on-trade outlets that serve beer in Mumbai alone.
In India, only major cities like Mumbai, Delhi, Calcutta and Bangalore have a pub culture, since the urban
population are more affluent and more accepting of Western culture. The vast majority of the beer drinking
population still prefers to drink at home or privately within their own social circle. In this respect India differs
from countries such as Taiwan, Hong Kong and Singapore, where on-trade sales account for almost 40% of total
volume consumption. There are still many sections of Indian society that embrace conservative social etiquette,
and among whom public drinking is still frowned upon.
In addition, there is a considerable price disparity for a similar bottle of beer purchased via the off-trade
compared to the on-trade. In a country where a good proportion of the population live close to the poverty line,
on-trade prices are deemed prohibitive.
Consumption of beer through the on-trade channel echoes that of the off-trade, with a significant majority of
volume sales generated by the 650ml glass bottle. Kegs are rarely found in the on-trade channel, and where they
are found, they are typically 30 litres in size. The canned format, typically used by international brands such as
Beck's and Heineken, is rarely found, and is largely confined to the on-trade channel rather than specialist
stores.
On- trade sales to grow over the forecast period
With the emergence of the pub culture and the expected rise in the number of on-trade establishments over the
forecast period, the gap between off-trade and on-trade sales is expected to narrow.
Western influences are slowly making an impact, with an associated rise in pub culture in the major cities, such
as Bangalore and New Delhi. Moving away from traditional social norms, drinking while socialising is also
increasingly perceived as having a status-enhancing image when in pubs, restaurants and hotels. In addition,
beer drinkers who have a taste for imported beer brands such as Heineken and Corona typically can generally
find these brands more easily in the on-trade channel.
Tax obtained from the liquor industry is a major source of revenue for most state governments. The West
Bengal government in East and Northeast India is issuing more licences to on-trade outlets like bars and
restaurants.
Nevertheless, the higher prices for beer charged in on-trade channels will keep on-trade volume sales growth in
check.
Off-trade distribution patterns
There were no significant changes to off-trade distribution patterns or margins during the review period.
Throughout the country, beer is almost entirely retailed via specialists stores, due to the controlled nature of
alcoholic drinks distribution in the country. Over 99% of off-trade volume sales are generated via this channel,
with the remainder coming from supermarkets, such as Foodworld Supermarket, which carry a limited number
of beer brands.
While there has been no change in the final distribution channels for beer with specialists dominating, there
have been some changes in the distribution of beer to such specialist stores. In Tamil Nadu, the government has
taken over all off-trade outlets, with effect from November 2003, moving away from private distribution.
Subsequently, there has been an increase in the number of such specialist outlets, from 2,500 to the present
4,000. These shops are obliged to sell beer at the maximum recommended price, and this has led to a reduction
of duty-evaded liquor sales and cartels, which used to distort the off-trade. In Karnataka, since July 2003,
Euromonitor Page 55
Karnataka State Beverages Corporation Ltd (KSBCL) has come into the picture, in a bid to reduce grey market
and seconds (unorganised) sales, which previously led significant tax evasion. Under the new system, the
manufacturer/company supplies directly to KSBCL, which then undertakes distribution to the specialist off-
trade stores.
Beer consumption in India has been held back by a variety of regulatory constraints. Most significantly, the
regulation and taxation of beer with lower alcohol content is being clubbed with that of spirits and wine.
Universally, beers and wines are treated on a different footing, especially in regards to the taxation.
Manufacturers of beer want the state governments to de-link beer from spirits, especially with regard to the
granting of new licences/permits and, to a lesser extent, payment of taxes and duties. If this is done then beer
can be sold in more supermarkets, spurring product demand.
Table 64 On-trade vs Off-trade Sales of Beer: Volume 1999-2004
Million litres
1999 2000 2001 2002 2003 2004
Off-trade 427.3 457.2 489.0 530.7 550.2 578.8

On-trade 100.2 111.2 122.0 143.2 151.2 161.9
TOTAL 527.5 568.3 611.0 673.9 701.4 740.7
Table 65 On-trade vs Off-trade Sales of Beer: Value 1999-2004
Rs million
1999 2000 2001 2002 2003 2004
Off-trade 26,909.2 30,221.5 33,471.2 37,301.4 39,381.6 42,023.2

On-trade 15,575.9 17,999.4 20,543.7 29,861.2 32,144.7 34,935.4
TOTAL 42,485.1 48,220.9 54,015.0 67,162.6 71,526.3 76,958.6
Table 66 On-trade vs Off-trade Sales of Beer: % Volume Growth 1999-2004
% volume growth
2003/04 1999-04 CAGR 1999/04 TOTAL
Off-trade 5.2 6.3 35.5

On-trade 7.1 10.1 61.6
TOTAL 5.6 7.0 40.4
Table 67 On-trade vs Off-trade Sales of Beer: % Value Growth 1999-2004
% current value growth

2003/04 1999-04 CAGR 1999/04 TOTAL
Off-trade 6.7 9.3 56.2

On-trade 8.7 17.5 124.3
TOTAL 7.6 12.6 81.1
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Table 68 Off-trade Sales of Beer by Distribution Format: % Analysis 1999/2004
% off-trade
1999 2004
Supermarkets/hypermarkets - 1.0
Independent food stores - -
Convenience stores - -
Discounters - -
Specialists 100.0 99.0
Direct sales - -
Others - -
Total 100.0 100.0
5. WINE
2004 headlines
• Wine volume and value sales boom with rise in disposable incomes
• Social factors keep value sales growth ahead of volume growth
• Change in government policies helps create new wineries and vineyards
• Champagne Indage leads volume sales, in spite of increasing presence of imported brands
• On-trade brings accounts for 35% of total volume sales
A booming market for wine
Sales of wine in India in 2004 stood at over 4 million litres, dwarfed by sales of beer and spirits. However,
growth of wine has been unprecedented in a country which does not have a culture of wine consumption.
Volume sales of wine grew by 17.5% in 2004, with a compound annual growth rate of close to 20% between
1999 and 2004.
There are a number of reasons why wine, which was previously close to unknown in the country, has seen
substantial growth over the past few years. With the Indian economy doing well, the disposable income
available to the middle and upper class has risen, and indulgence in things previously considered luxurious is a
popular way of spending it. The number of Indian professionals who have worked in Western countries, and
have experienced the culture of consuming wine, is on the rise. Such people, apart from being consumers of
wine themselves, are spreading the word and encouraging the consumption of wine. Wine makers are also doing
their bit with wine tasting sessions and wine festivals, a recent example being the wine festival held in Amby
valley, Maharashtra by Champagne Indage in March 2004.
Wine has become de rigueur at parties and social events, alongside spirits, which were previously the only
option. People have also moved on from asking just for red or white wine to requesting specific brands. This
interest is genuine, as is seen from the increasing desire to learn about serving wine, and the number of wine
clubs that have emerged in places like Delhi, Chandigarh, Hyderabad and Bangalore. However, per capita
consumption of wine in India stood at a mere 4ml per person in 2004, compared to 1.5 litres per person in
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China. This indicates that the future looks rosy for growth of wine in India, which will accelerate as Indians
become better travelled, and with favourable policies, such as treating wine as a food item for taxation purposes,
which is the case in the states of Andhra Pradesh and Tamil Nadu as of 2004.
Social factors push value growth ahead of volume
Total value growth for wine in 2004 was a heady 21%, to Rs3.8 billion. The current value CAGR of 24.6% over
the 1999-2004 review period was ahead of the volume CAGR of 20%. Faster value growth was an indication of
the movement of consumers from port wine and cheaper wines produced by spirits companies to the costlier
brands like Riviera, Sula and Grover's from wineries like Champagne Indage Ltd, Grover Vineyards Ltd and
Samant Soma Wines Ltd. Influenced by word of mouth and also by the promotional activities undertaken by the
wine manufacturers, the upper class migrated towards premium brands, looking for higher quality.
Industry players indicate that wine is catching on as the younger Indian population are attracted to the social
status and image attributed to a wine consumer. More women are also taking to drinking wine, with, again, a
key motivator for the consumption of wine being the connotations of status associated with the drink. Also, beer
and spirits consumption is associated with men, and women are generally averse to being seen consuming hard
"brown" liquor, such as whisky, rum and brandy, but are more inclined to try out the milder "whites", such as
gin and vodka, as well as wine. The low alcohol content of wine, along with its sweet taste, makes it an
acceptable drink for women.
Wine is still very much an urban phenomenon in India, with consumption concentrated in the major cities such
as Mumbai and New Delhi. Nearly 80% of wine sales are accounted for by the major cities, in particular New
Delhi, Mumbai, Chennai, Kolkata, Pune and Bangalore. Wine is still consumed mainly by the upper echelons of
society in India, who generally regard wine consumption as a status symbol. However, in Maharashtra, the
wealthier farmers in rural areas also consume wine, indicating that wine consumption is not necessarily
synonymous with city-bred sophistication.
Still wine the most popular, though fortified wine holds ground
Within wine, still wine dominates, with sales of 3.5 million litres in 2004. Red wine is marginally more popular
than white, due to its availability and also its perceived health benefits. Red and white wine account for all sales
of still wine, as a combination of high pricing and a limited brand presence for rosé wine mean that sales are
negligible.
Fortified wine and vermouth accounted for close to 14% of total wine volume sales in 2004, at 0.6 million litres.
Fortified wines, especially the ones made in Goa, which are also referred to by industry sources as synthetic
wine, are much cheaper than other domestic wines, and are hence popular. For example, the Goa Port wine from
Vinicola Pvt Ltd retails for Rs115 for a 750ml bottle, while the cheapest red and white wine under the umbrella
brand name of Vin Ballet, from Champagne Indage, retails at over Rs200 for a 750ml bottle.
From table grape growers to wine producers
The state of Maharashtra in West India has one of the most favourable climates in the country for the production
of grapes. The district of Nashik is one of the best known areas within the state for the production of grapes. The
place has the terroir required for wine, coupled with hot days, cold nights, scattered rain and good soil. Until the
state government established incentives for wineries in 2001, the area was the largest table grape (for eating) -
growing region of the country. However, with the incentives made available, farmers shifted from growing table
grapes to the more lucrative varieties like Chardonnay and Shiraz, for making wines.
The state government did its bit to push growth by offering subsidies, reducing excise duties on wines and
reducing red tape, which greatly benefited manufacturers. The result of this has been that since early 2000, over
400 winery licences have been issued, with many more in the offing. There is an increasing shift among the
farmers of the region to convert the farms that they had previously used for growing table grapes to wine grape
growing. The government, for its part, sees wine as an upcoming industry, both domestically and globally, and
expects the industry to contribute towards exports as well.
Not much sparkle from sparkling wine
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Sales of sparkling wine in India have yet to take off. In 2004, 0.26 million litres of sparkling wine were sold, of
which "other" sparkling wine sales accounted for 0.2 million litres. Even within the domestic market, not many
companies produce sparkling wine, the exceptions being a couple of brands from Champagne Indage and
Samant Soma. The high price of Rs400 for a bottle of sparkling wine, which is double that of the cheapest red
and white varieties from the same companies, acts as strong deterrent to the consumption of sparkling wine.
Champagne sale continue to be restricted only to the wealthiest consumers, and even here consumption is
infrequent. With sales of 0.06 million litres in 2004, champagne accounted for less than 1.5% of total wine sales.
Although champagne is occasionally stocked by off-trade outlets in some of the major cities, like Mumbai and
Delhi, almost all sales arise from on-trade channels and from some duty-free shops.
Wine tours catch the fancy of the middle class
Champagne Indage, Samant Soma and Grover Vineyards have opened their vineyards to the public in order to
connect directly to the consumers and to give them a feel of what happens behind the picture. Day trips in
Mumbai and Bangalore that are priced above Rs1,000 per person and which includes transportation, wine
tasting and a sumptuous lunch have become quite popular among the trendy and even the middle class whom
want to know more about wines and wineries.
Wine clubs have also sprung up in cities such as Bangalore, Hyderabad, Chandigarh and Delhi with smaller
cities such as Pune and Vishakapatanam also in the process of setting up similar clubs. These clubs create
awareness of the nuances involved in the consumption of wine, lobby with the government, conduct wine
tasting sessions, wine maker dinners and an appreciation for the health benefits involved in wine consumption.
Champagne Indage leads the charge
Champagne Indage leads the pack of wine manufacturers in India. The company had a 30% volume share of the
wine sector in India in 2003. Champagne Indage has been the forerunner in the sale of wine in the country since
1982, and has been able to make full use of its first mover advantage. Indage, apart from having wines from its
own portfolio, has also tied up with wineries in South Africa, Australia and Germany, and sells wines under a
mutually decided brand name, like Cranswick Indage, Zulu Nelson Creek Indage and Morande Indage, using the
brand names of both Champagne Indage and also the global tie-up company.
Champagne Indage has successfully used umbrella branding for its different wine varietals, with almost all its
brands occupying leadership positions in their respective categories. The Riviera, Chantilli Vin Ballet and Ivy
brand names are well-known among wine connoisseurs in the country. Riviera Red and White wine are leaders
in their respective subsectors, with 10% and 12% of volume sales. Under the Chantilli umbrella, Chantilli
Cabernet Sauvignon has a 6% volume share of red wine sales, while Chantilli White wine accounted for 8% of
volume sales of white wine in 2003.
Champagne Indage has close to a monopoly in "other" sparkling wines. The brands Marquise De Pompadour,
with 44% of volume, Joie-Cuve Close Bubbly, with 16%, and Ivy, with 4%, gave Champagne Indage a total
volume share of 64% in 2003. Given the price of sparkling wine, which is more often than not double that of red
and white wines, sales are very small, thus few companies offer sparkling wines.
while Grover and Samant Soma follow
Following on the heels of Indage are two other domestic companies, Grover Vineyards Ltd and Samant Soma
Ltd, each with a 10% share of the sector. Grover Vineyard's Red wine leads red wine sales, alongside Riviera
red wine from Champagne Indage, with both accounting for 10% of volume sales. Grover Vineyard's Cabernet
Shiraz red wine – a mix of Cabernet Sauvignon and Shiraz – is one of the most popular red wines in India.
Grover Vineyards' white wine accounted for 6% of volume sales of white wine in 2003.
Samant Soma's Madera Red Wine, with a 6% volume share of red wines, and Sula Sauvignon Blanc, with an
8% volume share of white wine, are the two leading brands from Samant Soma. Samant Soma also owns Sula
Brut, with a 34% volume share in "other" sparkling wines. Samant Soma was one of the fastest growing wine
producers in the country during the review period. The company has been steadily building its brands and, like
Champagne Indage, has tie-ups with wineries in other countries, including Chile, South Africa and the US, for
importing New World wine into the country.
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with a long list of other companies
There are a many players in the wine sector, with foreign labels being imported into bonded warehouses in
Mumbai and Delhi. Prominent among them are Moët Hennessy India Ltd, which brings in champagne, and
Sansula International Brands Ltd and Brindco Sales Ltd, which import New World and Old World wines from
countries like France, Portugal, the US, Italy, South Africa and Australia. There are also quite a few players in
fortified wine and vermouth that manufacture wine by mixing molasses-based alcohol with grape alcohol.
United Breweries Ltd, with its Bosca brand, and Shaw Wallace & Co Ltd with its Golconda brand cater to mass
segment consumers who are unable to afford the more premium wines from Indage, Grover and Samant Soma.
While Bosca has variants of red, white, rosé and fortified wine and vermouth, Golconda is essentially a fortified
wine and vermouth brand, as well as being present in brandy.
Champagne Indage's wine bars
In late 2002, Champagne Indage set up a chain of wine bars across Maharashtra to leverage the state
government's decision to permit the setting up of wine bars in a bid to provide support to the state's large grape
growing community. The company opened the first of its wine bars in Pune, and the company plans to tap into
areas such as Nashik, Nagpur, Solapur and Kolhapur.
One company source stated that, "wine drinking has not caught on with the masses mainly because it is
available only in the large hotels, where prices are prohibitive. Besides, the average customer is intimidated by
the prospect of walking into a 5-star hotel for wine, which is largely available only by the bottle". As such,
Champagne Indage aims to promote the wine culture by making wine available in glasses through these wine
bars, supported with presence of sales personnel to educate consumers regarding the different wine varietals.
The company's strategy is to retail an entire range of wines at these bars, along with all the accessories to go
with it, such as glasses, storage equipment, etc. The staff at these wine bars are also thoroughly trained with
regards to the product characteristics, storing and handling know-how, and also advice on matching Indian food
with wine. Also offered are wine tasting evenings and wine of the week themes, where consumers enjoy
discounts on various brands and servings by the glasses.
Healthy growth expected for wine
The market for wine in India is predicted to grow at a CAGR of 12% in volume between 2004 and 2009. A host
of new wineries, new imported brands and the easing of government rules and taxes are expected to be the
catalysts for growth. As the Indian economy continues to do well, with strong GDP growth predicted, the
disposable income of Indian consumers available for spending on luxuries is expected to increase.
The other major growth drivers will be greater product education, increasing brand and product awareness,
media promotional campaigns, the entry of more players, the growing availability of good quality wines, the
build up of consumer relationships, expansion in the production capacities of companies and technology
upgrading by companies.
Foster's plans foray while Indage considers new packs
The Australian beer company Foster's Group is understood to have plans to launch wine in India. Some of the
brands that are being considered for such a launch are Wolf Blass, Yellowglen, Saltram, Stags' Leap, Beringer
and Matua Valley. An entry by Foster's would definitely be of note in the sector, as Foster's has its distribution
system in place for beer, and hence would be able to leverage it for wine.
Champagne Indage is planning to launch wine in cartons and plastic bottles, marking a departure from the glass
bottles which have been the only packaging type for wine so far in India. This would reduce Indage's
dependence on glass packaging, which is becoming increasingly scarce and thus costly.
Imported wines to flow into the market
In an attempt to cater to the ever-growing consumer base for wines, more and more foreign brands are trying to
establish a foothold in the market. The ranks of wines from the US, Australia, South Africa and Chile are
expected to swell in the years to come. The range of varietals that are available, and also the growing acceptance
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of New World wines, are likely to help wines from these countries garner a substantial share of the Indian wine
sector.
The increasing presence of foreign brands and the promotion being given them are definitely creating awareness
in the minds of the consumer. Measures like the lowering of import duties, as in 2004, when basic import duties
where brought down from 168% to 150% and special additional duties were removed, would help bring down
imported wine prices further and offer greater variety to wine consumers.
while domestic companies set up wineries
Domestic manufactures are not expected to lag behind, as more and more table grape farmers are shifting
towards wine grape growing, and are also establishing wineries. Some domestic wineries are also benefiting as
the Maharashtra government in West India continues to pursue its forward-looking policies. The reduction in
sales tax for wines produced within the state, by classifying wine as a food item, is very likely to spur growth.
Apart from start-ups, some of the well-established spirits manufacturers are trying their hand as well, as Shaw
Wallace, for example, looks to tap into the premium segment, and McDowell's is considering acquiring wine
producers.
Table 69 Sales of Wine by Subsector: Total Volume 1999-2004
'000 litres
1999 2000 2001 2002 2003 2004
Still light grape wine 1,474.8 1,800.0 2,147.6 2,555.5 3,002.5 3,511.1
- Still red wine 768.4 930.8 1,105.5 1,304.7 1,521.9 1,763.9
- Still white wine 706.3 869.2 1,042.1 1,250.8 1,480.6 1,747.2
- Still rosé wine - - - - - -
Sparkling wine 89.2 111.8 140.0 175.0 215.9 262.1
- Champagne 13.4 17.9 24.6 33.9 45.7 60.3
- Other sparkling wine 75.8 93.9 115.4 141.1 170.2 201.8
Fortified wine and 202.3 247.0 303.8 377.4 461.7 551.6
vermouth
Non-grape wine - - - - - -
Wine 1,766.3 2,158.8 2,591.4 3,107.9 3,680.0 4,324.8
BeverAsia, Wine & Spirit International, Drinks International, Indianwine.com), company research, store checks,
trade interviews, Euromonitor International estimates
Table 70 Sales of Wine by Subsector: Total Value 1999-2004
Rs million
1999 2000 2001 2002 2003 2004
- Still red wine 509.4 637.5 788.9 967.0 1,162.9 1,379.4
- Still white wine 518.4 669.4 833.8 1,046.8 1,276.8 1,531.0
Sparkling wine 191.9 251.4 333.8 445.0 576.3 733.3
- Champagne 120.6 161.5 222.5 306.6 406.9 529.0
vermouth
Wine 1,282.6 1,639.1 2,059.6 2,592.2 3,182.9 3,847.2
Euromonitor Page 61
Table 71 Sales of Wine by Subsector: % Total Volume Growth 1999-2004

2003/04 1999-04 CAGR 1999/04 TOTAL
Still light grape wine 16.9 18.9 138.1

- Still red wine 15.9 18.1 129.5
- Still white wine 18.0 19.9 147.4
- Still rosé wine - - -
Sparkling wine 21.4 24.1 193.8
- Champagne 32.0 35.1 350.7
- Other sparkling wine 18.6 21.6 166.2
Fortified wine and vermouth 19.5 22.2 172.7
Non-grape wine - - -
Wine 17.5 19.6 144.9
Table 72 Sales of Wine by Subsector: % Total Value Growth 1999-2004

2003/04 1999-04 CAGR 1999/04 TOTAL

- Still red wine 18.6 22.0 170.8
- Champagne 30.0 34.4 338.6
Wine 20.9 24.6 200.0
Table 73 Company Shares of Wine 2003
% volume Litres
Champagne Indage Ltd 30.0 1,104,000

Grover Vineyards Ltd 10.0 368,000
Samant Soma Wines Ltd 10.0 368,000
Others 50.0 1,840,000
TOTAL 100.0 3,680,000
Table 74 Brand Shares of Red Wine 2003
% volume
2003
Grover Vineyards Red Wine 10.0
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Riviera Red Wine 10.0

Chantilli Cabernet Sauvignon 6.0
Madera Red Wine 6.0
Ivy Shiraz 2.0
Others 66.0
TOTAL 100.0
Table 75 Brand Shares of White Wine 2003
% volume
2003
Riviera White Wine 12.0

Chantilli White Wine 8.0
Sula Sauvignon Blanc 8.0
Grover's White Wine 6.0
Ivy 3.0
Others 63.0
TOTAL 100.0
Table 76 Brand Shares of Other Sparkling Wine 2003
% volume
2003
Marquise De Pompadour 44.0

Sula Brut 34.0
Joie-Cuve Close Bubbly 16.0
Ivy 4.0
Others 2.0
TOTAL 100.0
Table 76 Brand Shares of Fortified Wine for 2003
% volume
2003
Figueira Port wine 25.0

Others 75.0
TOTAL 100.0
Table 78 Forecast Sales of Wine by Subsector: Total Volume 2004-2009
'000 litres
Euromonitor Page 63
2004 2005 2006 2007 2008 2009
- Still red wine 1,763.9 2,017.6 2,279.3 2,544.6 2,809.2 3,065.9
- Still white wine 1,747.2 2,027.2 2,315.6 2,606.7 2,895.3 3,169.1
Sparkling wine 262.1 313.0 367.4 425.0 484.7 546.5
- Champagne 60.3 77.8 98.3 122.2 149.4 179.8
vermouth
Wine 4,324.8 5,002.2 5,698.1 6,398.1 7,087.0 7,744.9
Table 79 Forecast Sales of Wine by Subsector: Total Value 2004-2009
Rs million
2004 2005 2006 2007 2008 2009
- Still red wine 1,379.4 1,568.0 1,751.6 1,924.4 2,086.2 2,233.7
- Still white wine 1,531.0 1,759.4 1,987.5 2,209.9 2,416.9 2,603.6
Sparkling wine 733.3 896.6 1,073.5 1,258.6 1,446.0 1,632.8
- Champagne 529.0 661.3 807.4 961.9 1,119.9 1,278.7
vermouth
Wine 3,847.2 4,462.0 5,084.4 5,696.2 6,281.0 6,827.9
Table 80 Forecast Sales of Wine by Subsector: % Total Volume Growth 2004-2009

2008/09 2004-09 CAGR 2004/09 TOTAL

- Still red wine 9.1 11.7 73.8
- Champagne 20.3 24.4 198.2
Wine 9.3 12.4 79.1
Table 81 Forecast Sales of Wine by Subsector: % Total Value Growth 2004-2009

2008/09 2004-09 CAGR 2004/09 TOTAL

- Still red wine 7.1 10.1 61.9
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- Champagne 14.2 19.3 141.7

Wine 8.7 12.2 77.5

West and North lead volume sales
West India is the largest market for wine in India, accounting for close to 42% of total volume sales in 2004.
Volume sales in the region stood at 4.3 million litres in 2004, valued at Rs1.6 billion. In terms of both volume
and value growth, West India led other regions in 2004, with 18.5% volume growth and just under 22% value
growth. Sales were buoyed by the incentives for production from the state government and the cosmopolitan
culture of the populations of Mumbai and Pune.
West Indians are considered to be more receptive to lifestyle changes than consumers in the other regions of the
country, and hence are more likely to try and to adopt a new product like wine. The market for wine is growing,
with young people and women trying out the increasing variety of domestic and international wines. Typically,
these consumers belong to the upper echelons of society, with high disposable incomes. Women have especially
taken to red wine as, apart from health benefits, it allows them to indulge themselves, especially in the company
of men who prefer hard liquor.
The Maharashtra state government has endeavoured to promote wine sales by reducing the amount of red tape.
It now takes only a couple of months to get a winery licence, compared with the two years it previously took.
The state government, by classifying wine as a food in November 2004, has also brought down sales tax from
20% to 4% for wines produced in the state.
North India comes a distant second with 1.2 million litres of wine sold in 2004, corresponding to 28% of total
wine volume sales. Delhi and the National Capital Region of Delhi are the largest markets in the region, though
certain regions in Punjab and Haryana also see strong sales. Like Mumbai, Delhi has a more cosmopolitan
culture that resembles the more developed countries. The small proportion of foreigners working in the
embassies in Delhi aid growth, though the hot summers of North India mean that the summer months of March
to June see very little off-take for wine, as consumers tend to prefer beer as a cool drink.
with South close behind but East and Northeast nowhere in the picture
South India, with sales of one million litres in 2004, accounted for just over 23% of total sales of wine. Value
sales stood at Rs962 million, up by 20% over 2003. Bangalore and Chennai are definitely the hubs for
consumption of wine, with the pub culture of Bangalore definitely being a plus for wine sales in the South. One
of the prominent reasons for growth being centred on the three big cities is the considerable population of
professionals working there. Many of them have travelled to the US and other European countries, and returned
with a very different worldview, including a greater acceptance of wine drinking, clearly differentiating wine
from hard liquor.
The East and Northeast continues to be a disappointment for the wine producers in the country, with sales of just
0.34 million litres in 2004: less than 8% of total volume sales. The market outside Kolkata is close to negligible.
Being more of an urban product associated with sophistication, low incomes coupled with lack of awareness of
wine limit sales in the region. With so few consumers of wine, retailers are not inclined to place orders, fearing
piled up inventory. However, fortified wine and vermouth do see some sales in the East and Northeast, with
Golconda from Shaw Wallace being highly popular, due to its low price. The Northeast continues to be cut off
from the developments taking place in other parts of the country, in some instances literally, with a number of
domestic television channels being unavailable.
West and North predicted to maintain lead
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West and North India are expected to drive growth over the forecast period, continuing their performance in the
review period. With several wineries already established in the state and with more to come in the future, West
India is predicted to see the fastest annual average volume growth of over 13% over the 2004-2009 forecast
period. Trade sources are increasingly quoting companies as being unable to meet demand, indicating the
upward direction of wine sales. One of the other reasons for predicted good growth in West India is cooperation
from the Maharashtra state government, which is taking a more liberal attitude towards wineries and their wine.
Barriers to entry are lower, and those that are left are expected to come down in the future.
North India is predicted to see annual average volume growth of over 12% over the forecast period. Though
there is unlikely to be any major policy changes towards wines from the northern state governments, curbs on
sales of wine like higher taxes and distribution only through licensed specialists are expected to reduced
compared with the review period. The business process-outsourcing centre of Gurgaon is expected to emerge as
a major new market, due to the many professionals living and working in the region.
while South and East try to catch up
Whilst South India is predicted to see 11% compound annual volume growth in the period 2004 to 2009, it will
continue to lag behind the more affluent regions of the West and North. Bangalore and Chennai apart,
consumption of wine is limited in the region, where spirits are generally preferred. The large number of
Christians in the state of Kerala, who are accustomed to taking wine, albeit the cheaper varieties, could possibly
be one of the untapped sources for wine growth in the region. Also aiding growth will be the decision of the
Andhra Pradesh government in late 2004 to reduce the label registration fees that were charged on wine from
Rs0.2 million to Rs10,000. The charge was previously on a par with that for spirits, but the active lobbying of
wine companies led to the reduction. This is likely to lead to an influx of companies selling wine in Andhra
Pradesh. Distribution had previously been kept at a minimum, with producers citing the high levies in the state
as the reason for this.
East and Northeast India, in line with trends seen in 2004, is expected to see the slowest volume growth.
Volume growth, at a CAGR of less than 10% over the period 2004-2009, will be centred in and around Kolkata,
with wine-tasting sessions and consumer education being the drivers of growth. However, there are few
consumers with sufficient disposable income in the region to make much of an impact on wine sales.
Table 82 Sales of Wine by Region: Total Volume 1999-2004
Million litres
1999 2000 2001 2002 2003 2004
North India 0.5 0.6 0.7 0.8 1.0 1.2
South India 0.4 0.5 0.6 0.7 0.9 1.0
West India 0.7 0.9 1.1 1.3 1.5 1.8
TOTAL 1.8 2.2 2.6 3.1 3.7 4.3
Table 83 Sales of Wine by Region: Total Value 1999-2004
Rs million
1999 2000 2001 2002 2003 2004
North India 300.8 388.8 492.8 622.2 767.6 932.7
South India 338.3 427.5 529.6 658.9 802.1 962.2
West India 495.5 640.2 815.8 1,042.1 1,291.5 1,572.9
TOTAL 1,282.6 1,639.1 2,059.6 2,592.2 3,182.9 3,847.2
Euromonitor Page 66
Table 84 Sales of Wine by Region: % Total Volume Growth 1999-2004

2003/04 1999-04 CAGR 1999/04 TOTAL

North India 18.3 20.4 153.1
South India 16.2 18.2 130.5
West India 18.5 20.8 157.7
TOTAL 17.5 19.6 144.9
Table 85 Sales of Wine by Region: % Total Value Growth 1999-2004

2003/04 1999-04 CAGR 1999/04 TOTAL

North India 21.5 25.4 210.0
South India 20.0 23.3 184.4
West India 21.8 26.0 217.4
TOTAL 20.9 24.6 200.0
Table 86 Forecast Sales of Wine by Region: Total Volume 2004-2009
Million litres
2004 2005 2006 2007 2008 2009
North India 1.2 1.4 1.6 1.8 2.0 2.1
South India 1.0 1.1 1.3 1.4 1.6 1.7
West India 1.8 2.1 2.4 2.7 3.1 3.4
TOTAL 4.3 5.0 5.7 6.4 7.1 7.7
Table 87 Forecast Sales of Wine by Region: Total Value 2004-2009
Rs million
2004 2005 2006 2007 2008 2009
North India 932.7 1,087.9 1,247.1 1,404.4 1,556.7 1,700.6
South India 962.2 1,107.2 1,250.9 1,387.5 1,517.2 1,639.0
West India 1,572.9 1,838.0 2,109.2 2,379.7 2,637.7 2,876.4
TOTAL 3,847.2 4,462.0 5,084.4 5,696.2 6,281.0 6,827.9
Euromonitor Page 67
Table 88 Forecast Sales of Wine by Region: % Total Volume Growth 2004-2009

2008/09 2004-09 CAGR 2004/09 TOTAL

West India 10.3 13.5 88.6
TOTAL 9.3 12.4 79.1
Table 89 Forecast Sales of Wine by Region: % Total Value Growth 2004-2009

2008/09 2004-09 CAGR 2004/09 TOTAL

West India 9.0 12.8 82.9
TOTAL 8.7 12.2 77.5

ND, Sankalp and Rajdheer wines make their entries
The market for wine in India, which was hitherto dominated by Indage, Grover and Samant Soma, has seen
more competition in recent years. Three new wineries have been established in the state of Maharashtra. ND
Wines Pvt Ltd produces wines with the company name as the brand, Sankalp uses the Vinsura name, and
Rajdheer uses Le Wines.
Plethora of New World launches, especially within red and white wine
Almost all the new launches of wine in 2003 and 2004 were either red or white wines from the New World wine
producing countries, such as Chile, South Africa and the US. Price acted as a strong deterrent to importing
sparkling wines. New World wines have remained cheaper than most of their Old World counterparts, and
hence are generally preferred. Demand for New World wines also stems from the desire of New World wine
producing countries to export their wines to new customers in new markets, and a growing market like India
provides a very good option.
Direct importing by on-trade channels
On-trade channels, with the help of importers like Sansula International Brands Ltd and Brindco Sales Ltd,
import wine directly according to their requirements. Almost all these products are thus available in on-trade
channels only. The companies import both still and sparkling varieties, and from both Old World and New
World wine producing countries. One of the most common imports is the Robert Mondavi range from US.
Summary 9 Wine: New Product Launches 2003-2004

Brand name Company Product type Launch date
Caballo Loco No 6 Valdivieso Premium red wine May 2004
imported from Chile;
launched in Delhi in five
star hotels
Chianti Ruffino Samant Soma Wines Ltd Premium Italian red wine May 2004
l h di M b i
Euromonitor Page 68
launched in Mumbai
Pinot Grigio delle Radico Khaitan Ltd Premium white wine March 2004
Venezie 2001 launched nationally,
targeting on-trade
channels
Chianti (Sangiovese) Radico Khaitan Ltd Premium red wine March 2004
DOCG 2001 launched nationally,
targeting on-trade
channels
Blue Nun Wines Mount Shivalik Industries Premium imported wine January 2004
Ltd targeted at women
ND Wines ND Wines Pvt Ltd Range of red and white December 2003
wines launched in select
cities
Sauvignon Blanc White Grover Vineyards Ltd Grover Vineyards' December 2003
wine popular export variety
launched in the domestic
market
Vinsura Wines Sankalp Winery Pvt Ltd Range of red, white and September 2003
rosé wines launched in
select regions
Two Ocean Wines Samant Soma Wines Ltd White and red wines from September 2003
South Africa launched in
Mumbai
Pacifica Chardonnay Samant Soma Wines Ltd A coastal Chardonnay September 2003
White Wine white wine imported from
the US launched in
Mumbai and Delhi
Jacob's Creek wine Seagram's India Ltd White and red varieties July 2003
launched in Mumbai,
Delhi and Bangalore
Maybach wines Sundeep Vinters Red and white wines June 2003
imported in bulk from
Germany, South Africa,
Chile, Australia and
Argentina, and bottled in
India under the brand
name Maybach
Le Wines Rajdheer Wines Pvt Ltd Value for money red and June 2003
white wines
BeverAsia, Wine & Spirit International, Drinks International), company research, store checks, trade interviews
5.4 Price Segmentation

Red and white wine for less than Rs500 per bottle
Both red and white domestic wines, with the exception of a very few brands, are priced below Rs500 per bottle
in off-trade channels. Almost 80% of total off-trade sales are of brands which are priced below Rs500 per bottle.
Upwards of Rs500, both the number of brands and also their sales decrease. Almost all of brands are priced in
the range of Rs300 to Rs500, which is perceived by manufacturers as a convenient price range, since beyond
Rs500 consumers tend to feel that the brand has been overpriced. Among the more popular brands in the Rs300
to Rs500 range are the Vin Ballet and Rivera lines of red and white wine from Champagne Indage Ltd.
A noticeable trend has been the migration of consumers from cheaper brands to slightly more expensive ones. A
far cry from the pricing of less than Rs300 that used to dominate the sector, with increasing knowledge and with
Euromonitor Page 69
the emergence of domestic varieties, consumers have been slowly but steadily moving up the value chain, and
are increasingly willing to spend Rs500 on a bottle of red and white wine.
but not sparkling wine
The pricing of sparkling wine begins where that for red and white wine generally ends. Almost all the sparkling
wine brands that are available cost in excess of Rs550 per bottle. The more popular brands, like Marquise De
Pompadour from Champagne Indage and Sula Brut from Samant Soma, cost in excess of Rs650 per bottle. As
for champagne, the cheapest brand that is available in the off-trade is Moët & Chandon, which costs in excess of
Rs3,000 for a bottle. Almost all the other champagne brands present are priced much higher than Moët &
Chandon.
Table 90 Sales of Red Wine by Price Segment 2003-2004
% off-trade
2003 2004
Under Rs 199.99 15.0 15.0

Rs 200 to Rs 299.99 15.0 15.0
Rs 300 to Rs 399.99 25.0 25.0
Rs 400 to Rs 499.99 25.0 25.0
Rs 500 to Rs 599.99 15.0 15.0
Rs 600 and above 5.0 5.0
Total 100.0 100.0
Table 91 Sales of White Wine by Price Segment 2003-2004
% off-trade
2003 2004
Under Rs 199.99 15.0 15.0

Rs 200 to Rs 299.99 15.0 15.0
Rs 300 to Rs 399.99 25.0 25.0
Rs 400 to Rs 499.99 25.0 25.0
Rs 500 to Rs 599.99 15.0 15.0
Total 100.0 100.0
Table 92 Sales of Other Sparkling Wine by Price Segment 2003-2004
% off-trade
2003 2004
Under Rs 449.99 5.0 5.0

Rs 450 to Rs 549.99 10.0 10.0
Rs 550 to Rs 649.99 30.0 30.0
Rs 650 to Rs 749.99 30.0 30.0
Rs 750 to Rs 849.99 20.0 20.0
Total 100.0 100.0
Euromonitor Page 70
5.5 Grape/Varietal Type

No clear classification of grape varietals
Due to the immaturity of wine consumption in India, there are no established quality controls or classification
systems of the type found elsewhere around the world. Publishing information on the country of production,
vintage and grape variety is not mandatory.
The popular grape/varietal types of wine commonly consumed are Merlot and Cabernet Sauvignon for still red
wine, and Chenin Blanc and Sauvignon Blanc for still white wine.
Trade sources also indicate that Shiraz, Chardonnay, Merlot and Zinfandel are amongst the leading grape
varietals, although it is not evident how much of this consumption is driven by grape varietal knowledge and
how much due to pricing strategies and brand image. Others are quick to point out that 60-70% of total volume
consumption stems mainly from popular brand recall and a low price positioning.
However, the frequent wine tasting sessions conducted in high class restaurants and hotels are expected to
educate budding wine connoisseurs on the various grape varietals, and increase wine appreciation.
Table 93 Sales of Still Red Wine by Grape/Varietal Type 1999-2004
% total volume
1999 2000 2001 2002 2003 2004
Cabernet Sauvignon/Shiraz - 2.0 3.0 5.0 5.0 5.0

Merlot 5.0 10.0 10.0 15.0 15.0 15.0
Others 95.0 88.0 87.0 80.0 80.0 80.0
Total 100.0 100.0 100.0 100.0 100.0 100.0
Table 94 Sales of Still White Wine by Grape/Varietal Type 1999-2004
% total volume
1999 2000 2001 2002 2003 2004
Chenin Blanc 5.0 10.0 10.0 15.0 15.0 15.0

Sauvignon Blanc - 5.0 5.0 8.0 10.0 10.0
Others 95.0 85.0 85.0 77.0 75.0 75.0
Total 100.0 100.0 100.0 100.0 100.0 100.0
5.6 Quality Classification

Lack of awareness regarding classification
With the consumption of wine in its early stages in India, there are very few consumers who distinguish between
New World wines and Old World wines. With the price of Old World wines being beyond the reach of the
majority of consumers, 90% of all wines sold are New World wines. Consumption of Old World wines is
restricted to the wine connoisseurs who are aware of the difference between New World and Old World wines.
Euromonitor Page 71
Many imported wines, especially New World wines, are brought in as bulk and then bottled within the country.
These are typically bottled by independent bottlers and are still sold as imported brands. This is seen as an
advantage, since importing in bulk results in much lower import tariffs than when the wine is bottled in the
county of origin and then imported.
Among the New World countries, the US and Australia leads the pack, with some of the Australian wineries
planning to form a consortium in order to make a joint entry by forming their own sales and marketing network.
Table 95 Sales of Still Red Wine by Quality Classification 1999-2004
% total volume
1999 2000 2001 2002 2003 2004
New World 95.0 94.0 93.0 92.0 90.0 90.0

Old World 5.0 6.0 7.0 8.0 10.0 10.0
Total 100.0 100.0 100.0 100.0 100.0 100.0
Table 96 Sales of Still White Wine by Quality Classification 1999-2004
% total volume
1999 2000 2001 2002 2003 2004
New World 99.0 98.0 97.0 95.0 95.0 95.0

Old World 1.0 2.0 3.0 5.0 5.0 5.0
Total 100.0 100.0 100.0 100.0 100.0 100.0
5.7 Non-grape wine by Type

The presence of non-grape wines in India is largely restricted to the unorganised sector, with fruit like jackfruit
and pineapple being used to prepare non-grape wines.
5.8 Distribution
The off-trade continues to dominate volume sales of wine, with 65% of sales in 2004, although the on-trade has
the higher share in value terms. Fortified wine and vermouth sales are generated confined to off-trade channels,
as on-trade channels are increasingly moving towards the more premium red and white wines, which offer
higher margins.
A substantial proportion of total wine consumption in India is of cheap, locally manufactured fortified wine,
which is generally consumed in the home. In on-trade channels, wine consumers tend to be more refined in their
tastes, opting for better quality wines rather than cheap ones. Rising social aspirations as well as the pursuit of
status are fuelling growth in demand for better quality wines in the on-trade channel. Wine is promoted through
wine-tasting sessions held in five star hotels and upmarket restaurants.
The on-trade, largely comprising bars, restaurants and hotels, has far higher mark-ups than the off-trade. For
wine companies, the hotel channel is crucial. Indage achieves 40% of its sales through these hotels that also aid
them in wine advertising and tasting sessions. Grover and Sula also have a significant share of sales through
hotels.
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Though off-trade channels currently lead on-trade channels in sales volume, industry sources expect the gap to
narrow in the forecast period. Hotels remain the key drivers for the wine companies in India, as they provide
opportunities for tasting wine, and offer the right kind of brand image support and a sophisticated environment.
In the off-trade, wine continues to be sold almost entirely through specialists, as is the case with other alcoholic
drinks. The only other channel is direct supply from wineries, including sales to consumers who visit the
wineries.
The fact that wines are restricted from being sold in other off-trade channels other than specialists has been a
major hindrance to the consumption of wine, as some consumers, especially women, are not comfortable with
purchasing from specialist liquor shops. Whilst retailing is limited in this way, the perception will remain that
people drink wine merely to get drunk.
Table 97 On-trade vs Off-trade Sales of Wine: Volume 1999-2004
Million litres
1999 2000 2001 2002 2003 2004
Off-trade 1.2 1.5 1.7 2.1 2.4 2.8

On-trade 0.6 0.7 0.9 1.0 1.3 1.5
TOTAL 1.8 2.2 2.6 3.1 3.7 4.3
Table 98 On-trade vs Off-trade Sales of Wine: Value 1999-2004
Rs million
1999 2000 2001 2002 2003 2004
Off-trade 505.5 636.8 784.9 963.1 1,158.5 1,372.1

On-trade 777.0 1,002.2 1,274.7 1,629.1 2,024.5 2,475.1
TOTAL 1,282.6 1,639.1 2,059.6 2,592.2 3,182.9 3,847.2
Table 99 On-trade vs Off-trade Sales of Wine: % Volume Growth 1999-2004
% volume growth
2003/04 1999-04 CAGR 1999/04 TOTAL
Off-trade 17.2 18.8 137.0

On-trade 18.2 21.2 161.3
TOTAL 17.5 19.6 144.9
Table 100 On-trade vs Off-trade Sales of Wine: % Value Growth 1999-2004

2003/04 1999-04 CAGR 1999/04 TOTAL
Euromonitor Page 73
Off-trade 18.4 22.1 171.4

On-trade 22.3 26.1 218.5
TOTAL 20.9 24.6 200.0
Table 101 Off-trade Sales of Wine by Distribution Format: % Analysis 1999/2004
% off-trade
1999 2004
Supermarkets/hypermarkets - -
Discounters - -
Direct sales - 0.5
Others - -
Total 100.0 100.0
6. SPIRITS
2004 headlines
• Value growth, at 11%, ahead of volume growth for spirits
• Indian whiskies' volume growth slows as vodka increasingly preferred
• Raw material prices rise as sugarcane crops fail, and ethanol is used for petroleum products
• McDowell & Co Ltd retains top position in volume terms with its wide range of brands
• Shaw Wallace & Co Ltd and Mohan Meakin Ltd lose out as competition intensifies
Spirits see faster value growth
Spirits volume sales grew at a healthy 7% in 2004, to 846 million litres. Value sales stood at just under Rs565
billion, corresponding to an overwhelming 87% of total value sales of alcoholic drinks in the country. Value
growth for spirits, at over 11% was faster than volume growth due to rises in prices of raw materials, especially
molasses, and also of glass bottles. There has also been an upgrading on the part of consumers towards more
expensive variants within Indian whisky, and also towards more premium Scotch varieties, as consumers'
disposable incomes have risen, with the Indian economy growing at a rapid pace.
India is probably the only country in the world where consumption of spirits exceeds that of beer. Spirits
accounted for 53% of alcoholic drinks volume sales in 2004, whilst the share of beer was 46%. This is in
contrast to the more developed countries, like the US and the UK, and also to China, where more than 70% of
total alcoholic drinks volume sales are of beer. Among the leading reasons for this unique situation in India is
the low price of Indian whiskies, and also the preference for high alcoholic content drinks that cannot be found
in beer.
Euromonitor Page 74
Indian whiskies synonymous with spirits
Spirits sales in India are very much dominated by domestic Indian whiskies, which are captured within "other
whisky" under Euromonitor's definitions. Close to 846 million litres of spirits were sold in 2004, of which 581
million litres were of Indian whiskies. However, Indian whiskies saw the slowest growth compared to other
spirits sold. With just under 7% volume growth in 2004, Indian whiskies grew at a slower pace than blended
Scotch whisky, which grew by almost 12%. Local spirits have a long history in India, and their product quality
and production techniques have improved over centuries of production, and are highly tailored to suit local taste
buds.
Indian whiskies are definitely the poor man's spirit, with prices as low as Rs200 for a 750ml bottle of the largest
selling whisky, Bagpiper, from Herbertsons Ltd. Though there is stiff competition from country liquor and also
unbranded spirits, concerns regarding the spurious nature of such products is increasingly pushing consumers
towards branded products. Total value sales of Indian whiskies in 2004 stood at Rs453 billion, representing a
rise of just under 11% on 2003.
Euromonitor classifies whisky as economy, mid-priced and premium, which differs slightly from the industry
classification of whisky as cheap, medium, prestige, premium and super-premium/deluxe. "Cheap" whiskies
account for an estimated 20% of volume sales, but operate on wafer thin margins, thus it is the prestige,
premium and super-premium brands that are most profitable for the companies.
Blended Scotch small but growing
Blended Scotch is an emerging product, with volume growth of just under 12% in 2004. 1.7 million litres of
blended Scotch, valued at just under Rs4,700 million, were sold in 2004. Some consumers who previously used
to be regular drinkers of premium Indian whiskies are slowly migrating towards the more premium blended
Scotch varieties, like Teachers 50 from Allied Domecq Spirits & Wines (India) Pvt Ltd. However, there
continues to be a lack of appreciation of Scotch whisky among many consumers, who believe in more "kick" for
less money.
Single malt and blended Scotch together accounted for less than 1% of volume sales of alcoholic drinks in 2004.
Single malt especially is an extremely niche segment, with sales taking place largely through five star hotels and
high-end pubs and bars. Though the government does allow five star hotels earning a specified amount of
foreign exchange to import Scotch whiskies, the majority of on-trade channels route it through importers, as the
process of importing is complex. Sales of single malt whiskies through off-trade channels are small, as prices in
excess of Rs2,000 are beyond the reach of the great majority of consumers.
Rum plays second fiddle to whisky
Accounting for close to 15% of total spirits volume sales in 2004, rum comes second to whisky in India. Over
126 million litres of rum were sold in 2004, with dark rum accounting for close to 98% of volume. Dark rum has
a long-standing presence in India, whilst white rum is a relatively new entrant.
Dark rum is seen as a "macho" drink, due in part to brand building efforts by manufacturers over the years, and
also the mixing of rum with cola has become popular among drinkers in the south. The transition from beer to
hard drinks often starts with rum as, among young people, rum is seen as a masculine drink. A substantial
proportion of sales of dark rum are to the defence services canteen stores. Falling within the category of
institutional sales, sales to the defence sector are not included in this report's coverage.
Shares in dark rum shifted in the latter part of the review period, as Old Monk from Mohan Meakin Ltd lost
ground due to intense competition from brands from McDowell. McDowell's Celebration Rum achieved the
leading status, with sales of over 37 million litres; giving it a volume share of 33%, whilst sales of Old Monk
slipped from over 40 million litres in 2002 to 37 million litres in 2003, due to an absence of marketing support.
One of the major gainers has been Majestic XXX rum, also from McDowell, which, since its introduction in
2001, has grown to account for close to 9% of volume sales of dark rum in 2003.
Sales of white rum are minimal in comparison to dark rum, with a mere 2.5 million litres sold in 2004. White
rum does not see as much activity from manufacturers as other spirits, and has suffered from increasing
competition from vodka and gin. Bacardi-Martini India Ltd with its brands Carta Blanca and Limon lead sales,
with close to 1.3 million litres sold in 2003.
Euromonitor Page 75
Brandy – another monolith with slow growth
Brandy follows whisky and rum as the third largest subsector within spirits in volume terms. Brandy exhibits a
clear regional preference, with South India accounting for close to 65% of the 114 million litres sold in 2004.
Volume growth of 7% for brandy in 2004 was slower than that for spirits as a whole, as, with increasing
options, consumers are moving away from brandy to other spirits like vodka. However, India is fast emerging as
the largest volume market in the world for brandy, with markets like Germany, which was once a stronghold for
brandy, seeing steep declines in consumption.
While brandy does not rank as high in the popularity stakes as "other" whisky, it is still more popular than rum,
vodka and gin, due to its lower price. This is not the case in other Asia-Pacific countries, where brandy is
typically priced higher than other spirits. In fact, unit prices of brandy, vodka and rum are generally lower in
India than in other countries due to local versions of products dominating the market, rather than imported ones.
A typical brandy consumer is a manual worker who drinks brandy as a cheap "high" after a day of hard labour.
McDowell's No 1 Brandy from McDowell & Co Ltd is among the top selling brandies in the world. McDowell's
No 1 leads the Indian market, with close to 31 million litres sold in 2003, up significantly from 23 million litres
in 2002, giving it a 29% volume share. Growth was aided by renewed focus on the brand by McDowell, and
with promotions also driving sales. Other prominent brands include Honeybee, also from McDowell, and John
Exshaw, a mass brand from Shaw Wallace & Co Ltd. Both of these brands had sales of more than 9 million
litres in 2003, with Honeybee holding a slight edge.
Cognac sales in India are negligible. Its presence is limited to imported brands such as Hennessy and Rémy
Martin in select on-trade channels.
Vodka leads the charge of the white brigade
White spirits saw faster volume and value growth than brown spirits in 2004, registering 14% volume growth
and over 16% value growth. Within white spirits, the fastest growing type was vodka, with a 22.5% rise in
volume and over 23% value growth, to over 8 million litres, valued at Rs4 billion. On-trade sources state that
vodka is preferred to brown spirits as it can be used to create exotic cocktails, as well as consumed straight.
Another strong indicator is the number of new launches that vodka saw in the latter part of the review period,
with the premium brand Belvedere being the latest to join the list. Interest in vodka was also stirred up with the
launch of flavoured variants by companies like United Distillers & Vintners India Ltd with Smirnoff Citrus, and
also local companies like Southern Agrifurane Industries Ltd launching cheap orange and apple flavoured
vodka.
Though the presence of international brands has grown in vodka, the subsector is led by a domestic brand.
Romanov, from Herbertsons, accounted for 45% of vodka volume sales in 2003, with sales of over 3 million
litres. Romanov has employed the strategy of brand building using surrogates and sponsoring music
shows/parties, along with low prices. At around Rs160 for a 750ml bottle, Romanov is among the cheapest
vodkas available. Smirnoff, with a 21% volume share of vodka, and White Mischief from Shaw Wallace, with a
16.5% volume share, are priced at Rs480 and Rs230 for a 750ml bottle, respectively, are rather more expensive
than Romanov. Smirnoff has kept its place as the second largest vodka brand by appealing to young people in its
promotions, and by creating excitement around the brand by launching flavoured variants.
Industry sources identify growth of the other major white spirit – gin – to be arising from the smaller towns and
cities of the country, with Rajasthan, Punjab, Haryana, Tamil Nadu and Andhra Pradesh being the major
markets. Gin, ever since Blue Riband from McDowell was promoted in magazines as being associated with
beaches and sunshine, has been perceived as a smooth refreshing drink, mainly for women. Close to 14 million
litres of gin were sold in 2004, valued at Rs6.5 billion. Blue Riband is by far the largest selling gin brand in
India, with sales of slightly more than 9.5 million litres in 2003, giving it a volume share of close to 76%. Gin
has an image as a cooling clear drink, with key consumers being women, often those who are moving on from
consuming beer towards spirits. The image of gin as a cooling drink means that consumption is heavily skewed
towards the summer months.
Ambiguity in rules leads to foreign investment being held back
Euromonitor Page 76
The Foreign Investment Promotion Board (FIPB), the authority for sanctioning Foreign Direct Investment in
India, has pushed to the backburner proposals for foreign investment in liquor companies. According to the
existing policy, 100% foreign direct investment is allowed by the central government in the alcoholic drinks
industry only if it is for existing capacity and not for additional capacity, following a ban imposed in 1975. New
units have, nevertheless, been operating under licences issued by state governments; however, as a result of
legal complications, the FIPB has not been recognising such units running on licences received from the state
governments and so foreign investment in liquor companies has been near-zero.
One of the companies that got itself involved in the muddy waters of DFI was United Distillers & Vintners,
which has in its portfolio popular brands like Smirnoff and VAT 69, which are bottled by contract bottling units.
The company requested the FIPB to take on record its agreement with the contract bottlers for bottling, since its
production has declined since the sale of Gilbey's Green Label to Triumph Distillers & Vintners Pvt Ltd in
2002. However, since the third party bottlers were working on licences issued by the state governments, the
FIPB declined approval for the third party manufacturing arrangement. The net result is that the agreement
between United Distillers and the contract bottlers is technically unauthorised by the government.
The canteen stores – a major market for spirits
Sales to the military or "canteen store sales", as they are popularly called in India comprise one of the largest
markets for liquor outside the normal off-trade channels in the country. Sales to the stores take place at prices
which are lower than those in the standard channels, as a large proportion of the duty is removed for brands
being sold to the stores. This results in a significant amount of diversion taking place from the stores to the open
market, as defence personnel buy from the canteen stores and sell in the open market to make profits.
Almost all sprits companies target the canteen stores, with larger companies, such as McDowell's, having a
separate department for defence sales. Radico Khaitan has brands like Contessa Rum, which are more popular in
the defence sector than in the off-trade, whilst Old Adventurer, from Shaw Wallace, also caters mainly to the
defence sector. Mohan Meakin's Old Monk derives close to one third of its sales from canteen stores, which are
not included within Euromonitor's coverage. Total sales of spirits to the defence sector in 2003 were estimated
to be as high as 90 million litres.
McDowell towers above the rest
McDowell & Co Ltd confirmed its position as the number one spirits company in India, with close to 27% of
volume sales in 2003. McDowell's share was almost that of its nearest competitor, Shaw Wallace. The company
grew strongly in 2003, with almost all of its brands performing well, especially the flagship McDowell's No 1
brand within whisky and brandy, and Celebration rum. McDowell's No 1 whisky is the second largest spirits
brands in the country, after Herbertsons' Bagpiper whisky, with a 6% volume share, while Celebration rum
comes third with a 5% share.
McDowell has been able to leverage its spread of distilleries and contract agreements with bottlers across the
country. McDowell has 12 company-owned distilleries and 27 contract distilleries spread across the country,
which provide substantial savings in terms of the costs involved in inter-state trade. Having been in existence for
over 100 years, McDowell has substantial financial muscle as well as political influence, as its Chairman, Mr
Vijaya Mallya, is a nominated Member of the Parliament. This enables the company to lobby for policies in
favour.
Herbertsons, an associate company of McDowell's, has close to an 8% share of the sector, with its Bagpiper
whisky and Romanov vodka being the largest brands within their respective subsectors. McDowell, together
with Herbertsons Ltd, has over a 37% volume share of the sector. Bagpiper continued to lead volume sales in
2003, with a volume share of over 7%. The brand carved a niche for itself when advertising was permitted with
the help of Hindi film stars like Akshay Kumar and Sunny Deol. With advertising currently prohibited, the
brand name is used for mixers and bottled water to keep it in the public eye.
as Shaw Wallace performance dips
The performance of Shaw Wallace in 2003 was in contrast to McDowell, with the former losing ground steadily.
Shaw Wallace has been on a declining trend from the 17% volume share it held in 2000 to a 14% volume share
in 2003. Among the largest losers among Shaw Wallace's brands were Haywards whisky, which saw volume
sales dip from over 20 million litres in 2002 to 18.7 million litres in 2003, and John Exshaw brandy, which saw
Euromonitor Page 77
sales fall from over 10 million litres in 2002 to just above 9 million litres in 2003. The two brands lost share in
the wake of increased competition from McDowell's brands.
In what could turn out to be one of the most important developments in the alcoholic drinks market in India for
over a decade, industry speculation is rife about Shaw Wallace being put up for sale. While some sources
suggest that the task given to McKinsey by the Group Company Jumbo as being only a valuation exercise,
others point out that the signals are on for a sale of Shaw Wallace. UB Group and Mason & Summers Alcobev
Pvt Ltd have emerged as the two leading bidders for the company. A purchase of Shaw Wallace by UB Group
would lead to large-scale consolidation in spirits, with the UB Group and its subsidiaries together holding over a
50% share of all volume sales of spirits.
and so does Mohan Meakin
Another steady loser has been Mohan Meakin Ltd, as its leading dark rum brand, Old Monk, has been wilting
under pressure from competition from Celebration rum from McDowell. Whilst Old Monk's volume share has
declined from 39% in 2002 to 33% in 2003, Celebration has increased its share from just under 29% in 2002 to
33% in 2003. Mohan Meakin's volume share of spirits fell to less than 6% in 2003 from over 7% in 2000,
largely as a result of the decline in Old Monk sales.
In a sector dominated by domestic companies, the one international company that has made a mark and is
moving up the ladder is Seagram India Ltd. Spurred on by the performance of its two Indian whisky brands,
Royal Stag and Imperial Blue, the company had a volume share in 2003 of over 5% in the spirits sector. Royal
Stag is the only brand from an international company among the top 10 spirits brands in India, with a 3%
volume share.
Raw materials price increases for spirits
The price of the extra neutral alcohol used in the manufacture of spirits rose sharply in 2004, as the area under
cultivation of sugarcane used for the production of molasses decreased. The difficulties were exacerbated when
the central government issued a directive in January 2003 requiring the mixing of ethanol with petroleum
products in all the molasses producing states. This meant that one of the main raw materials used for producing
alcoholic drinks, ethanol, would become increasingly scarce.
The brands which came under most pressure were the economy brands that operate on wafer thin margins.
McDowell & Co had to cut its production of Kerala Malt whisky, Vin whisky and Majestic XXX rum, which
achieve the majority of volume sales in the South Indian states of Andhra Pradesh, Tamil Nadu and Kerala, as
the state governments in the South Indian states, which control distribution, refused to accept a price hike for the
brands.
Slowdown in growth expected
Growth in sales of spirits in India is expected to slow down between 2004 and 2009, as the sector begins to
mature. The volume CAGR for 2004-2009 is expected to be less than 5%, down from the 8% CAGR seen over
the 1999-2004 review period.
Growth will be aided by the continuing preference for white spirits, with vodka leading growth with a volume
CAGR of over 14%. The popularity of vodka, with its neutral taste and mixing ability, is likely to last as
younger consumers try to distinguish themselves as fashionable from older brown spirits drinkers. Mixed vodka
and gin drinks, such as vodka and lime and gin and tonic, are popular in the rest of the world, and trade sources
are optimistic that white spirits will meet with the same success amongst the Indian population.
Brown spirits growth to taper off
The big three spirits – other whiskies, dark rum and brandy – are predicted to see growth tapering off from the
levels in 2004. As consumers begin to look for variety, and also desire to upgrade consumption, dark rum, other
whisky and brandy are predicted to grow more slowly than during the review period, at around 5% per annum
during the 2004-2009 forecast period.
Blended Scotch whisky is predicted to see faster growth, at over 8% per annum over the 2004-2009 period.
Migration of consumers from cheap Indian whiskies to the costlier blended Scotch and premium single malt is
Euromonitor Page 78
predicted to continue, though the transition is expected to be slow. This is because of the huge price gap
between Indian whiskies and Scotch whiskies, which will continue to keep Scotch as an expensive proposition
for most consumers. Some upgrading will take place within Indian whiskies, where premium varieties are
available, with some consumers experimenting with these before moving on to Scotch. Single malt, bourbon,
Canadian and Irish whisky will see consumer off-take, but sales are likely to be concentrated in high-end on-
trade channels.
Westernisation drives demand
Although there is a deep-seated tradition against alcohol consumption in India, consumer attitudes are gradually
relaxing, as people are exposed to Western culture through the media. Thus the consumer base for spirits will
gradually expand. The target segment of men aged 20-49 is expected to grow annually, and this, along with the
socioeconomic changes that are occurring, will drive sales in the Indian spirits sector in the coming years.
Growing awareness of white spirits is attracting non-drinkers, especially women. However, their success
depends on price and on-trade drinking habits. Furthermore, the entry of foreign players will intensify
competition, making it imperative for players to focus on pricing, as well as product extensions and marketing
strategies. More companies will start to focus on brand names to survive in the market.
The South region has always been more receptive to the alcohol drinking culture than the rest of the country.
With the presence of a large number of foreigners and expatriates, the southern population is more cosmopolitan
and open to Western influences and practices. The surging pub culture within this region, as well as in the
Mumbai and Delhi metropolitan areas, augurs well for overall consumption of alcoholic drinks. The pub culture
is especially flourishing in Andhra Pradesh, Karnataka and Tamil Nadu.
New premium products to be launched
As was seen in 2004, when international brands like Belvedere and Absolut were launched, targeting wealthier
consumers, it is expected that further launches will be targeted largely at high-end consumers. A reduction of
basic customs duty to 75% from the existing 150%, and the removal of additional duties would induce trials
from consumers for whom the imported brands were previously out of bounds due to their high prices.
Importers like Brindco Sales Ltd are expected to continue to import single malt brands like Glenmorangie and
bourbon whiskey like Jack Daniel's directly for on-trade channels. These brands will not be launched in the
country, as such, but nevertheless will be present in high-end on-trade channels like five star hotels and
upmarket pubs. However, this trade constitutes an extremely small part of the market, and it is expected that the
spirits requirements of the great majority of consumers will continue to be met by domestic players.
Table 102 Sales of Spirits by Subsector: Total Volume 1999-2004
mn litres
1999 2000 2001 2002 2003 2004
Whisk(e)y 398.8 433.2 469.0 506.5 545.5 583.0

- Single malt Scotch - - - - - -
whisky
- Blended Scotch whisky 1.0 1.1 1.2 1.3 1.5 1.7
- Bourbon/other US - - - - - -
whiskey
- Canadian whisky - - - - - -
- Irish whiskey - - - - - -
- Japanese whisky - - - - - -
- Other whisk(e)y 397.8 432.1 467.8 505.1 543.9 581.3
Brandy and Cognac 75.6 83.5 91.3 99.0 106.8 114.3
- Brandy 75.6 83.5 91.3 99.0 106.8 114.3
- Cognac - - - - - -
White spirits 11.9 13.2 14.8 16.9 19.5 22.2
- Gin 8.1 9.0 10.1 11.3 12.6 13.8
- Vodka 3.8 4.2 4.8 5.6 6.9 8.4
Rum 84.7 90.7 98.0 106.3 116.0 126.2
- White rum 1.7 1.8 2.0 2.2 2.4 2.5
Euromonitor Page 79
- Dark rum 83.0 88.9 96.0 104.1 113.6 123.7

Tequila (and mezcal) - - - - - -
Liqueurs - - - - - -
- Cream-based liqueurs - - - - - -
- Bitters - - - - - -
- Other liqueurs - - - - - -
Other spirits - - - - - -
Spirits 571.0 620.7 673.1 728.7 787.7 845.7
estimates
Table 103 Sales of Spirits by Subsector: Total Value 1999-2004
Rs million
1999 2000 2001 2002 2003 2004
Whisk(e)y 266,637.3 298,934.8 333,561.6 372,062.2 413,048.3 457,779.4

whisky
- Blended Scotch whisky 2,565.3 2,877.1 3,237.8 3,693.9 4,182.5 4,698.7
whiskey
- Other whisk(e)y 264,072.0 296,057.7 330,323.8 368,368.2 408,865.8 453,080.7
Brandy and Cognac 25,194.8 29,111.7 32,996.3 37,247.1 41,694.8 46,212.4
- Brandy 25,194.8 29,111.7 32,996.3 37,247.1 41,694.8 46,212.4
- Cognac - - - - - -
White spirits 4,876.0 5,657.4 6,622.9 7,817.1 9,154.2 10,667.0
- Gin 3,233.9 3,758.0 4,384.6 5,078.0 5,755.4 6,474.6
- Vodka 1,642.1 1,899.5 2,238.3 2,739.2 3,398.7 4,192.4
Rum 27,646.4 30,963.7 34,701.8 39,314.2 44,377.5 50,333.1
- White rum 982.9 1,130.1 1,288.3 1,473.4 1,667.0 1,861.5
- Dark rum 26,663.5 29,833.6 33,413.6 37,840.8 42,710.5 48,471.6
- Bitters - - - - - -
Spirits 324,354.5 364,667.7 407,882.5 456,440.5 508,274.7 564,991.9
estimates
Table 104 Sales of Spirits by Subsector: % Total Volume Growth 1999-2004

2003/04 1999-04 CAGR 1999/04 TOTAL
Whisk(e)y 6.9 7.9 46.2

- Single malt Scotch whisky - - -
- Blended Scotch whisky 11.7 10.8 67.0
- Bourbon/other US whiskey - - -
- Canadian whisky - - -
- Irish whiskey - - -
- Japanese whisky - - -
Euromonitor Page 80
- Other whisk(e)y 6.9 7.9 46.1

Brandy and Cognac 7.0 8.6 51.2
- Brandy 7.0 8.6 51.2
- Cognac - - -
White spirits 14.1 13.3 86.8
- Gin 9.6 11.2 69.9
- Vodka 22.5 17.4 123.4
Rum 8.8 8.3 49.0
- White rum 7.5 8.7 51.9
- Dark rum 8.9 8.3 49.0
Tequila (and mezcal) - - -
Liqueurs - - -
- Cream-based liqueurs - - -
- Bitters - - -
- Other liqueurs - - -
Other spirits - - -
Spirits 7.4 8.2 48.1
estimates
Table 105 Sales of Spirits by Subsector: % Total Value Growth 1999-2004

2003/04 1999-04 CAGR 1999/04 TOTAL
Whisk(e)y 10.8 11.4 71.7

- Single malt Scotch whisky - - -
- Blended Scotch whisky 12.3 12.9 83.2
- Bourbon/other US whiskey - - -
- Canadian whisky - - -
- Irish whiskey - - -
- Japanese whisky - - -
- Other whisk(e)y 10.8 11.4 71.6
Brandy and Cognac 10.8 12.9 83.4
- Brandy 10.8 12.9 83.4
- Cognac - - -
White spirits 16.5 16.9 118.8
- Gin 12.5 14.9 100.2
- Vodka 23.4 20.6 155.3
Rum 13.4 12.7 82.1
- White rum 11.7 13.6 89.4
- Dark rum 13.5 12.7 81.8
Tequila (and mezcal) - - -
Liqueurs - - -
- Cream-based liqueurs - - -
- Bitters - - -
- Other liqueurs - - -
Other spirits - - -
Spirits 11.2 11.7 74.2
estimates
Table 106 Company Shares of Spirits by National Brand Owner 2000-2003
% total volume
Company 2000 2001 2002 2003
Euromonitor Page 81
Allied Domecq Spirits & Wine 0.1 0.1 0.1 0.1

(India) Pvt Ltd
Bacardi-Martini India Ltd 0.2 0.2 0.2 0.2
BDA Distilleries 5.0 4.7 4.3 4.4
Brihan Maharashtra Sugar 0.2 0.2 0.2 0.2
Syndicate Ltd, The
Empee Distilleries 0.3 0.3 0.3 0.3
Herbertsons Ltd 8.4 7.8 7.8 7.8
Jagatjit Industries Ltd 6.3 6.3 6.3 6.3
McDowell & Co Ltd 25.8 24.3 24.9 26.8
Polychem - - 0.5 0.6
Radico Khaitan Ltd 4.5 4.4 4.3 5.0
Seagram India Ltd 2.6 2.7 4.7 5.3
Shiva Distilleries Ltd 0.5 0.5 0.5 0.5
Triumph Distillers & Vintners Ltd - - 2.4 2.6
United Distillers & Vintners 3.6 3.5 0.2 0.2
India Ltd
Others 18.1 21.9 22.0 20.1
Total 100.0 100.0 100.0 100.0
estimates
Table 107 Company Shares of Spirits by Global Brand Owner 2000-2003
% total volume
Company 2000 2001 2002 2003
UB Group 34.2 32.1 35.0 37.3

Jagatjit Industries Ltd 6.3 6.3 6.3 6.3
Pernod Ricard Groupe 0.0 2.7 4.7 5.3
Radico Khaitan Ltd 4.5 4.4 4.3 5.0
BDA Distilleries 5.0 4.7 4.3 4.4
Polychem 0.1 0.1 0.5 0.6
Shiva Distilleries Ltd 0.5 0.5 0.5 0.5
Empee Distilleries 0.3 0.3 0.3 0.3
Diageo Plc 3.5 3.4 0.2 0.2
Brihan Maharashtra Sugar 0.2 0.2 0.2 0.2
Syndicate Ltd, The
Bacardi & Co Ltd 0.2 0.2 0.2 0.2
Allied Domecq Plc 0.1 0.1 0.1 0.1
Seagram Co Ltd, The 2.6 - - -
Others 18.1 21.9 22.0 20.1
Total 100.0 100.0 100.0 100.0
estimates
Table 108 Brand Shares of Spirits 2000-2003
% total volume
Owner)
Bagpiper (UB Group) Herbertsons Ltd 8.1 7.5 7.4 7.4
Euromonitor Page 82
McDowell's No 1 (UB McDowell & Co Ltd 4.9 5.1 5.0 5.7

Group)
Celebration (UB McDowell & Co Ltd 3.5 3.6 4.1 4.7
Group)
Old Monk Mohan Meakin Ltd 6.5 5.9 5.5 4.7
Officer's Choice BDA Distilleries 5.0 4.7 4.3 4.4
McDowell's No 1 McDowell & Co Ltd 3.0 3.4 3.2 3.9
Brandy (UB Group)
Haywards Shaw Wallace & Co Ltd 3.6 3.9 4.0 3.6
Director's Special Shaw Wallace & Co Ltd 4.2 3.6 3.7 3.4
Aristocrat Jagatjit Industries Ltd 3.2 3.2 3.2 3.2
Royal Stag (Pernod Seagram India Ltd - 1.5 2.8 2.9
Ricard Groupe)
30 Dec 1899 Radico Khaitan Ltd 2.5 2.7 2.9 2.7
Gilbey's Green Triumph Distillers & - - 2.4 2.6
Label (UB Group) Vintners Ltd
Vin Whisky (UB Group) McDowell & Co Ltd 0.1 0.4 1.4 1.9
Imperial Blue Seagram India Ltd - 0.6 1.4 1.9
(Pernod Ricard
Groupe)
Old Cask (UB Group) McDowell & Co Ltd 1.6 1.6 1.6 1.6
Bonnie Scot Jagatjit Industries Ltd 1.6 1.6 1.6 1.6
Kerala Malted (UB McDowell & Co Ltd 5.4 3.1 2.2 1.5
Group)
Contessa XXX Rum Radico Khaitan Ltd 2.0 1.7 1.4 1.4
Honeybee (UB Group) McDowell & Co Ltd 1.6 1.6 1.4 1.3
Old Tavern Shaw Wallace & Co Ltd 2.1 1.7 1.4 1.3
Majestic XXX (UB McDowell & Co Ltd - 0.3 1.0 1.2
Group)
John Exshaw Shaw Wallace & Co Ltd 1.4 1.4 1.4 1.2
Blue Riband (UB McDowell & Co Ltd 1.2 1.2 1.2 1.2
Group)
Diplomat (UB Group) McDowell & Co Ltd 1.4 1.1 1.1 1.1
Royal Challenge Shaw Wallace & Co Ltd 0.8 0.8 0.8 0.9
Premium Whisky
Golconda Shaw Wallace & Co Ltd 0.8 0.9 0.9 0.9
Binnie Jagatjit Industries Ltd 0.8 0.8 0.8 0.8
Old Admiral VSOP Radico Khaitan Ltd - - - 0.8
Brandy
Antiquity Premium Shaw Wallace & Co Ltd 0.7 0.7 0.7 0.7
Whisky
Caesar (UB Group) McDowell & Co Ltd 0.5 0.5 0.5 0.5
Exshaw VSOP Shaw Wallace & Co Ltd 0.5 0.5 0.5 0.5
Victory Brandy (UB McDowell & Co Ltd 0.4 0.4 0.4 0.4
Group)
Triple Crown Brandy Mohan Meakin Ltd 0.4 0.4 0.4 0.4
Romanov (UB Group) Herbertsons Ltd 0.3 0.3 0.3 0.4
Oaken Glow (Pernod Seagram India Ltd - 0.3 0.3 0.3
Ricard Groupe)
Derby Special McDowell & Co Ltd - - - 0.3
Premium Whisky (UB
Group)
Signature Premium McDowell & Co Ltd 0.2 0.2 0.2 0.2
Whisky (UB Group)
McDowell's Premium McDowell & Co Ltd 0.2 0.2 0.2 0.2
Whisky (UB Group)
Brihan's Premium Brihan Maharashtra 0.2 0.2 0.2 0.2
Whisky Sugar Syndicate Ltd, The
Napolean Doctor Mohan Meakin Ltd 0.2 0.2 0.2 0.2
Brandy
Monitor Brandy Shiva Distilleries Ltd 0.2 0.2 0.2 0.2
Blender's Pride Seagram India Ltd - 0.2 0.1 0.2
(Pernod Ricard
Groupe)
Smirnoff (Diageo Plc) United Distillers & 0.1 0.1 0.2 0.2
Vintners India Ltd
Euromonitor Page 83
Bacardi Carta Bacardi-Martini India Ltd 0.2 0.2 0.2 0.2

Blanca (Bacardi &
Co Ltd)
White Mischief Shaw Wallace & Co Ltd 0.1 0.1 0.1 0.2
Golden Grape (UB McDowell & Co Ltd 0.1 0.1 0.1 0.1
Group)
Empee’s Napoleon Empee Distilleries 0.1 0.1 0.1 0.1
Brandy
Cardinal Grape Brandy Shiva Distilleries Ltd 0.1 0.1 0.1 0.1
Golden Eagle Doctor Mohan Meakin Ltd 0.1 0.1 0.1 0.1
Brandy
McLene Brandy Empee Distilleries 0.1 0.1 0.1 0.1
Royal Stag (Seagram Seagram India Ltd 1.7 - - -
Co Ltd, The)
Imperial Blue Seagram India Ltd 0.3 - - -
(Seagram Co Ltd, The)
Oaken Glow (Seagram Seagram India Ltd 0.3 - - -
Co Ltd, The)
Blender's Pride Seagram India Ltd 0.2 - - -
(Seagram Co Ltd, The)
Gilbey's Green United Distillers & 2.8 2.7 - -
Label (Diageo Plc) Vintners India Ltd
Others 24.2 27.9 26.4 24.2
Total 100.0 100.0 100.0 100.0
estimates
Table 109 Forecast Sales of Spirits by Subsector: Total Volume 2004-2009
mn litres
2004 2005 2006 2007 2008 2009
Whisk(e)y 583.0 618.0 649.9 679.1 705.7 729.8

whisky
- Blended Scotch whisky 1.7 1.9 2.0 2.2 2.4 2.5
whiskey
- Other whisk(e)y 581.3 616.1 647.9 676.9 703.3 727.3
Brandy and Cognac 114.3 121.2 127.5 133.1 138.3 142.8
- Brandy 114.3 121.2 127.5 133.1 138.3 142.8
- Cognac - - - - - -
White spirits 22.2 24.9 27.5 30.0 32.3 34.4
- Gin 13.8 14.9 15.8 16.7 17.4 17.9
- Vodka 8.4 10.0 11.7 13.3 14.9 16.4
Rum 126.2 135.9 144.7 152.9 160.6 167.7
- White rum 2.5 2.7 2.9 3.0 3.2 3.3
- Dark rum 123.7 133.2 141.9 149.9 157.5 164.4
- Bitters - - - - - -
Spirits 845.7 900.0 949.6 995.1 1,036.8 1,074.7
Euromonitor Page 84
Table 110 Forecast Sales of Spirits by Subsector: Total Value 2004-2009
Rs million
2004 2005 2006 2007 2008 2009
Whisk(e)y 457,779.4 484,503.7 509,637.4 532,973.4 553,764.1 571,598.7

whisky
- Blended Scotch whisky 4,698.7 5,042.3 5,378.8 5,703.0 6,018.5 6,312.9
whiskey
- Other whisk(e)y 453,080.7 479,461.3 504,258.6 527,270.3 547,745.6 565,285.8
Brandy and Cognac 46,212.4 48,907.1 51,336.6 53,552.4 55,438.8 57,106.9
- Brandy 46,212.4 48,907.1 51,336.6 53,552.4 55,438.8 57,106.9
- Cognac - - - - - -
White spirits 10,667.0 11,909.4 13,097.8 14,207.2 15,227.9 16,145.9
- Gin 6,474.6 6,954.1 7,372.7 7,744.0 8,070.7 8,353.4
- Vodka 4,192.4 4,955.3 5,725.1 6,463.2 7,157.1 7,792.5
Rum 50,333.1 54,575.3 58,517.5 62,095.9 65,374.5 68,348.2
- White rum 1,861.5 1,982.8 2,095.2 2,198.0 2,290.5 2,370.9
- Dark rum 48,471.6 52,592.5 56,422.3 59,898.0 63,084.0 65,977.3
- Bitters - - - - - -
Spirits 564,991.9 599,895.4 632,589.4 662,828.9 689,805.2 713,199.8
Table 111 Forecast Sales of Spirits by Subsector: % Total Volume Growth 2004-2009

2004-09 CAGR 2004/09 TOTAL
Whisk(e)y 4.6 25.2

- Single malt Scotch whisky - -
- Blended Scotch whisky 8.4 49.4
- Bourbon/other US whiskey - -
- Canadian whisky - -
- Irish whiskey - -
- Japanese whisky - -
- Other whisk(e)y 4.6 25.1
Brandy and Cognac 4.6 24.9
- Brandy 4.6 24.9
- Cognac - -
White spirits 9.1 54.7
- Gin 5.3 29.7
- Vodka 14.4 95.8
Rum 5.8 32.9
- White rum 5.3 29.5
- Dark rum 5.9 32.9
Tequila (and mezcal) - -
Liqueurs - -
- Cream-based liqueurs - -
- Bitters - -
- Other liqueurs - -
Other spirits - -
Spirits 4.9 27.1
Euromonitor Page 85
Table 112 Forecast Sales of Spirits by Subsector: % Total Value Growth 2004-2009

2004-09 CAGR 2004/09 TOTAL
Whisk(e)y 4.5 24.9

- Single malt Scotch whisky - -
- Blended Scotch whisky 6.1 34.4
- Bourbon/other US whiskey - -
- Canadian whisky - -
- Irish whiskey - -
- Japanese whisky - -
- Other whisk(e)y 4.5 24.8
Brandy and Cognac 4.3 23.6
- Brandy 4.3 23.6
- Cognac - -
White spirits 8.6 51.4
- Gin 5.2 29.0
- Vodka 13.2 85.9
Rum 6.3 35.8
- White rum 5.0 27.4
- Dark rum 6.4 36.1
Tequila (and mezcal) - -
Liqueurs - -
- Cream-based liqueurs - -
- Bitters - -
- Other liqueurs - -
Other spirits - -
Spirits 4.8 26.2

South India the largest market for spirits
South India leads volume sales of spirits in India, with sales of 310 million litres, worth Rs165 billion, in 2004.
West India is, however, the leading region on value terms. South India accounts for close to 37% of total spirits
volume sales in the country. However, the region had the slowest volume growth rate in 2004, at just under 7%,
due to its relative maturity.
The states of Andhra Pradesh and Tamil Nadu lead spirits consumption. The other South Indian states of
Karnataka and Kerala do not lag far behind. The sales of spirits in these four states are such that close to 50% of
volume sales for the country's number one spirit producer, McDowell & Co Ltd, arise from the region alone.
Coupled with this is the fact that there are brands like Majestic XXX rum and Vin whisky which derive almost
all of their sales from the states of Kerala and Andhra Pradesh, respectively. However, in South India, Old
Monk from Mohan Meakin Ltd continues to be ranked the number one brand. Old Monk is followed by
McDowell's No 1 Whisky from McDowell & Co Ltd, and Bagpiper whisky from Herbertsons Ltd.
One of the differences that sets South India apart from other regions in terms of alcohol sales is the nature of
off-trade distribution. All four states have direct intervention of the government in the distribution channels,
thereby reducing the sale of smuggled or duty-evaded products. While in Andhra Pradesh, Kerala and
Karnataka, the state acts as an intermediary by being a beverage corporation; in Tamil Nadu, the state has taken
the role of retailer as well.
That said, the involvement of the state government does not always augur well, as is seen in Tamil Nadu, where
the retail shops owned by the state have started stocking more of the mass-market brands at the expense of
Scotch whiskies. The incumbent Tamil Nadu state government has also taken a protectionist stance for local
brands, and does not sell brands of companies located outside the state.
Euromonitor Page 86
Though South India leads the consumption of all kinds of spirits, it is in brandy that the difference is most
apparent. South India accounted for close to 65% of volume sales of brandy in 2004. The preference for
consumption of brandy is so prevalent that liquor shops are often referred to as "brandy shops". The bulk of the
consumption of brandy comes from the states of Tamil Nadu and Kerala.
West India the largest market in value terms
West India is the largest market in terms of value sales of spirits in India, with sales of 203 million litres sales in
2004, valued at Rs180 billion. This is a clear indication of the preference among the consumers of the region for
premium varieties.
Maharashtra, in West India, is considered to be among the most profitable states in the country for the sale of
alcohol. The Maharashtra government has some of the more accommodating liquor policies of the country, with
lower duties and taxes. Madhya Pradesh is currently an auction market, where liquor shops are auctioned out;
however, the government is moving over to a licence fee based system from the financial year 2004-2005.
The situation in Gujarat, where there is complete prohibition, is in stark contrast to Maharashtra and Madhya
Pradesh. Apart from certain people who hold permits to buy liquor for various reasons, the sale of liquor openly
is prohibited. The net result of prohibition is that liquor is clandestinely smuggled into the state. Much is
counterfeit, with, more often than not ,a Bagpiper whisky tasting the same as Johnnie Walker. The packaging
differs but what goes into the bottle is very often the same spirit.
West India is characterised by a growing preference for single malts and for vodka. Almost all of the new
product launches for vodka have been introduced in Mumbai, the commercial capital of the country, and Goa, a
tourist haven, before being rolled out nationally. However, growth in premium vodka and single malt whiskies
is emerging mainly from the on-trade channels.
North wrests west in volume sales but lags in values
North India, with sales of 209 million litres in 2004, accounted for one quarter of the Indian market for spirits.
Though in volume terms, North India is a bigger market than the West, in value and in per capita consumption
terms, North India is much smaller. Per capita consumption in West India was 0.93 litres in 2004, compared
with 0.64 litres in North India.
North India experiences hot summers and cold winters, which has a definite role to play in the sale of spirits.
During the summers, consumers tend to prefer beer to hard liquor, with sales of dark rum being almost nil. The
trend reverses in the winter months of December, January and February, when consumers revert to hard liquor
to keep themselves warm.
Sales of spirits in North India differ markedly from those in the other regions of the country. While Punjab,
Haryana and Himachal Pradesh are auction markets, Uttar Pradesh shifted from being an auction market to a
licence based one in 2001. Auction markets normally suffer from monopolistic controls, as, more often than not,
through underhand dealings, cartels gain control of the vending outlets. All three regions see strong competition
from country liquor, which is extremely popular in these parts.
Rajasthan, another licence-based market, is a major tourist centre and is considered to be among the more
profitable liquor markets in the country. Rajasthan saw the revival in 2003 of some of its heritage liquors, which
feature a blend of spices and herbs, and are normally consumed on the rocks after dinner.
Delhi and its surrounding National Capital Region (NCR) constitute a major market in the North. The
government has complete control of liquor sales, with both distribution and retail sales being taken care of by
four different government departments. Delhi is also a key test bed for launches, with the premium brands
finding Delhi a suitable place for test marketing, along with Mumbai in West India. Although prices are
government controlled, trade sources indicate that Delhi actually has lower prices when compared to
neighbouring states.
Bagpiper from Herbertsons continues to the leading spirits brand in North India, followed by Director's Special
from Shaw Wallace & Co Ltd and Officer's Choice from BDA Distilleries. Old Monk from Mohan Meakin
comes fourth, whilst McDowell's Honeybee brandy occupies the fifth sloth. North India, unlike the South, is not
a major market for McDowell.
Euromonitor Page 87
East and Northeast India the smallest market for spirits
East and Northeast India accounted for 14% of total volume sales in 2004, with sales close to 123 million litres.
However, the region saw the fastest volume growth rate in 2004, at over 8%, albeit from a small base.
Kolkata in West Bengal is one of the prime markets in the region. The city has a high proportion of wealthy and
sophisticated consumers, which prompts companies to introduce their premium brands in the area. However,
outside Kolkata and a handful of other cities, the market is mainly rural. States like Bihar, Orissa and Jharkhand,
and also the Northeast, are characterised by low purchasing power and a consumer preference for cheap country
liquor.
Northeast India remains largely inaccessible, whilst in some states, such as Nagaland and Manipur, liquor is
prohibited. This leaves the market open to bootleggers.
Bagpiper from Herbertsons leads spirits sales in East and Northeast India, as it does in all the regions with the
exception of South India, underlining its status as the largest spirit brand in India. Bagpiper is followed by two
other whisky brands, Officer's Choice from BDA Distilleries and Directors Special from Shaw Wallace.
South falls in line with national trends
Spirits sales are expected to lose steam in the period 2004-2009, as whisky and brandy consumption slowly
becomes saturated, especially in the South. Consumers are likely to shift from brown spirits, such as whisky and
brandy, to white spirits, notably vodka.
Annual average volume growth in South India is expected to be in line with the national CAGR, of just under
5%, between 2004 and 2009. Dark rum is likely to be one of the growth drivers for the region, as the South
Indian love affair with dark rum and cola is expected to continue. The liquor policies of the various state
governments of the South are unlikely to see any major changes, since the governments are unlikely to pull out
from their involvement in one of their largest contributors of revenue.
Another important growth driver over the forecast period is expected to be vodka, which will see the fastest
growth between 2004 and 2009, of over 18% per annum. The popularity of the local spirits brand MGM Vodka
in orange and apple flavours will contribute to this rapid increase.
West and North slows down
West and North India are expected to see similar annual average volume growth of just under 5% between 2004
and 2009. Value growth is expected to be marginally higher than volume growth. As import restrictions ease,
West India, especially Mumbai and Goa, is expected to see more and more global brands flow in to try to attract
the elite population.
However, growth for such global brands is expected to centre on the on-trade channels through single servings,
as the prices of these brands are likely to be too high to generate significant off-trade sales in bottles. Vodka and
blended Scotch are predicted to see the fastest volume growth in West India, at 15% and 8% per annum,
respectively. Single malt whiskies are also expected to gain a stronger presence in high-end on-trade outlets
though the market will be extremely niche.
While Delhi, like Mumbai, is expected to see more global single malt whiskies, with a greater on-trade presence,
the other states in the region are unlikely to see such activity. The strong presence of country liquor in these
parts is likely to hinder branded spirits from seeing strong growth. Two of the big markets of the region –
Punjab and Haryana – continue to be auction markets, with pricing for some products being rather arbitrary. A
change in policy of the government towards licensing of outlets, as is the case in Uttar Pradesh, is likely to
increase sales. However, with the political and financial clout of the cartels in the region, it might be some time
before that happens.
East and Northeast to see fastest growth
Euromonitor Page 88
East and Northeast India is predicted to see the fastest volume growth over the forecast period, with a 5.5%
CAGR, albeit from a small base. Nevertheless, per capita consumption in East and Northeast India is expected
to remain the lowest at 0.5 litres in 2009.
Almost the whole of the Northeast remains to be tapped, with this part of the region currently being served by
country liquor, and spurious and smuggled products. Mass brands should find favour in the East and Northeast
among those consumers who, despite comparatively low purchasing power, wish to trade up from cheap country
liquor to branded products. In the more metropolitan Kolkata, which accounts for the bulk of sales in the region,
national trends will be mirrored, with white spirits expected to see rapid growth. There is also predicted to be an
increased preference for single malt, blended Scotch and premium domestic whiskies in Kolkata, as Kolkata has
the highest per capita incomes in the region.
Table 113 Sales of Spirits by Region: Total Volume 1999-2004
mn litres
1999 2000 2001 2002 2003 2004
North India 141.2 153.2 166.0 179.6 194.7 209.2
South India 213.2 231.2 250.0 269.8 290.2 310.3
West India 134.7 147.7 161.3 175.3 189.5 203.5
TOTAL 571.0 620.7 673.1 728.7 787.7 845.7
estimates
Table 114 Sales of Spirits by Region: Total Value 1999-2004
Rs million
1999 2000 2001 2002 2003 2004
North India 89,361.0 100,133.1 112,362.9 125,716.8 140,431.8 156,723.3
South India 95,279.5 107,554.3 120,486.2 134,780.4 149,281.1 165,046.0
West India 102,194.2 115,413.5 129,145.0 144,950.3 161,828.9 179,618.5
TOTAL 324,354.5 364,667.7 407,882.5 456,440.5 508,274.7 564,991.9
estimates
Table 115 Sales of Spirits by Region: % Total Volume Growth 1999-2004

2003/04 1999-04 CAGR 1999/04 TOTAL

West India 7.4 8.6 51.1
TOTAL 7.4 8.2 48.1
estimates
Euromonitor Page 89
Table 116 Sales of Spirits by Region: % Total Value Growth 1999-2004

2003/04 1999-04 CAGR 1999/04 TOTAL

North India 11.6 11.9 75.4
South India 10.6 11.6 73.2
West India 11.0 11.9 75.8
TOTAL 11.2 11.7 74.2
estimates
Table 117 Spirits Brand Ranking by Region 2003
100 Pipers (Seagram India Ltd) - - X -

8 PM Whisky (Radico Khaitan Ltd) - 5 - -
Aravalli White Rum (Alwar Malt - - X -
& Agro Foods Manufacturers Co
Ltd)
Aristocrat (Jagatjit Industries - - - X
Ltd)
Bacardi Carta Blanca (Bacardi- - - X -
Martini India Ltd)
Bacardi Limon (Bacardi-Martini - - X -
India Ltd)
Bagpiper (Herbertsons Ltd) 3 1 1 1
Black Dog (McDowell & Co Ltd) - - X -
Blenders Pride (Seagram India - - X -
Ltd)
Blue Riband (McDowell & Co Ltd) - X X -
Caesar (McDowell & Co Ltd) - - X -
Celebration (McDowell & Co Ltd) - X 4 X
Contessa XXX Rum (Radico - - X X
Khaitan Ltd)
Director's Special (Shaw X 2 3 2
Wallace & Co Ltd)
Gilbey's Green Label (Triumph - - X -
Distillers & Vintners Ltd)
Gilbey's London Dry Gin (United - - X -
Distillers & Vintners India Ltd)
Golconda (Shaw Wallace & Co Ltd) X X - X
Gold Cup Brandy (IFB Agro - - X -
Industries Ltd)
Honeybee (McDowell & Co Ltd) X - X 5
McDowell's No 1 (McDowell & Co 2 3 X -
Ltd)
McDowell's No 1 Brandy 4 X X X
(McDowell & Co Ltd)
McDowell's No 1 Celebration 5 - - -
(McDowell & Co Ltd)
Officer's Choice (BDA - 4 2 3
Distilleries)
Old Cask (McDowell & Co Ltd) X - - -
Old Monk (Mohan Meakin Ltd) 1 X 5 4
Old Port Deluxe Rum (Amrut - - X -
Distilleries Ltd)
Old Smuggler (Allied Domecq - - X -
Spirits & Wine (India) Pvt Ltd)
Euromonitor Page 90
Romanov (Herbertsons Ltd) X - X -

Royal Challenge (Shaw Wallace & X X - -
Co Ltd)
Royal Challenge Premium Whisky - - X -
(Shaw Wallace & Co Ltd)
Royal Stag (Seagram India Ltd) - - X X
Seagram's Gin (Seagram India Ltd) - - X -
Signature Premium Whisky - - X -
(McDowell & Co Ltd)
Smirnoff (United Distillers & - - X -
Vintners India Ltd)
Teacher's 50 (Allied Domecq - - X -
Spirits & Wine (India) Pvt Ltd)
Teacher's Highland Cream - - X -
(Allied Domecq Spirits & Wine
(India) Pvt Ltd)
Triple Crown Brandy (Mohan - - X -
Meakin Ltd)
Vat 69 (United Distillers & - - X -
Vintners India Ltd)
Vladivar Vodka (Shaw Wallace & - - X -
Co Ltd)
Volga Vodka (IFB Agro - - X -
Industries Ltd)
White Mischief (Shaw Wallace & - - X -
Co Ltd)
White Mischief Paradise (Shaw - - X -
Wallace & Co Ltd)
estimates
Notes: 1) Rankings by order, with (1) representing highest sales in a given region.
2) In no particular order, (x) represents other popular brands, outside of the top 5 ranked earlier in a given
region.
Table 118 Forecast Sales of Spirits by Region: Total Volume 2004-2009
mn litres
2004 2005 2006 2007 2008 2009
North India 209.2 222.8 235.0 245.8 255.7 264.5
South India 310.3 329.4 347.2 363.8 379.3 393.4
West India 203.5 216.4 227.7 238.2 247.8 256.5
TOTAL 845.7 900.0 949.6 995.1 1,036.8 1,074.7
Table 119 Forecast Sales of Spirits by Region: Total Value 2004-2009
Rs million
2004 2005 2006 2007 2008 2009
North India 156,723.3 167,103.6 176,807.1 185,658.0 193,103.0 198,957.8
South India 165,046.0 174,284.3 182,678.8 190,390.5 197,300.2 203,405.3
West India 179,618.5 190,379.4 200,698.6 210,410.4 219,466.8 227,745.6
TOTAL 564,991.9 599,895.4 632,589.4 662,828.9 689,805.2 713,199.8
Euromonitor Page 91
Table 120 Forecast Sales of Spirits by Region: % Total Volume Growth 2004-2009

2004-09 CAGR 2004/09 TOTAL

West India 4.7 26.0
TOTAL 4.9 27.1
Table 121 Forecast Sales of Spirits by Region: % Total Value Growth 2004-2009

2004-09 CAGR 2004/09 TOTAL

West India 4.9 26.8
TOTAL 4.8 26.2

Vodka sees a slew of brands being launched
2003 and 2004 saw a flurry of activity in vodka, with both flavoured and non-flavoured varieties being launched
in the country. Smirnoff Citrus Twist was launched in January 2003. The brand was introduced in select
markets, with other flavours – vanilla, raspberry and orange – launched more than a year later, in August 2004.
Following up Smirnoff was Absolut vodka. Absolut, which is priced at in excess of Rs1,200 for a 750ml bottle,
was launched in Mumbai, Bangalore and Delhi targeting high end on-trade channels, as well as certain off-trade
outlets.
Next in line was Seagram's Fling targeting, urban young people. The company planned a series of "Flingles"
nights and promotions across bars and pubs, and also tied up with MTV to promote the events. Fling was
launched both as non-flavoured and in peach and blackcurrant flavours.
Belvedere, from Moët Hennessy India Ltd, was launched as a luxury vodka. Belvedere was introduced initially
in Mumbai, Bangalore and Delhi, and then, in the second part of the roll-out, was made available in Kolkata,
Pune, Goa, Chennai and Hyderabad. Priced in excess of Rs2,600 for a 750ml bottle, the brand is definitely at the
luxury end of the market.
Radico Khaitan tries brand extensions
Radico Khaitan has endeavoured to create umbrella brands by extending its established brand names to sectors
in which it previous lacked a presence. The Old Admiral brand, which was used previously only for brandy, has
now been extended to whisky and even mineral water. The company has used model Katrina Kaif to endorse
and promote the Old Admiral brand. Radico Khaitan also created a sub-brand for its successful 8 PM whisky
brand with the creation of 8 PM Royale whisky, and has extended it to rum by launching 8 PM Bermuda Rum.
The brand is being pushed in the North and South Indian markets. A brown spirits player until 2004, Radico
Khaitan also made its foray into white spirits by launching regular as well as flavoured Magic Moments Gin.
2004 a quiet year for McDowell and Shaw Wallace
Euromonitor Page 92
McDowell & Co Ltd and Shaw Wallace Co Ltd were not particularly active in terms of new launches in 2004.
There were no launches from McDowell in that year, whilst Shaw Wallace focused its activities on Kerala in
South India. Shaw Wallace launched its India's Pride Rum in Kerala in February 2004 and White Mischief
brandy in August 2004. Both these brands were targeted at mass consumption in a market traditionally known
for rum and brandy drinking.
Kyndal lines up brands for launch in India
Kyndal India Ltd, the trading arm and wholly-owned subsidiary of Whyte & Mackay Group Plc, has lined up a
number of brands for launch in India. Company sources suggest that 20 premium wine and whisky brands are to
be launched in late 2004 and 2005. These brands include spirits such as Dalmore single malt whisky, Isle of Jura
single malt whisky, Glayva whisky-based liqueur, Whyte & Mackay blended whisky, Jin Vien bourbon, Rémy
Martin cognac and Danzka vodka.
Summary 10 Spirits: New Product Launches 2003-2004

Brand name Company Product type Launch date Region
Belvedere Moët Hennessy Luxury vodka October 2004 Delhi, Mumbai and
India Ltd launched targeted Bangalore
at niche market
White Mischief Shaw Wallace & Co Brand extension of August 2004 Kerala
Brandy Ltd the White Mischief
Vodka and Gin
brands
Smirnoff Twist United Distillers & Vanilla, raspberry August 2004 Select cities
Vintners India Ltd and orange flavours
launched, after
citrus was launched
in 2003
Magic Moments Radico Khaitan Ltd Regular and July 2004 Select markets in
flavoured gin North India
launched to mark
entry into white
spirits
Chancellor Whisky Avian Breweries Pvt Economy pricing – July 2004 Select markets in
Ltd positioned to South and East
compete directly India
with Royal Stag
Wild Horse Whisky Avian Breweries Pvt Low-priced whisky July 2004 Select markets in
Ltd positioned targeting South and East
the mass market India
Old Admiral Whisky Radico Khaitan Ltd Brand extension of June 2004 Select markets
Old Admiral VSOP
brandy
Old Admiral VSOP Radico Khaitan Ltd Brand launch in a June 2004 Tamil Nadu
brandy, Contessa state from which the
XXX Rum, 8PM company was
whisky previously absent
8 PM Royale Radico Khaitan Ltd Brand extension of May 2004 South and North
Whisky the 8 PM brand to India
compete against
McDowell's No 1
Wild Horse Mason & Summers Low-priced whisky, May 2004 Karnataka
Alcobev Pvt Ltd brandy and rum
targeted at the
mass market, under
the umbrella brand
Wild Horse
Euromonitor Page 93
Fling Seagram India Ltd Vodka imported February 2004 All major
from America and metropolitan areas
blended in India
India's Pride Rum Shaw Wallace & Co Rum brand February 2004 Kerala
Ltd relaunched
Royale Oak Radico Khaitan Ltd Brandy priced on January 2004 Kerala and
par with leading Pondicherry
brand Honeybee
MGM Vodka Southern Agrifurane Low-priced apple Second half of 2003 Tamil Nadu
Industries Ltd and orange
flavoured vodka
targeted at the
mass market
Absolut Kyndal India Ltd Premium vodka December 2003 Mumbai, Delhi and
targeted at high-end Bangalore
retail shops
8 PM Bermuda Radico Khaitan Ltd Brand extension of October 2003 National
Rum the 8 PM brand to
compete against
McDowell's
Celebrations
Power Empee Distilleries Low-priced whisky, July 2003 Tamil Nadu
Ltd brandy and rum
targeted at the
mass market, under
the umbrella brand
Power
Scottish Crown McDowell & Co Ltd Other whisky March 2003 West
Whisky
Special Radico Khaitan Ltd Semi-premium February 2003 West India
Appointment grain-based whisky
with a smooth
mellow flavour
Haywards Special Shaw Wallace & Co Other whisky February 2003 South
Whisky Ltd
Haywards Strong Shaw Wallace & Co Dark rum February 2003 South and East
Rum Ltd
Smirnoff Citrus United Distillers & Extension of January 2003 Select cities
Twist Vintners India Ltd Smirnoff with citrus
flavour
Derby Special McDowell & Co Ltd Premium whisky January 2003 Select cities
competing against
Imperial Blue and
Gilbey's Green
Label
6.4 Pricing
Each state different price
Liquor being a state subject, with a myriad of taxes being levied by the state governments, the price of each
brand differs from state to state. For example, India's largest selling spirits brand, Bagpiper whisky, is cheapest
when bought in Mumbai, at Rs186 for a 750ml bottle, while the same bottle cost close to Rs200 in Delhi, and
can cost as much as Rs245 in Chennai. Even within states like Punjab, where a retailer monopoly exists, prices
are raised arbitrarily.
Euromonitor Page 94
Comparing prices across the four regions, prices are on an average lowest in states in West India, followed by
the North. South India tends to have the highest prices across brands.
Standard-priced and economy labels bring in the sales
While Euromonitor adopts a 3-tier breakdown – premium, mid-priced and economy – to segment the different
price bands of spirits, the local industry in India embraces a 5-tier structure:
• Cheap (Rs90-140);
• Medium (Rs150-250);
• Prestige (Rs250-350);
• Premium (Rs350-650);
• Super-premium/deluxe segment, at Rs700 and above per 750ml bottle, and this typically includes the
Scotch whiskies.
In Euromonitor's terms, the majority of volume sales are generated by mid-priced and economy-priced brands,
typically reflecting the pricing strategies of the domestic labels. With the multi-layer tax structure applied to
imported brands, foreign labels tend to be classified within the premium segment, and this accounts for the
smallest proportion of total spirits volume sales in India. While the economy and mid-priced labels find
widespread acceptance in the off-trade channels, the super-premium brands normally find takers in on-trade
channels.
Table 122 Typical Blended Scotch Whisky Pricing 2004
Rs

100 Pipers Seagram Manufacturing Ltd 375 ml 519.0
100 Pipers Seagram Manufacturing Ltd 750 ml 1,000.0
100 Pipers Seagram Manufacturing Ltd 750 ml 1,021.0
Black & White United Distillers & Vintners 750 ml 1,110.0
India Ltd
Black Dog McDowell & Co Ltd 750 ml 1,525.0
Black Knight Mohan Meakin Ltd 750 ml 196.0
Bonnie Scot Special Jagatjit Industries Ltd 375 ml 98.0
Malted Whisky
Chivas Regal Seagram Manufacturing Ltd 1 litre 4,800.0
Chivas Regal Seagram Manufacturing Ltd 750 ml 5,500.0
Colonel's Special Whisky Mohan Meakin Ltd 750 ml 450.0
Cutty Sark Berry Bros & Rudd Ltd 750 ml 1,700.0
Famous Grouse, The Highland Distillers Ltd 750 ml 1,700.0
Findlater's Whyte & Mackay Group Plc 375 ml 444.0
Findlater's Finest Whyte & Mackay Group Plc 750 ml 750.0
J&B Rare United Distillers & Vintners 1 litre 2,190.0
India Ltd
Jack Daniel's Black Brown-Forman Corp 750 ml 1,990.0
Source: Store checks
Note: Price indicated is price per bottle
Table 123 Typical Other Whisk(e)y Pricing 2004
Rs

30 Dec 1899 Radico Khaitan Ltd 750 ml 196.0
Antiquity Premium Whisky Shaw Wallace & Co Ltd 750 ml 550.0
Antiquity Rare Whisky Shaw Wallace & Co Ltd 750 ml 575.0
Aristocrat Black Jagatjit Industries Ltd 750 ml 288.0
Euromonitor Page 95
Aristocrat Premium Jagatjit Industries Ltd 750 ml 190.0

Aristocrat Supreme Jagatjit Industries Ltd 750 ml 300.0
Bagpiper Herbertsons Ltd 180 ml 61.0
Bagpiper Gold Herbertsons Ltd 750 ml 250.0
Bagpiper Gold Rare Herbertsons Ltd 180 ml 78.0
Black Knight Mohan Meakin Ltd 750 ml 200.0
Blender's Pride Seagram Manufacturing Ltd 750 ml 430.0
Bonnie Scot Jagatjit Industries Ltd 750 ml 160.0
Brihan's Premium Brihan Maharashtra Sugar 750 ml 291.0
Syndicate Ltd, The
Brihan's Premium Brihan Maharashtra Sugar 180 ml 70.0
Syndicate Ltd, The
Class Fine Whisky Madhusala Drinks Pvt Ltd 750 ml 140.0
Contessa Radico Khaitan Ltd 750 ml 150.0
Cosmopolitan Shiva Distilleries Ltd 180 ml 61.0
Derby Special McDowell & Co Ltd 750 ml 225.0
Table 124 Typical Brandy and Cognac Pricing 2004
Rs

Brandy
Beehive Polychem Ltd 750 ml 140.0
Binnie's Fine Brandy Jagatjit Industries Ltd 180 ml 48.0
Brihan's Doctor Brihan Maharashtra Sugar 180 ml 42.0
Syndicate Ltd, The
Brihan's Napoleon Brandy Brihan Maharashtra Sugar 180 ml 72.0
Syndicate Ltd, The
Brihan's Napoleon Brandy Brihan Maharashtra Sugar 750 ml 299.0
Syndicate Ltd, The
Caesar McDowell & Co Ltd 750 ml 326.0
Cardinal Grape Brandy Shiva Distilleries Ltd 180 ml 61.0
Cardinal Grape Brandy Shiva Distilleries Ltd 375 ml 123.0
Contessa Delux Doctor's Radico Khaitan Ltd 750 ml 150.0
Brandy
Diamond Brandy Southern Agrifurane 100 ml 29.0
Industries Ltd
Industries Ltd
Industries Ltd
Empee's Fine Brandy Empee Distilleries Ltd 100 ml 29.0
Empee's Napoleon Brandy Empee Distilleries Ltd 180 ml 70.0
Exshaw Deluxe VSOP Shaw Wallace & Co Ltd 180 ml 90.0
Exshaw Premium VSOP Shaw Wallace & Co Ltd 180 ml 66.0
Golconda Shaw Wallace & Co Ltd 180 ml 52.0
Golconda Shaw Wallace & Co Ltd 750 ml 200.0
Gold Cup Brandy IFB Agro Industries Ltd 750 ml 224.0
Golden Eagle Doctor Brandy Mohan Meakin Ltd 100 ml 30.0
Cognac
Hennessy VS Moët Hennessy India Ltd 700 ml 2,504.0
Hennessy VSOP Moët Hennessy India Ltd 700 ml 4,407.0
Hennessy XO Moët Hennessy India Ltd 700 ml 11,554.0
Table 125 Typical English Gin Pricing 2004
Euromonitor Page 96
Rs

Aristocrat Gin Jagatjit Industries Ltd 750 ml 185.0
Beefeater Allied Domecq Spirits & Wine 750 ml 1,460.0
(India) Pvt Ltd
Blue Bird Brihan Maharashtra Sugar 180 ml 42.0
Syndicate Ltd, The
Blue Bird Gin-N-Lime Brihan Maharashtra Sugar 180 ml 45.0
Syndicate Ltd, The
Blue Diamond NB Distilleries & Breweries Ltd 750 ml 220.0
Blue Riband McDowell & Co Ltd 180 ml 54.0
Blue Riband McDowell & Co Ltd 750 ml 196.0
Blue Riband Duet McDowell & Co Ltd 180 ml 57.0
Blue Riband Duet McDowell & Co Ltd 750 ml 196.0
Blue Riband London McDowell & Co Ltd 750 ml 200.0
Blue Riband Prestige McDowell & Co Ltd 180 ml 64.0
Blue Riband Prestige McDowell & Co Ltd 750 ml 263.0
Blue Riband Tango McDowell & Co Ltd 750 ml 196.0
Bombay Sapphire Bacardi-Martini India Ltd 750 ml 1,740.0
Calcutta Dry Gin Brihan Maharashtra Sugar 750 ml 130.0
Syndicate Ltd, The
Caro Dry Gin McDowell & Co Ltd 750 ml 135.0
Club Polo Dry Gin Empee Distilleries Ltd 180 ml 60.0
Diamond Gin Southern Agrifurane 375 ml 121.0
Industries Ltd
Forbes Dry Gin McDowell & Co Ltd 750 ml 195.0
Forbes Two in One McDowell & Co Ltd 750 ml 200.0
Table 126 Typical Vodka Pricing 2004
Rs

Absolut Vodka V&S Vin & Sprit AB 1 litre 1,100.0
Alcazar Vodka Triumph Distillers & Vintners 180 ml 60.0
Pvt Ltd
Alcazar Vodka Triumph Distillers & Vintners 750 ml 220.0
Pvt Ltd
Blue Moon NV Distilleries & Breweries Ltd 750 ml 70.0
Brisnoff Shiva Distilleries Ltd 750 ml 244.0
Finlandia Altia Group Oy 750 ml 1,320.0
Fling Seagram Manufacturing Ltd 750 ml 425.0
Haywards Shaw Wallace & Co Ltd 750 ml 140.0
High Ball Kedia Great Galleon Ltd 750 ml 150.0
Hot Fling Peach Vodka Seagram Manufacturing Ltd 750 ml 400.0
Jelzin Vodka Orange Le Grange de France 750 ml 1,250.0
Kalanov Deejay Distilleries Pvt Ltd 750 ml 192.0
Karmazov Shaw Wallace & Co Ltd 750 ml 198.0
Lady Di Gwalior Distilleries Ltd 750 ml 170.0
MGM Southern Agrifurane 180 ml 61.0
Industries Ltd
Red Riband McDowell & Co Ltd 180 ml 54.0
Red Riband McDowell & Co Ltd 750 ml 196.0
Red Riband Crystal McDowell & Co Ltd 180 ml 64.0
Romanov Herbertsons Ltd 180 ml 59.0
Romanov Herbertsons Ltd 750 ml 225.0
Euromonitor Page 97
Table 127 Typical Rum Pricing 2004
Rs

White rum
Aravalli White Rum Alwar Malt & Agro Foods 750 ml 245.0
Manufacturers Co Ltd
Bacardi Carta Blanca Bacardi-Martini India Ltd 750 ml 425.0
Bacardi Limón Bacardi-Martini India Ltd 750 ml 440.0
Bacardi Superior Ron Bacardi-Martini India Ltd 750 ml 404.0
Carta Blanca
Gold Maker White Rum Shiva Distilleries Ltd 180 ml 62.0
Gold Maker White Rum Shiva Distilleries Ltd 375 ml 125.0
Hawaiian National Industrial Corp Ltd 750 ml 130.0
Malibu Allied Domecq Spirits & Wine 750 ml 440.0
(India) Pvt Ltd
McDowell's Carribean McDowell & Co Ltd 750 ml 204.0
White Rum
Old Monk White Mohan Meakin Ltd 750 ml 200.0
Dark rum
AC Black Magic XXX Rum Jagatjit Industries Ltd 375 ml 98.0
Amigoz Original Dark Rum Seagram Manufacturing Ltd 750 ml 200.0
Aristocrat Jagatjit Industries Ltd 750 ml 190.0
Bacardi 8 Rum Bacardi-Martini India Ltd 750 ml 425.0
Bacardi Black Rum Bacardi-Martini India Ltd 1 litres 1,929.0
Bacardi Gold Rum Bacardi-Martini India Ltd 750 ml 1,929.0
Bacardi Reserva Bacardi-Martini India Ltd 750 ml 400.0
Bagpiper XXX Rum Herbertsons Ltd 750 ml 190.0
Bermuda Rum Radico Khaitan Ltd 750 ml 200.0
Binnie's Jagatjit Industries Ltd 750 ml 135.0
6.5 Vodka by Flavoured vs Non-Flavoured

Small market for flavoured vodka
97% of all vodka sales in the country are of the non-flavoured type. The market for favoured vodka has yet to
take off, as the majority of consumers have yet to experiment or try out flavoured vodka with the product
relative late launch in the country and limited distribution. Smirnoff Citrus Twist was launched in 2003,
followed by other flavours like orange, vanilla and raspberry, but was introduced in select outlets only. The only
exception to the low sales of flavoured vodka is in Tamil Nadu, where a local brand, MGM vodka in apple and
orange flavours, has seen significant acceptance. This is a relatively new brand, launched towards the second
half of 2003 by Southern Agrifurane Industries Ltd, targeted at the mass market.
Table 128 Sales of Vodka by Flavoured vs Non-Flavoured 2003-2004
% total volume
2003 2004
Flavoured vodka 1.0 3.0

Non-flavoured vodka 99.0 97.0
Total 100.0 100.0
6.6 Distribution
Euromonitor Page 98
Off-trade sales dominate sales of spirits with 79% of all spirits sales arising from sales by off-trade channels.
Sales through off-trade channels grew by over 7% to exceed 670 million litres in 2004, whilst on-trade channels
saw slightly stronger growth.
The lower prices in the off-trade channels is one of the most important reasons for its accounting for a large
proportion of sales. For this reason, the value share accounted for by the on-trade is rather higher than its
volume share. The price difference tends to be particularly significant when the off-trade outlet is itself owned
by the state. On-trade channels tend to have a narrower range of brands, with unfashionable ones being omitted.
In addition, on-trade outlets tend to stock those brands which offer higher margins.
With consumption of hard liquor being a highly contentious issue, sales are permitted only through specialists.
None of the other off-trade channels are permitted to stock or sell liquor. The specialist shops are either outlets
owned by the state government themselves, or are outlets to which a licence has been issued permitting sales of
spirits.
Table 129 On-trade vs Off-trade Sales of Spirits: Volume 1999-2004
'000 litres
1999 2000 2001 2002 2003 2004
Off-trade 457,442.8 496,567.7 537,344.3 580,132.0 625,580.4 670,392.2

On-trade 113,585.2 124,091.3 135,712.4 148,541.5 162,147.4 175,315.4
TOTAL 571,028.0 620,658.9 673,056.7 728,673.5 787,727.7 845,707.6
Table 130 On-trade vs Off-trade Sales of Spirits: Value 1999-2004
Rs million
1999 2000 2001 2002 2003 2004
Off-trade 176,103.8 196,152.5 217,921.7 240,775.2 265,154.1 293,491.2

On-trade 148,250.8 168,515.2 189,960.8 215,665.4 243,120.6 271,500.7
TOTAL 324,354.5 364,667.7 407,882.5 456,440.5 508,274.7 564,991.9
Table 131 On-trade vs Off-trade Sales of Spirits: % Volume Growth 1999-2004
% volume growth
2003/04 1999-04 CAGR 1999/04 TOTAL
Off-trade 7.2 7.9 46.6

On-trade 8.1 9.1 54.3
TOTAL 7.4 8.2 48.1
Table 132 On-trade vs Off-trade Sales of Spirits: % Value Growth 1999-2004
Euromonitor Page 99

2003/04 1999-04 CAGR 1999/04 TOTAL
Off-trade 10.7 10.8 66.7

On-trade 11.7 12.9 83.1
TOTAL 11.2 11.7 74.2
Table 133 Off-trade Sales of Spirits by Distribution Format: % Analysis 1999/2004
% off-trade
1999 2004
Supermarkets/hypermarkets - -
Discounters - -
Direct sales - -
Others - -
Total 100.0 100.0
7. CIDER/PERRY
There is no market for cider/perry in India.
8. FABS
2004 headlines
• FABs grow at a scorching pace, with 23% volume growth in 2004
• Metropolitan markets of Delhi and Mumbai account for the bulk of the sales
• Parts of South India remain virgin markets, as government policies prevent launch
• Bacardi Breezer takes the market by storm by stirring up consumer interest
• Romanov Shotz makes little headway, and Veba close to being pulled out of the market
FABs see explosive growth on introduction
FABs, or ready-to-drink (RTD) alcoholic beverages, as the industry terms it in India have seen explosive growth
since their launch in 2002. The new product has seen strong growth as young people and women, in particular,
are taking to the flavours. Sales of FABs stood at 3.8 million litres in 2004, valued at Rs730.5 million, up by a
substantial 23% from 2003.
Euromonitor Page 100

Bacardi Breezer was launched in October 2002 in a phased manner, first in Goa and Mumbai, followed by Delhi
and other states. Though McDowell did attempt to gain first mover advantage by launching Romanov Shotz in
August 2002, earlier than Bacardi Breezer, it proved unsuccessful. It was only after Bacardi-Martini India
launched its Bacardi Breezer, a fruit-flavoured drink with 4.8% alcohol content, in three flavours of lime,
cranberry and orange, that the sector took off.
FABs are spirits-based
Almost all the FABs launched in 2003 were spirits-based. The only exception was the wine-based Sinn, from
the house of Champagne Indage Ltd, which was launched in December 2003. Sinn was launched as a higher
strength FAB, with 8% alcohol content. However, Champagne Indage does not have the distribution muscle of
Bacardi and McDowell's, thus the brand may struggle to compete.
It's Breezer all the way
Bacardi Breezer dominates the sector with an 85% volume share in 2003. This share was down by five
percentage points from the previous year, as a result of the slew of new brands that hit the market in 2003. In
such a new and emerging alcoholic drinks sector, consumers were willing to try out the various new brand
offerings on offer.
Prior to the introduction of Bacardi Breezer in 2002, a couple of brands had been launched, but these met with
little success. Prominent among them was Romanov Shotz, from McDowell & Co Ltd, which failed to entice the
consumers due to the absence of consumer education initiatives. Industry sources attribute the better
performance of Breezer to successful brand building and marketing. While the other brands tried to focus on the
trade by providing higher margins to outlets, but with virtually no brand building, Bacardi's activities were
focused on the consumers. Bacardi targeted young people with sleek advertisements, and used music CDs as
surrogates.
Shotz present, Veba absent
The only other FAB brand of note is Romanov Shotz, with a 10% volume share in 2003. McDowell has used the
distribution strength built up for its spirits and beer brands to get substantial placement for Shotz in outlets.
While the country's largest spirit player did manage to get shelf space for its brand, the second largest player,
Shaw Wallace & Co Ltd, with Veba, which was launched in association with Kyndal Spirits, barely has a
presence even in Mumbai, where it was initially launched. With little advertising and brand building, trade
experts are not expecting the brand to be viable for the company, and it is likely to be removed. FABs derive
30% of all volume sales from on-trade sales, as young people, especially women, favour them as a refreshing
alternative to consuming beer and/or spirits.
FABs to see strong growth
FABs are expected to see strong growth between 2004 and 2009, with a volume CAGR of close to 20%.
Though some industry sources are apprehensive that the beverage will fizzle out sooner than later, others believe
that the excitement around FABs will keep growth on track, with sales driven in part by consumers who have
previously eschewed alcoholic drinks, in particular women, who constitute the most important target segment.
Growth will also be aided by the introduction of FABs – especially Bacardi Breezer – in major spirits markets
like Tamil Nadu, Karnataka and Kerala, which have yet to see the product. While Tamil Nadu does not allow
the sale of brands manufactured outside the state, in Karnataka, the government is still mulling over taxation
issues. In Kerala, the price of any brand that is brought in from outside the state tends to become prohibitive,
due to the taxes added.
Bacardi Breezer is likely to face competition from an increasing number of brands in the future. In 2004,
McDowell already had a production capacity of close to 4 million litres for the production of FABs, and is likely
to launch a slew of different brands to use this capacity. Innovation, both in product development and in
promotion, is likely to drive sales of FABs.
Table 134 Sales of FABs by Subsector: Total Volume 2002-2004

'000 litres
2002 2003 2004
Wine-based FABs - - -
Spirits-based FABs 660.0 3,121.4 3,825.3
Other FABs - - -
FABs (flavoured alcoholic beverages) 660.0 3,121.4 3,825.3
Table 135 Sales of FABs by Subsector: Total Value 2002-2004
Rs million
2002 2003 2004
Spirits-based FABs 135.2 613.1 730.5
Other FABs - - -
Table 136 Sales of FABs by Subsector: % Total Volume Growth 2002-2004

2003/04 2002-04 CAGR 2002/04 TOTAL
Other FABs - - -
Table 137 Sales of FABs by Subsector: % Total Value Growth 2002-2004

2003/04 2002-04 CAGR 2002/04 TOTAL
Other FABs - - -
Table 138 Company Shares of FABs by National Brand Owner 2002-2003
% total volume
Company 2002 2003

Bacardi-Martini India Ltd 90.0 85.0

McDowell & Co Ltd 10.0 10.0
Others 0.0 5.0
Total 100.0 100.0
Table 139 Company Shares of FABs by Global Brand Owner 2002-2003
% total volume
Company 2002 2003
Bacardi & Co Ltd 90.0 85.0

UB Group 10.0 10.0
Total 100.0 95.0
Table 140 Brand Shares of FABs 2002-2003
% total volume
Brand (Global Brand Owner) Company 2002 2003
Bacardi Breezer (Bacardi Bacardi-Martini India Ltd 90.0 85.0

& Co Ltd)
Romanov Shotz (UB Group) McDowell & Co Ltd 10.0 10.0
Others 0.0 5.0
Total 100.0 100.0
Table 141 Forecast Sales of FABs by Subsector: Total Volume 2004-2009
'000 litres
2004 2005 2006 2007 2008 2009
Wine-based FABs - - - - - -
Spirits-based FABs 3,825.3 5,095.5 6,092.9 7,165.1 8,284.2 9,408.0
Other FABs - - - - - -
FABs (flavoured 3,825.3 5,095.5 6,092.9 7,165.1 8,284.2 9,408.0
Table 142 Forecast Sales of FABs by Subsector: Total Value 2004-2009
Rs million
2004 2005 2006 2007 2008 2009
Wine-based FABs - - - - - -
Spirits-based FABs 730.5 923.5 1,051.8 1,180.6 1,309.8 1,435.5
Other FABs - - - - - -
FABs (flavoured 730.5 923.5 1,051.8 1,180.6 1,309.8 1,435.5

Table 143 Forecast Sales of FABs by Subsector: % Total Volume Growth 2004-2009

2004-09 CAGR 2004/09 TOTAL
Wine-based FABs - -
Spirits-based FABs 19.7 145.9
Other FABs - -
Table 144 Forecast Sales of FABs by Subsector: % Total Value Growth 2004-2009

2004-09 CAGR 2004/09 TOTAL
Wine-based FABs - -
Spirits-based FABs 14.5 96.5
Other FABs - -

Mumbai and Delhi the largest markets
West India is largest regional market for FABs, accounting for over 40% of the country's total volume sales in
2003, at slightly over 1.5 million litres. Following on the heels of West India is North India, with 1.1 million
litres sold in 2004. Mumbai, Goa and Delhi saw the earliest launch of FABs, in 2002, with Romanov Shotz and
Bacardi Breezer, putting these markets ahead of the East and Northeast and the South in terms of development.
The positioning of FABs as an object of desire has seen growth being centred around the major cities, especially
the major and more sophisticated centres of Mumbai in the West and Delhi in the North. Some of the other
major markets are Pune in the West, Kolkata in the East and Guwahati in the Northeast. However, prices of
close to Rs40 for a 275ml bottle are likely to be a major barrier in generating mass-market sales.
Andhra Pradesh is the only region in the south where FABs have been launched, with the products having no
presence in Tamil Nadu, Karnataka and Kerala. If and when FABs are launched in these areas, urban markets
such as Chennai in Tamil Nadu and Bangalore in Karnataka, which has a huge population of teenagers, are
likely to become major markets.
The South Indian states which have yet to see the launch of FABs are expected to do so in 2005. This should
lead to explosive growth in that year, as the product reaches the virgin markets of Karnataka, Tamil Nadu and
Kerala. However, Tamil Nadu might prove a difficult market to penetrate, given the fact that the existing state
government has a policy of protecting manufacturers based in the state from competition.
West and North India is expected to continue to see the strong growth between 2004 and 2009, with a volume
CAGR of 24%. On-trade outlets are likely to emerge as a major channel, as the young people, and particularly
women, who are the key consumer group, are more likely to consume in on-trade channels than purchase FABs
from off-trade outlets. Growth in the East and Northeast is predicted to average 16% per annum between 2004
and 2009, with growth continuing to come from cities like Kolkata and Guwahati, with little consumption
outside these two areas.

Table 145 Sales of FABs by Region: Total Volume 2002-2004
'000 litres
2002 2003 2004
East and Northeast India - 624.3 762.2

North India 264.0 936.4 1,159.3
South India - 312.1 354.3
West India 396.0 1,248.6 1,549.5
TOTAL 660.0 3,121.4 3,825.3
Table 146 Sales of FABs by Region: Total Value 2002-2004
Rs million
2002 2003 2004
East and Northeast India - 104.2 124.8

North India 53.2 188.8 229.1
South India - 61.7 68.5
West India 82.0 258.5 308.0
TOTAL 135.2 613.1 730.5
Table 147 Sales of FABs by Region: % Total Volume Growth 2002-2004

2003/04 2002-04 CAGR 2002/04 TOTAL
East and Northeast India 22.1 - -

North India 23.8 109.6 339.1
South India 13.5 - -
West India 24.1 97.8 291.3
TOTAL 22.6 140.7 479.6
Table 148 Sales of FABs by Region: % Total Value Growth 2002-2004

2003/04 2002-04 CAGR 2002/04 TOTAL
East and Northeast India 19.8 - -

North India 21.4 107.5 330.5
South India 11.1 - -
West India 19.2 93.8 275.7
TOTAL 19.1 132.4 440.3

Table 149 FABs Brand Ranking by Region 2003
Bacardi Breezer (Bacardi- 1 1 1 1

Martini India Ltd)
Shot (McDowell & Co Ltd) - 2 - -
Shotz (McDowell & Co Ltd) 2 - 2 2
Veba (Shaw Wallace & Co Ltd) - 3 - -
Notes: 1) Rankings by order, with (1) representing highest sales in a given region.
Table 150 Forecast Sales of FABs by Region: Total Volume 2004-2009
'000 litres
2004 2005 2006 2007 2008 2009
East and Northeast India 762.2 915.6 1,081.6 1,256.2 1,434.1 1,608.8
North India 1,159.3 1,412.3 1,692.8 1,995.4 2,312.9 2,629.1
South India 354.3 875.4 1,045.5 1,227.9 1,417.6 1,608.3
West India 1,549.5 1,892.1 2,273.0 2,685.5 3,119.5 3,561.8
TOTAL 3,825.3 5,095.5 6,092.9 7,165.1 8,284.2 9,408.0
Table 151 Forecast Sales of FABs by Region: Total Value 2004-2009
Rs million
2004 2005 2006 2007 2008 2009
North India 229.1 266.7 305.2 344.5 383.2 420.1
South India 68.5 161.8 189.8 218.8 249.2 279.0
West India 308.0 351.6 394.4 436.2 478.0 519.1
TOTAL 730.5 923.5 1,051.8 1,180.6 1,309.8 1,435.5
Table 152 Forecast Sales of FABs by Region: % Total Volume Growth 2004-2009

2004-09 CAGR 2004/09 TOTAL

West India 18.1 129.9
TOTAL 19.7 145.9
Table 153 Forecast Sales of FABs by Region: % Total Value Growth 2004-2009

2004-09 CAGR 2004/09 TOTAL


West India 11.0 68.6
TOTAL 14.5 96.5

McDowell innovates
McDowell leveraged its strong position within the Indian alcoholic drinks market to launch FABs for the first
time in India in February 2002. Romanov Shotz and Xite, a vodka-based and a wine-based beverage,
respectively, have an alcohol content of less than 5% and are priced at Rs30-35 per bottle. Made largely
available in the off-trade channel, these new launches failed to stir up consumer interest in FABs.
While company sources claim that Shotz is performing as per expectations, a lack of consumer awareness and
appreciation stemming from a lack of promotional and marketing activity is widely cited by trade experts as the
reason for these brands' apparent failure.
but Bacardi-Martini dominates
Conversely, the introduction of Bacardi Breezer in Goa, Mumbai and New Delhi in late 2002 was highly
successful in generating product trials and repeat purchases. Bacardi Breezer, with a 4.8% alcohol content, is
available in three flavours: lime, orange and cranberry.
Trade experts suggest that Bacardi Breezer has outperformed the brands from the McDowell stable as the
former has a strong international brand recall and brand equity.
A major promotion strategy called "Vivid" was implemented for Bacardi Breezer, just as the "Bacardi Blast"
campaign was developed for Bacardi rum to create brand awareness. Vivid was supported by a series of
parties/carnivals in various nightclubs and pubs, with the "Live Life in Colour: Vivid" tagline.
The company is aiming for retail sales of Rs1 billion by 2005. Over the forecast period, the company plans to
develop a distribution network of around 10,000 retail outlets to boost the presence of Bacardi Breezer. Bacardi-
Martini expects India to become among its top five global markets. As Bacardi Breezer is available in nine
flavours globally, the company is likely to introduce more flavours in India to add to the three currently
available, perhaps including ones created specifically for the Indian market.
Champagne Indage launches wine-based FAB
Taking a different route from the spirit-based FABs that were launched in 2003, Champagne Indage launched a
higher strength wine-based FAB, Sinn, at the end of the year. Sinn was initially launched in Goa in December
2003, and then in Mumbai in July 2004. Sinn has a higher alcohol content, at 8%, than the other FABs available
in the market.
Enter Xotica, exit Xotica
One of the sugar industry's major players and a manufacturer of bulk alcohol, Balrampur Chini Mills Ltd,
entered the spirits business in the last quarter of 2002, as a part of forward integration plans. The company
launched a couple of whisky brands, and in February 2003 also introduced a FAB brand, called Xotica. The
brand's presence was limited to the state of Uttar Pradesh in the North. However, before long the company
realised that it was not suited to the liquor business did not suit it, and the brand quickly exited the market.
Summary 11 FABs: New Product Launches 2002-2003

Brand name Company Product type Launch date Region
Sinn Champagne Indage Wine-based FAB December 2003 West
Ltd with 8% alcohol,
il bl i

available in
strawberry, peach,
blackcurrant,
orange and lemon
flavours
Veba Shaw Wallace & Co Vodka-based FAB August 2003 West
Ltd with 5% alcohol
content, available in
orange, lemon and
grapefruit flavours
Smirnoff Ice United Distillers & Premium priced July 2003 West
Vintners India Ltd spirits-based FAB
Cruiser McDowell & Co Ltd Vodka-based FAB February 2003 West
available in
raspberry, passion
fruit and ice flavours
Bacardi Breezer Bacardi-Martini White rum-based October 2002 All India
India Ltd FAB with 4.8%
alcohol, available in
lime, cranberry and
orange flavours
Romanov Shotz McDowell & Co Ltd Vodka-based FAB August 2002 All India
with 5% alcohol,
available in orange
and lime flavours
Xite McDowell & Co Ltd Wine-based FAB – February 2002 All India
the first to be
introduced into the
Indian market
8.4 Distribution
With FABs being targeted at the younger generation and women, close to 30% of volume sales are generated via
the on-trade channels. The leading on-trade channels are trendy pubs, which are visited by the young. Since
prices of FABs tend to be much lower when purchased through off-trade channels, consumers who wish to try
FABs often purchase them from off-trade outlets. For example, a 275ml can of Bacardi Breezer when purchased
through on-trade channels costs in excess Rs60, compared with only Rs40 when purchased through off-trade
channels.
The low alcohol content and appealing flavours of FABs are expected to continue to generate interest among
young people, particularly women, and with an increasing number of young people frequenting pubs, the on-
trade share of FAB sales is expected eventually to approach that of off-trade sales.
In contrast to other alcoholic drinks, FABs can be sold in supermarkets in Delhi. Delhi is, however, the only
state which permits such sales, with specialists being the sole off-trade sources in all other states where FABs
have been launched.
Table 154 On-trade vs Off-trade Sales of FABs: Volume 2002-2004
'000 litres
2002 2003 2004

Off-trade 462.0 2,185.0 2,700.7

On-trade 198.0 936.4 1,124.6
TOTAL 660.0 3,121.4 3,825.3
Table 155 On-trade vs Off-trade Sales of FABs: Value 2002-2004
Rs million
2002 2003 2004
Off-trade 79.0 362.7 436.6

On-trade 56.2 250.4 293.8
TOTAL 135.2 613.1 730.5
Table 156 On-trade vs Off-trade Sales of FABs: % Volume Growth 2002-2004
% volume growth
2003/04 2002-04 CAGR 2002/04 TOTAL
Off-trade 23.6 141.8 484.6

On-trade 20.1 138.3 468.0
TOTAL 22.6 140.7 479.6
Table 157 On-trade vs Off-trade Sales of FABs: % Value Growth 2002-2004

2003/04 2002-04 CAGR 2002/04 TOTAL
Off-trade 20.4 135.1 452.6

On-trade 17.4 128.7 422.9
TOTAL 19.1 132.4 440.3
Table 158 Off-trade Sales of FABs by Distribution Format: % Analysis 1999/2004
% off-trade
1999 2004
Supermarkets/hypermarkets - 0.5
Discounters - -
Specialists - 99.5
Direct sales - -
Others - -
Total - 100.0

9. APPENDIX
9.1 Industry Statistics
There is no single organised agency for monitoring the production, import and export of alcoholic beverages in
India. Trade associations and government-owned bodies gather data from those published by various
manufacturing companies, either as part of their corporate branding or profiling. These do not, however, give a
true representation of the market size. Furthermore, since the production of alcoholic beverages is a state
subject, there is no centralised agency on the national level either for control, quality standards or claims with
regards to company sales at country level.
Beer: production, imports and exports
Production data for beer have been sourced from the Central Statistical Organisation. Export and import figures
were obtained primarily from the Directorate General of Foreign Trade (Ministry of Commerce & Industry –
Department of Commerce). Rounding inconsistencies do appear in the website of the Ministry of Commerce.
Data for 2003 are for the period for April to September 2003.
Beer volume import data for Belgium for 1998-1999 are missing, although the value of imports is given.
Rounding errors appear in the website of the Ministry of Commerce.
Production rises as capacity expansion takes place
While production figures are not available for 2003 and 2004, there appears to have been expansion in
production capacity, as reported by the leading brewers such as United Breweries and Shaw Wallace Breweries.
More importantly, given the cap on breweries' numerical increase currently being imposed on the local industry,
trade experts are of the view that capacity expansion is taking place at most of the current 57 breweries located
in the country. Hence, while production figures from 2000 to 2002 hovered around 235-290 million litres, this
volume figure is though to have grown over 2003-2004.
Nepal is the largest importing country of beer into India, with its share steadily rising over the review period and
peaking at over 90% in 2002. While the volume of imports has held steady at over 4 million litres since 2001,
there is expected to be a rise over the forecast period, given the increased foreign interest in the Indian market
due to the mature and highly penetrated status of large global markets such as the US and Germany.
While Bhutan leads the lists of country to which Indian beer is exported, this dominance is being reduced by the
growing importance of import markets such as the US, Singapore and the United Arab Emirates, amongst
others. Increasingly, Indian beer brands such as Kingfisher are gaining acceptance in global markets, and Indian
companies are increasingly focusing on the export market for future growth.
Table 159 Beer: Production, Imports and Exports: Total Volume 1998-2003
Million litres
1998 1999 2000 2001 2002 2003
Production 433.2 363.2 289.0 235.2 269.6 -

Apparent consumption 428.7 360.4 283.2 232.3 267.0 0.0
Source: Official statistics (Central Statistical Organisation India, Ministry of Commerce & Industry)
Note: Rounding inconsistencies do appear in the website of the Ministry of Commerce. Data for 2003 are for the
period for April to September 2003.
Table 160 Beer Exports by Country of Destination: Total Volume 1998-2003

'000 litres
1998 1999 2000 2001 2002 2003
Australia 46.0 85.0 151.0 96.0 203.0 98.0

Bahrain - 10.0 62.0 80.0 118.0 55.0
Bangladesh 49.0 120.0 416.0 120.0 306.0 50.0
Bhutan 1,074.0 760.0 250.0 1,150.0 1,982.0 2,275.0
Canada 38.0 163.0 25.0 201.0 74.0 -
Hong Kong 218.0 85.0 98.0 84.0 96.0 15.0
Japan 316.0 372.0 463.0 407.0 374.0 99.0
Malaysia 24.0 - 43.0 22.0 96.0 273.0
Nepal 5.0 32.0 3,340.0 1,645.0 125.0 90.0
Netherlands 366.0 247.0 - - 36.0 -
New Zealand 120.0 63.0 124.0 103.0 149.0 139.0
Singapore 597.0 558.0 361.0 510.0 750.0 539.0
United Arab Emirates 322.0 507.0 538.0 639.0 610.0 581.0
United Kingdom 787.0 394.0 398.0 176.0 92.0 56.0
USA 1,386.0 1,039.0 1,280.0 1,719.0 1,599.0 681.0
Other countries 215.0 124.0 545.0 369.0 397.0 131.0
Total 5,563.0 4,559.0 8,094.0 7,321.0 7,007.0 5,082.0
Source: Official statistics (Central Statistical Organisation, Directorate General of Foreign Trade, Ministry of Commerce
and Industry)
Table 161 Beer Exports by Country of Destination: Total Value 1998-2003
1998 1999 2000 2001 2002 2003
Australia (Rs million) 0.9 1.9 3.4 2.3 4.5 2.6

Bahrain (Rs million) - 0.3 1.4 2.1 3.2 1.7
Bangladesh (Rs million) 0.9 3.1 13.0 5.6 9.7 0.9
Bhutan (Rs million) 32.2 23.6 7.1 41.9 61.1 70.9
Canada (Rs million) 0.8 3.8 0.7 4.2 1.6 -
Hong Kong (Rs million) 6.8 2.6 2.8 2.0 2.7 0.4
Japan (Rs million) 7.5 8.8 12.0 9.5 11.0 2.7
Malaysia (Rs million) 0.4 - 1.3 0.5 2.8 5.8
Nepal (Rs million) 0.1 1.3 108.8 52.3 4.7 2.1
Netherlands (Rs million) 14.7 7.1 - - 0.8 -
New Zealand (Rs million) 2.9 1.3 2.7 2.5 3.8 3.3
Singapore (Rs million) 17.3 13.8 8.7 15.2 24.4 15.6
United Arab Emirates 9.8 15.9 17.9 18.5 17.0 12.9
(Rs million)
United Kingdom (Rs 16.6 9.9 7.3 3.8 2.2 1.0
million)
USA (Rs million) 21.7 23.4 35.5 36.5 43.3 16.3
Other countries (Rs 6.3 3.7 16.5 10.2 12.1 3.4
million)
Total () 139.0 120.4 239.2 207.2 205.2 139.4
and Industry)
Table 162 Beer Imports by Country of Origin: Total Volume 1998-2003
'000 litres
1998 1999 2000 2001 2002 2003
Australia 28.0 - 6.0 - - -

Austria - - 51.0 - 22.0 -
Belgium - - - - - -

China - - - 2.0 3.0 -

Denmark 68.0 17.0 2.0 66.0 1.0 -
France 1.0 5.0 1.0 18.0 29.0 4.0
Germany 5.0 7.0 63.0 26.0 5.0 26.0
Nepal 521.0 1,237.0 1,836.0 3,791.0 4,037.0 6.0
Netherlands 126.0 46.0 3.0 102.0 28.0 22.0
Singapore 237.0 244.0 181.0 320.0 88.0 177.0
Slovenia - 33.0 - 39.0 173.0 3.0
Sri Lanka 6.0 34.0 34.0 - - 13.0
United Kingdom 34.0 17.0 38.0 9.0 9.0 24.0
USA - 27.0 48.0 1.0 2.0 3.0
Other countries 29.0 28.0 52.0 50.0 27.0 10.0
Total 1,055.0 1,695.0 2,315.0 4,424.0 4,424.0 288.0
and Industry)
Table 163 Beer Imports by Country of Origin: Total Value 1998-2003
1998 1999 2000 2001 2002 2003
Australia (Rs '000 ) 1,095.0 - 349.0 - 9.0 -

Austria (Rs '000 ) - - 2,078.0 - - -
Belgium (Rs '000 ) 7.0 - 13.0 - 473.0 -
China (Rs '000 ) - - - 79.0 80.0 -
Denmark (Rs '000 ) 2,729.0 852.0 719.0 1,954.0 39.0 -
France (Rs '000 ) 12.0 236.0 43.0 381.0 484.0 81.0
Germany (Rs '000 ) 232.0 386.0 1,851.0 392.0 102.0 426.0
Nepal (Rs '000 ) 12,474.0 27,391.0 42,268.0 78,799.0 88,240.0 210.0
Netherlands (Rs '000 ) 5,926.0 2,098.0 199.0 3,968.0 1,098.0 675.0
Philippines (Rs '000 ) - - - - - -
Singapore (Rs '000 ) 11,534.0 10,595.0 7,367.0 11,146.0 3,150.0 6,132.0
Slovenia (Rs '000 ) - 1,451.0 - 1,429.0 6,389.0 41.0
Sri Lanka (Rs '000 ) 282.0 1,060.0 898.0 - - 211.0
United Kingdom (Rs '000 ) 2,377.0 1,245.0 1,928.0 332.0 420.0 466.0
USA (Rs '000 ) - 1,384.0 1,048.0 43.0 74.0 84.0
Other countries (Rs 1,447.0 1,201.0 1,886.0 1,774.0 860.0 207.0
'000 )
Total () 38,115.0 47,899.0 60,647.0 100,297.0 101,418.0 8,533.0
and Industry)
Wine: production, imports and exports
Export and import figures were obtained primarily from the Directorate General of Foreign Trade (Ministry of
Commerce & Industry – Department of Commerce). Production figures were unavailable from Indian sources.
Consumption of wine in India dates back only to the early 1990s, and is very much in its nascent stages. While
most domestic consumption is accounted for by wine produced in local vineyards, imports are on the rise due to
increasing appreciation of wine among affluent connoisseurs, especially in West India. Most imports are
shipped from France, Australia and China, while South African and Italian wines form a small proportion of
India's imports.
India exports a considerable amount of wine due to the presence of a number of vineyards in the country, such
as those operated by Champagne Indage Ltd. France, Australia, the UK and Germany are the key target markets
for Indian wines.
Table 164 Wine Exports by Country of Destination: Total Volume 1998-2003

'000 litres
1998 1999 2000 2001 2002 2003
Australia - - 10.0 - - -
Belgium - - - - - -
France 8.0 16.0 22.0 15.0 63.0 16.0
Germany 30.0 46.0 72.0 200.0 43.0 1.0
Italy - - - 11.0 - 1.0
Japan 8.0 3.0 4.0 1.0 1.0 -
Malaysia - - 11.0 - - -
Nepal - - 6.0 - - -
Netherlands - - 10.0 - - -
Singapore - - - 67.0 - -
Sri Lanka 4.0 4.0 3.0 - 1.0 2.0
United Arab Emirates 32.0 - - - 83.0 12.0
United Kingdom 140.0 75.0 13.0 19.0 147.0 185.0
USA 22.0 2.0 15.0 1.0 21.0 -
Other countries 43.0 3.0 14.0 38.0 349.0 5.0
Total 287.0 149.0 180.0 352.0 708.0 222.0
and Industry)
Table 165 Wine Exports by Country of Destination: Total Value 1998-2003
1998 1999 2000 2001 2002 2003
Australia (Rs '000 ) 30.0 - 270.0 - - -

Belgium (Rs '000 ) - - - - - -
France (Rs '000 ) 545.0 540.0 1,048.0 1,906.0 6,548.0 3,366.0
Germany (Rs '000 ) 1,970.0 1,691.0 2,664.0 10,971.0 1,762.0 65.0
Italy (Rs '000 ) - - - 1,857.0 - 112.0
Japan (Rs '000 ) 661.0 236.0 394.0 195.0 147.0 7.0
Malaysia (Rs '000 ) - - 435.0 - - 17.0
Nepal (Rs '000 ) 13.0 - 24.0 - - -
Netherlands (Rs '000 ) - - 1,151.0 - - 20.0
Singapore (Rs '000 ) - - 1.0 5,474.0 - 18.0
Sri Lanka (Rs '000 ) 215.0 361.0 204.0 - 250.0 426.0
Switzerland (Rs '000 ) - 5.0 - 1.0 - 16.0
United Arab Emirates 1,615.0 - - - 7,342.0 1,565.0
(Rs '000 )
United Kingdom (Rs '000 ) 8,090.0 3,794.0 828.0 1,603.0 9,529.0 9,583.0
USA (Rs '000 ) 1,430.0 167.0 1,589.0 25.0 1,810.0 -
Other countries (Rs 4,812.0 192.0 960.0 2,268.0 13,268.0 906.0
'000 )
Total () 19,381.0 6,986.0 9,568.0 24,300.0 40,656.0 16,101.0
and Industry)
Table 166 Wine Imports by Country of Origin: Total Volume 1998-2003
'000 litres
1998 1999 2000 2001 2002 2003
Australia 2.0 31.0 24.0 50.0 30.0 23.0

China - - - 49.0 3.0 24.0
France 321.0 186.0 159.0 169.0 85.0 40.0
Germany 17.0 25.0 28.0 39.0 19.0 19.0
Italy 12.0 4.0 19.0 7.0 6.0 4.0
Japan - - - - 1.0 8.0
Netherlands 3.0 4.0 1.0 20.0 9.0 2.0
Portugal - 3.0 - 4.0 2.0 -

Singapore 7.0 3.0 13.0 21.0 3.0 3.0

South Africa - - - 2.0 1.0 5.0
Spain 3.0 - - 10.0 5.0 1.0
Switzerland 1.0 - - 1.0 - -
United Arab Emirates - - - 2.0 - 1.0
United Kingdom 49.0 30.0 46.0 39.0 46.0 7.0
USA 19.0 7.0 86.0 15.0 1.0 25.0
Other countries - 14.0 27.0 50.0 6.0 7.0
Total 434.0 307.0 403.0 478.0 217.0 169.0
and Industry)
Table 167 Wine Imports by Country of Origin: Total Value 1998-2003
1998 1999 2000 2001 2002 2003
Australia (Rs '000 ) 403.0 3,353.0 1,658.0 2,711.0 2,748.0 3,947.0

China (Rs '000 ) - 35.0 71.0 2,821.0 672.0 618.0
France (Rs '000 ) 42,584.0 44,326.0 44,476.0 39,552.0 12,246.0 11,905.0
Germany (Rs '000 ) 3,424.0 3,807.0 4,217.0 4,732.0 2,255.0 3,158.0
Italy (Rs '000 ) 2,386.0 773.0 3,275.0 1,823.0 1,048.0 1,342.0
Japan (Rs '000 ) 291.0 72.0 12.0 56.0 107.0 540.0
Netherlands (Rs '000 ) 773.0 1,935.0 340.0 3,920.0 1,305.0 587.0
Portugal (Rs '000 ) - 493.0 - 443.0 354.0 -
Singapore (Rs '000 ) 1,620.0 4,123.0 3,194.0 2,563.0 423.0 901.0
South Africa (Rs '000 ) 43.0 131.0 2.0 222.0 402.0 664.0
Spain (Rs '000 ) 345.0 36.0 90.0 1,624.0 1,364.0 419.0
Switzerland (Rs '000 ) 207.0 128.0 57.0 132.0 44.0 187.0
United Arab Emirates - 78.0 - 230.0 - 231.0
(Rs '000 )
United Kingdom (Rs '000 ) 7,953.0 6,983.0 13,942.0 7,048.0 7,824.0 1,720.0
USA (Rs '000 ) 1,639.0 2,193.0 6,587.0 1,667.0 736.0 1,964.0
Other countries (Rs 1,567.0 2,086.0 3,101.0 4,426.0 1,473.0 2,544.0
'000 )
Total () 63,235.0 70,552.0 81,022.0 73,970.0 33,001.0 30,727.0
and Industry)
Spirits: production, imports and exports
Production figures for spirits, sourced from the Central Statistical Organisation, are for whisky, brandy, rum
(dark and white) and white spirits only. As these are obtained from a sample of companies, production figures
tend to be underestimated. Export and import figures were obtained primarily from the Directorate General of
Foreign Trade (Ministry of Commerce & Industry – Department of Commerce). Rounding errors appear in the
figures on the website of the Ministry of Commerce.
Locally produced whisky, which goes by the name "Indian Scotch", constitutes the bulk of spirits exports.
Imports make up a very small but growing percentage of total spirits consumed in India. Scotch whisky ranks as
one of the most popular imported products among the exclusive niche group of consumers who can afford it.
Tequila data for 2002 and 2003 (full year) have been sourced from the Tequila Trade Association. Brandy and
Cognac data have been include data for 2001, 2002 and 2003 obtained from the BNIC. Data from 1998 to 2000
are for brandy alone. Figures for 2003 are part data for the period April to September 2003.
Table 168 Spirits Production, Imports and Exports: Total Volume 1998-2003
'000 litres
1998 1999 2000 2001 2002 2003
Production 40,096.0 51,622.0 43,227.0 51,394.0 109,974.0 -

and Industry)
Table 169 Whisk(e)y Production, Imports and Exports: Total Volume 1998-2003
'000 litres
1998 1999 2000 2001 2002 2003
Imports 603.6 517.4 731.1 724.0 722.3 389.1

Exports 6,741.8 6,354.1 8,943.7 8,316.8 10,757.1 4,658.2
and Industry)
Table 170 Brandy and Cognac Production, Imports and Exports: Total Volume 1998-2003
'000 litres
1998 1999 2000 2001 2002 2003
Imports 3.5 1.0 0.3 24.9 28.9 30.2

Exports 15.8 23.1 36.5 42.9 48.2 292.1
and Industry) BNIC
Table 171 Vodka Production, Imports and Exports: Total Volume 1998-2003
'000 litres
1998 1999 2000 2001 2002 2003
Imports 6.3 15.2 19.4 31.9 17.1 11.6

Exports - 21.0 18.1 18.2 33.8 9.3
and Industry)
Table 172 Gin Production, Imports and Exports: Total Volume 1998-2003
'000 litres
1998 1999 2000 2001 2002 2003
Imports 5.7 2.0 7.2 3.3 13.4 5.1

Exports 161.8 21.7 41.3 56.9 41.2 62.9
and Industry)
Table 173 Rum Production, Imports and Exports: Total Volume 1998-2003
'000 litres
1998 1999 2000 2001 2002 2003
Imports 36.0 23.3 212.0 29.5 2.6 5.9

Exports 650.3 398.2 517.8 474.6 820.0 289.0
and Industry)
Table 174 Tequila Production, Imports and Exports: Total Volume 1998-2003

'000 litres
1998 1999 2000 2001 2002 2003
Imports - - - - 5.4 9.9

Source: Tequila Trade Association
Table 175 Liqueurs Production, Imports and Exports: Total Volume 1998-2003
'000 litres
1998 1999 2000 2001 2002 2003
Imports 4.7 1.0 25.5 0.0 15.6 35.1

Exports - 228.5 352.4 978.6 326.7 120.0
and Industry)
Cider/Perry: production, imports and exports
There is no production, import or export of cider/perry in India.
FABs: production, imports and exports
There are no official data available on the production, import and export of FABs.
10. DEFINITIONS
This report analyses the market for alcoholic drinks in India. The review period covered is 1999-2004, and
forecasts are made to the year 2009. For the purposes of the study, the market has been divided into the
following sectors:
• Beer
• Wine
• Spirits
• Cider/perry
• Flavoured alcoholic beverages (FABs)
In order to give clearer insight into the Indian market, analysis is given at both the regional and national levels.
For the purposes of this study, India has been broken down into four broad regions:
North India
• Major states in the North region include Delhi, Punjab, Haryana, Himachal Pradesh, Uttar Pradesh,
Rajasthan, Uttaranchal, Jammu & Kashmir and Chandigarh (Union Territory).
• This is the most populous of the four regions, with 243 million inhabitants. Uttar Pradesh is the most
populous state in India. The states of Jammu & Kashmir, Himachal Pradesh, and the Union Territory of
Chandigarh are very small, and therefore contribute very little to the total output of the region. Uttaranchal
is a newly formed state, split from Uttar Pradesh in January 2001.
• This region produces an agricultural surplus, but industrial activity is only moderate. Punjab is the leading
state for agricultural produce.
East and Northeast India

• Major states in this region include Calcutta, West Bengal, Bihar, Orissa, Sikkim, Assam, Meghalaya,
Arunachal Pradesh, Manipur, Mizoram, Nagaland, Tripura, Jharkhand, Chattisgarh, Andaman (Union

Territory) and Nicobar Islands (Union Territory). Jharkhand and Chattisgarh are newly formed states, split
from Bihar and Madhya Pradesh, respectively, in January 2001.
• The region, with a population of 218 million, is largely inaccessible because most states are almost
separated from the mainland.
• This region is the least developed of the four, with the largest gap (in percentage terms) between rural and
urban populations, low per capita income, poor infrastructure and little industrial activity.
• However, East and Northeast India is the major national source of mineral resources like coal, iron and
bauxite.
South India
• Major states in the South region include Tamil Nadu (Madras), Andhra Pradesh, Kerala, Karnataka,
Pondicherry (Union Territory) and Lakshwadeep (Union Territory).
• This region, with a population of 197 million, is strong in agriculture and industry.
• The states of Karnataka and Andhra Pradesh pioneered the IT revolution in India. Bangalore, the capital of
Karnataka, and Hyderabad, the capital of Andhra Pradesh, are the Indian equivalents of USA's Silicon
Valley.
• The two union territories are relatively small, and do not contribute much to the region's output.
• All the states of this region have coastal areas and coastal transportation is well developed. This region also
has a very good land transportation infrastructure.
West India
• Major states in the West region include Maharashtra (Mumbai), Gujarat, Madhya Pradesh, Goa, Dadra &
Nagar Haveli (Union Territory) and Daman & Diu (Union Territory).
• The total population of this region is 188 million.
• West India is much more developed than the other three regions, and per capita income levels are therefore
comparatively high.
• Goa and the two Union Territories are small and do not contribute much to the output of the region,
although the former is a popular tourist destination.
• The hub of industrial activity in India is in Maharashtra and Gujarat, and these two states also attract the
highest number of foreign direct investment proposals each year. This region includes Mumbai, the
financial capital of India, and an important centre for industrial activity.
Analysis is also provided to compare industry trends in urban and rural areas. This is recorded as per Indian
classifications, which are defined by population size:
Urban
• Class I: population above 100,000
• Class II: population between 50,001 and 100,000
• Class III: population between 20,001 and 50,000
• Class IV: population between 10,001 and 20,000
Rural
• Class V: population between 5,001 and 10,000
• Class VI: population 5,000 and below
Explanations of Indian words and/or terminology used in this report are as follows:

• Country liquor: this refers to locally manufactured spirits, sometimes in poor conditions and with inferior
inputs. Often seen as a reflection of social status, country liquor is usually consumed by lower income
consumer
• Toddy: fermented spirit derived from coconut or rice, and produced illegally.
• Hooch: an illicit brew usually made from the bark of trees, banana peel and pulpy rotten grapes, with a dash
of methyl alcohol.
• Arrack: illicit country liquor widely popular in the southern region of India.
• Indian-Made Foreign Liquor (IMFL): refers to foreign spirits that are domestically manufactured in the
country. A very large and robust sector that feeds the demands of the majority of drinkers, many of whom
are hard drinkers who drink spirits neat.
Unit conversions of cases to litres for beer, wine and spirits:

• 1 case of beer includes 12 bottles of 650ml each = 7.8 litres
• 1 case of wine includes 12 bottles of 750ml each = 9 litres
• 1 case of spirit includes 12 bottles of 750ml each = 9 litres
Other terminology:
• GBO refers to Global Brand Owner, which is the ultimate owner of a brand.
• NBO refers to National Brand Owner, which is the company licensed to distribute a brand on behalf of a
GBO. The NBO may be a subsidiary of a GBO or it may be a completely separate company. Share tables at
both GBO and at NBO level are provided in the report. Reference to shares in the report analysis is at NBO
level.

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List of Contents and Tables

Table 26 On-trade vs Off-trade Sales of Alcoholic Drinks by Sector: Value 2004..................... 27

Table 72 Sales of Wine by Subsector: % Total Value Growth 1999-2004 ................................. 62

Euromonitor Page iii

ALCOHOLIC DRINKS IN INDIA

Value growth surges ahead due to upgrading in spirits

UB Group's leadership sails on amidst a concentrated operating environment

Cheers and toasts to a rosy drinking culture

Table 1 Retail Consumer Expenditure on Alcoholic Drinks 1999-2004

Total 69,748.0 73,098.0 77,106.0 81,855.0 89,230.0 96,713.4

2.2 Taxation and Duty Levies

In brief, each state has:

Prohibition no longer an alternative

Import duties for spirits reduced as per WTO commitments

The additional duty stands at:

Table 2 Taxation and Duty Levies on Beer 2004

Table 3 Taxation and Duty Levies on Wine and Spirits 2004

Table 4 Categorisation of Wine and Spirits in Andhra Pradesh 2004

Table 5 Typical Wholesaler and Retailer Off-trade Mark-ups by Sector 2004

Table 6 Selling Margin of a Typical Beer Brand 2004

% share of retail price

Table 7 Selling Margin of a Typical Wine Brand 2004

% share of retail price

Table 8 Selling Margin of a Typical Spirits Brand 2004

% share of retail price

Legal drinking age

2.4 Contraband/Parallel Trade

2.6 Country Liquor

Table 6 Production of Country Liquor 1999-2003

Production 58,008 63,171 96,607 124,700 148,608

2.7 Spurious Liquor

Value growth expected to outshine volume growth in 2004

Winning with wines and wineries

White is the spirit of the season

Soft drinks model of small pack sizes aids beer growth

Table 10 Sales of Alcoholic Drinks by Sector: Total Volume 1999-2004

Beer 527.5 568.3 611.0 673.9 701.4 740.7

Table 11 Sales of Alcoholic Drinks by Sector: Total Value 1999-2004

Beer 42,485.1 48,220.9 54,015.0 67,162.6 71,526.3 76,958.6

Table 12 Sales of Alcoholic Drinks by Sector: % Total Volume Growth 1999-2004

% total volume growth

Beer 5.6 7.0 40.4

Table 13 Sales of Alcoholic Drinks by Sector: % Total Value Growth 1999-2004

% local currency, current value growth

Beer 7.6 12.6 81.1

3.2 Market Performance by Region

West is the best to wine and dine

East and Northeast still the smallest market

Table 14 Sales of Alcoholic Drinks by Region: Total Volume 1999-2004

1999 2000 2001 2002 2003 2004

Table 15 Sales of Alcoholic Drinks by Region: Total Value 1999-2004

Table 16 Sales of Alcoholic Drinks by Region: % Total Volume Growth 1999-2004

% total volume growth

East and Northeast India 8.1 8.4 49.6

Table 17 Sales of Alcoholic Drinks by Region: % Total Value Growth 1999-2004

% local currency, current value growth

East and Northeast India 11.9 11.3 70.6

3.3 Market Performance by Rural-Urban Split

FABs completely an urban product

Wine sees growth in rural areas

Cheaper spirits preferred in rural areas

Pints allow for suburban penetration