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Brewers promote beer as softer option to hard liquor

P.T. Jyothi Datta

NEW DELHI, Sept. 13

THE beer industry's cup of woe seems to be spilling over. Following the degrowth of minus six per cent experienced in the segment, the All India Brewers' Association (AIBA) have embarked on efforts to promote beer as an ``agro-based low alcohol beverage' ' or a ``softer option'' to hard liquor.

According to information from AIBA, an association comprising 67 breweries, the total demand for beer is an estimated 60 million cases, constituting only 65 per cent of the total installed capacity.

Ms. Zinia Lawyer, Director, Associated Breweries & Distilleries Ltd, speaking as AIBA President told Business Line that the Association was working towards getting beer classified as an ``agro-based low alcohol beverage''.

``Beer is considered as an alcoholic drink and is clubbed with IMFL and, hence is subject to strict regulation and constant increase in duties and taxes which has resulted in the degrowth of the industry,'' she said.

Another factor inhibiting growth is the high tax structure. According to AIBA data: ``Tax structure as percentage of End Consumer Price (ECP) reveals that duties and taxes account for 40 per cent of ECP in India, while in the US, Germany and France, it i s about 20 per cent.''

Ms Lawyer said globally a distinction had been made between beer and hard spirits. ``Spirits like whisky have an alcohol content of as high as 45 per cent, where as in beer it ranges from 2-7 per cent only, which is made by brewing various raw materials of agricultural origin, like barley, malt, sugar and hops, usually added to impart a bitter taste to control the fermentation that follows.''

On whether the association's efforts to position beer as a ``softer option'' or a ``health drink'' would not be seen as ``preposterous'' by the health lobby in the country, she said: ``It is sad....The manufacturing process clearly shows that the presenc e of mild alcohol content in beer is because of the fermentation process. There is no alcohol induced separately.''

AIBA said several breweries would turn sick if the current trend of declining return on investment continued. ``The investment requirement is of the order of Rs 30,000 per hecto litre. To set up a brewery of about 2.5 lakh cases per month, an investment of Rs 75 crore is required. With this trende in the beer market and demand, the investment does not pay back even in 10 years time,'' it said.

Association members have been talking to government authorities to achieve the following objectives:

Delinking beer from IMFL for the purpose of licensing, taxation, promotion and advertising;

Classify beer as a beverage and not an alcoholic drink to be controlled by the Centre, with a central tax and not at the mercy of all States;

Reduce taxes on beer and its raw materials to bring down the ECP and make beer more affordable, at Rs 25 per bottle in India;

Bring beer under the Ministry of Food Processing Industry for all policy decisions; and

Make beer's distribution more open like in the foreign countries.

Ms. Lawyer, however, cited Uttar Pradesh as a case where policy makers realised that beer was a mild alcoholic drink and should be promoted. She felt the onus was on the Government to promote responsible drinking and change consumer pattern by weaning th em away from cheaper, hard intoxicants.

``In Maharashtra, I have been making representations, from the Chief Minister to the excise secretary to get help for 11 breweries in the State which are running at 48 per cent of capacity utilisation and are on the verge of collapse,'' she said.

Mr Kalyan Ganguly, President, United Breweries Ltd (Breweries division), said promotional efforts were also on in West Bengal, Delhi, Tamil Nadu, Andhra Pradesh, Karnataka, Punjab and Rajasthan. ``The policies need to be consistent to support the economi es of sale,'' he said.

Mr K.P. Balasubramaniam, Vice-Chairman and Managing Director, Mysore Breweries Ltd, and the association's past president pointed out the `beer-friendly' policies recently adopted in Uttar Pradesh were the result of the association's efforts. ``Increased distribution in Uttar Pradesh had resulted in a 400-per cent increase in sales over the same period in the previous year.''

He added that these issues would be discussed at AIBA's annual general meeting in Bangalore.