Global Craft Beer Future – India

During the beery explorations that resulted in The World Atlas of Beer, Tim Webb and I hit upon the two markets we consider most important to the future of brewing world-wide. Not craft brewing, mind, but brewing in general. They are China and India.

Neither has high per capita consumption levels – China drinks about 34 litres per person per year, while India languishes around one, yes, one litre per head annually – but both are growing markets and one, China, already produces more than twice as much beer as the second largest brewing nation in the world. India’s production sits at a very modest 26th place globally.

But beer consumption is growing, slowly, in both markets, partly because increased affluence allows for greater purchasing power among the middle class.

India, however, is primarily a spirits market, as evidenced by the fact that United Spirits, the country’s top distiller, is also the number two spirits company in the world when measured by volume of product sold. And now Diageo is poised to take control of it.

With an offer of $1.8 billion on the table, Diageo is expected to assume majority control of United Spirits and thus gain ownership of a vast portfolio of brands and, perhaps more importantly, access to an expansive distribution network for its own global brands. This will place the world’s largest drinks company in a steel cage match for market presence with its chief rival, Pernod Ricard.

It will also likely put on hold for possibly several years any significant growth in the Indian beer market. Why? Because with two spirits behemoths going head-to-head in what is primarily a spirits marketplace, there is likely to be little room left over for beer growth, especially when the inevitable marketing and price wars heat up.

The good news in all this is that I’m told reliably that a small but enthusiastic craft beer market is just beginning to develop in India, the existence of which will probably not even be noticed by the two Goliaths hammering each other for market share. Bad news for A-B InBev, SABMiller, Heineken and the rest, but good news for the small minority of Indians thirsting for good beer.

If You Thought China Might Not Be Influencing the Booze Market

Check this out:

Rémy Cointreau has reported a 235% increase in profit, from €14.1 million ($22m) to €47.3 million ($63.3m), for its first half ended September 30. Excluding non-recurring items, net profit totaled €61.5 million ($96m), up from €50.6 million ($79m) in the same period last year. Current operating profit, meanwhile, rose 27.3% to €106.2 million ($165.8m), as net sales grew nearly 11% to €474.9 million ($741.6m).

What’s that to do with China, you might ask? Onl;y this:

The group’s Rémy Martin Cognac led the growth, posting a 27.6% increase in operating profit to €91.2 million ($142.4m). The Cognac brand benefited primarily from “a thriving Asian economy”—particularly in China…

Cognac sales are once again on the rise elsewhere — France, Germany and Russia are also mentioned — but considering that global sales have been flagging for years, a 27% bump is massive, and yes, it’s fueled largely, perhaps exceptionally, by China.

While those words sink in, consider this story and its potential impact on the global wine market.

We are indeed entering interesting times in the alcoholic beverage world.