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.