The market for beer in India is expected to expand by 39 percent to 2010, faster than the growth forecast for wines and spirits, says a new study by an international consultancy and research organisation.
"This growth is being fuelled by heavy levels of investment in the beer industry whereas spirits and wine industries are only now starting to attract the sort of multinational attention India's beer industry has long enjoyed," says the study.
"However, India lags behind other regional markets, such as Thailand, in terms of our industry growth forecasts. Why? India seems to have a slower culture of change than other Asia Pacific markets," adds the Research and Markets study.
The wine and spirits market in India is forecast to grow 31.7 per cent and 31.6 per cent respectively, while the broader alcoholic drinks industry, in general, is seen expanding by 32.4 per cent to 2010.
Some 130 million cases of beer worth around Rs 100 billion ($2.4 billion) were sold in India last fiscal, as per industry estimates.
The study says even though the outlook for India's beer industry is promising and robust, it is reasonably moderate when compared with many of the region's other booming economies.
"An increasingly crowded competitive landscape and some constant investments in capacity increases, marketing initiatives and new product launches, coupled with a booming economy, should be a recipe for explosive growth," it says.
The study notes that there has been a lot of activity in India's beer market in recent months. Anglo-South African brewing entity SAB Miller finalised its acquisition of the brewing assets of departing Australian drinks major Fosters.
"Similarly America's Anheuser-Busch, Denmark's Carlsberg and Belgian giant InBev were all once again rumoured to be on the verge of market entry," it says.
For brewers in India, the growing middle and upper class consumer groups do lead to strong demand for their product - which is essentially a non-essential item that requires certain level of disposable income to consume.
"But these groups still represent the minority in a country where the vast rural population is yet to feel the effects of rapid economic development," it says, adding that the entry of Carlsberg, Anheuser-Busch or InBev could change all this.
"Fiercer competition would inevitably result in brewers placing strategic emphasis on price while presently the emphasis is very much on 'premiumisation' and trading up existing customers," it observes.
"These apart, lower prices would broaden the availability of beer even more and remove an element of the urban-rural consumption barrier that affects the sale of so many consumer goods in India."