Capital punishment: Brewers miffed at policies stymying Delhi beer sales despite heatwave

Soaring temperatures across large swaths of the country have yet again brought cheer to beer brands as tipplers guzzle on their favourite summer drink to beat the heat. But in the national capital, that froth of euphoria is tempered by a hugely insufficient number of outlets, inadequate chiller penetration and stringent excise policy.

According to industry sources, beer sales in Delhi actually fell 2.25 percent on a sequential basis in April this year. The city sold 70,101 hectolitres (hl) of beer in April against 75,340 hl in March 2024. On the other hand, beer sales in South Indian states, as well as in central and western India, remained at peak levels.

Beer brands struggle in Delhi

Despite being the capital, Delhi has issues with regard to maintaining smooth supplies of beer, especially in the peak summer months. Despite the high local demand and tourists who prefer beer in the summer months, the city reels from a beer shortage every year.

Several major beer brands have continued to struggle in Delhi due to varied reasons. According to an industry source, "Unlike other states such as Maharashtra, Karnataka Rajasthan, Haryana, Goa and Punjab, Delhi has no local source of manufacture. The city depends on supplies from outside the state. In peak season, manufacturers can only supply the surplus quantities after meeting demand in the states they manufacture or after supplies to other major profitable beer markets. In addition, the supply chain distribution is archaic. The number of retail outlets in Delhi, limited to 660, is highly inadequate to service consumer needs in normal times. Lack and ease of availability of chilled beer of known brands at outlets is a further deterrent for consumers."

In comparison, Karnataka, one of India’s key beer markets, has a free pricing system. There are around 4,000 liquor outlets in Karnataka, apart from bars, pubs, restaurants, etc, totalling 11,000 points of purchase and consumption. The state has seven breweries, not counting the slew of microbreweries that can be found across state capital Bengaluru. This has helped meet the needs of the consumers effectively and helped grow the beer category.

On the other hand, as Vinod Giri, director general of Brewers Association of India said, "Beer sales have fallen in Delhi this summer on account of grossly inadequate supplies and slow regulatory action to rectify the matter." While beer brands from smaller breweries tried to fill the gap, they could not make up for the absence of the major brands, given, among other things, their unfamiliarity with customers and their preference for known brands.

"The ex-factory prices allowed to companies in Delhi are the lowest in the country. Unless these supply-side issues are corrected, and the ex-factory prices are increased, I am afraid we will see the same shortage occur year after year," Giri said.

Beer demand and summer

The summer months are traditionally the peak season for the beer industry in India. As per experts, beer consumption between April and July constitute 60 percent of total year sales in the country. Of the total alcohol consumed in India annually, 7 percent comes from beer alone.

Coming back to the example of Karnataka, brewers in the state saw a massive growth in beer sales this summer, recording a 29.13 percent growth with 418,319 hl of the liquor sold in April this year. In Maharashtra, 338,976 hl beer was sold in April, as per industry data.

Rasagna Rao, founder of Goa-based brewery Reybier Alco Bev (RAB), who also owns microbreweries in Andhra Pradesh, said that in India, the demand for lager, both strong and mild, has witnessed a jump in recent years, and argues against the summer boost theory. According to Rao, the beer market has nothing to do with the season as the demand persists 365 days, especially in regions like Karnataka and Andhra Pradesh.

United Breweries, the maker of popular beer brands such as Heineken and Kingfisher, said it observed robust net sales fuelled by volume growth in Tamil Nadu, Telangana, Andhra Pradesh, Rajasthan, Odisha, Uttar Pradesh and Jharkhand in the fourth quarter of this year, with partial offsets mainly in Delhi and Haryana.

Corona and Budweiser maker AB InBev said that consumer preference for premium beers led to a surge in demand for premium labels. "Consumer trends indicate a rise in in-home consumption with many of them opting for beer cans for ease of use and portability,” said an AB InBev India spokesperson.