The beer industry in India has been growing at a good pace for the last few months. Almost double digit (about 10%) increase is being seen in sales. The reason for this is believed to be the improvement in some states and favorable weather. However, due to rising costs, there is still pressure on the profits of companies. Vivek Gupta, Managing Director and CEO of United Breweries Limited (UBL) said this. Vivek Gupta said, “The demand for beer is continuously increasing due to good weather and reforms in states like Karnataka and Maharashtra.”
Sales increased, but profits decreased
He said that the position of the industry is quite strong in terms of sales, but there is huge pressure on profits (margins). The biggest reason for this is the rising prices of raw materials. According to Gupta, the ongoing conflicts (wars) in the world have affected the prices of glass bottles, aluminum cans and imported raw materials. Apart from this, weakness of rupee (weak exchange rate) has also increased the cost. Due to this, doing business has become more expensive than before. He said, “At present our sales are growing at a good pace, but continuous work is being done to recover the profits that have declined due to the impact of the war.”
Growth is coming from more sales, not price.
When he was asked whether this growth came from increasing prices or increased sales, he said that the main reason for this was higher volume sales. He said, “High single digit growth is being seen in the sales (volume) of beer. There is some effect of increase in prices also, but the real reason is the increase in sales.”
Balanced monsoon is more important
On the unusual heat in North India during June, Gupta said that a good and balanced monsoon is more important for the industry than a few days of extreme heat. He said, “We want the country to have a good monsoon, because a strong economy and balanced rains are more important for us than a few days of extra heat.” He also said that a change of 10-15 days in the weather does not have any major impact on the business.
Extreme heat can also reduce demand for beer
Gupta told that when it is very hot, people come out of the house less. Since beer is usually consumed during social gatherings with friends and family, extreme heat can also affect its consumption.
Beer is becoming the first choice of youth
According to Vivek Gupta, the popularity of beer is continuously increasing among the youth. Now the youth are choosing light alcoholic drinks instead of strong alcohol. He said that according to the company’s internal data, about 70-75% people choose beer as their first liquor. It is clear from this that the number of beer drinkers in the country is continuously increasing.
