Second Covid-19 wave hits Indian beer industry, outlook is volatile: UBL

The Indian beer industry has yet again been negatively impacted with the onset of the second wave of Covid-19 and the outlook is volatile, according to leading player United Breweries.

After the second wave of the pandemic, several state governments and local authorities had imposed lockdowns to contain the spread of Covid-19 and restrictions started to lift from the first week of June.

"With the onset of a second Covid wave at the start of financial year 21/22, the beer industry is again negatively impacted, and the outlook is volatile," said United Breweries Ltd (UBL) in its latest annual report.

While the company navigates the near term challenging circumstances, the strategy is to remain focused on increasing category penetration, building a strong brand portfolio, managing costs and cash, ensuring further improvements on sustainability, while fostering a highly engaged workforce that is supported by best in class processes, it said.

In FY 2020-21 UBL's revenue was down 30.47 per cent to Rs 10,183.40 crore.

Last month, Dutch brewing major Heineken had acquired an additional 14.98 per cent stake in UBL, taking its total shareholding to 61.50 per cent.

While sharing the industry overview, UBL said, unlike other emerging economies, the beer industry in India continues to remain quite traditional and is controlled by state governments.

It has registered a robust growth during the last one and half decades.

"From a total industry consumption of about 100 million cases in 2005, the industry consumption crossed 300 million cases per annum in 2019 prior to the impact of Covid," it said, adding that three leading players contribute over 85 per cent of the total industry sales.

Beer comprises about 12 per cent of the total alcohol consumed in India.

"While the alcohol beverages industry in India has been dominated by spirits, beer is emerging as the preferred alcoholic beverage for young Indians," it said.

Though compared to the global average per capita consumption of about 30 litres, the per capita consumption in India still hovers around two litres.

"However, the scope for growth in India continues to remain positive given the climate, young demographics and increasing disposable income," it said.

Due to Covid, retail sale of beer was completely shut from March 23, 2020, till first week of May, causing a considerable drop in sales for beer.

Industry volumes grew at a compound annual growth rate (CAGR) of about 7 per cent during 2015 to 2020.

"However, during 2020-21, the Indian beer market shrunk for force majeure reasons of Covid. The industry has evolved from manufacturing standard beers such as strong and lager beer to flavoured and variety beers in line with trends in other developed countries," said UBL.