InBev concern over high tax on beer

Belgium-based beer major Anheuser-Busch InBev sees taxation and accessibility as the key factors holding back the growth of the beer industry in India even as it looks to expand its product range.

By Pinak Ghosh in Calcutta
  • Published 11.06.18
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BIG MOVES: Verhaert

Calcutta: Belgium-based beer major Anheuser-Busch InBev sees taxation and accessibility as the key factors holding back the growth of the beer industry in India even as it looks to expand its product range.

Unlike other countries, in India, the tax on beer is not based on the alcohol content, but the volume and price which makes the end product more expensive for consumers. Moreover, each state can set its own excise duty, adding to the complexity in pricing.

"In most countries beer is taxed on the alcoholic content. For example, 1 litre of beer contains around 5-7 per cent of alcohol. In other countries, you would be taxed on the 5-7 per cent. If you consider a litre of scotch, it has around 42 per cent alcohol, it gets almost the same tax as beer. This is something unique here and there is no drive to moderation," Jan Craps, president (APAC South) of ABInBev, told The Telegraph during an interaction to announce the use of renewable energy at its brewery in Mysore.

According to Ben Verhaert, the India president of ABInBev, accessibility is another limiting factor. "(It is estimated) there is one outlet for every 200 people in China whereas in India, it is one outlet for 16,000 people. So the accessibility is limited," Verhaert said.

Industry data suggest India has one of the lowest levels of beer consumption per capita in Asia - estimated at around 5.1 litres per capita compared with the regional average of 20.9 litres per capita. So, in India, beer constitutes around 10-15 per cent of the total alcoholic beverages, while in the other markets it is more than 50 per cent.

Despite the constraints, the beer market is seen to grow annually at an average of 6.9 per cent between 2018 and 2022, according to BMI Research, reaching 6.5 billion litres in total, up from an estimated 4.7 billion litres in 2017.

"With the per capita consumption low and disposable income expected to increase, this kind of growth seems realistic," said Verhaert.