India's Brewery Business: A Thriving Craft Beer Culture Amidst Challenges
India's Brewery Business: A Thriving Craft Beer Culture Amidst Challenges

Craft beers and independent breweries in India is no longer a nascent industry. India's alcohol beverage market has seen a notable shift, with craft beer carving out a significant niche. Despite various challenges, the craft beer industry, driven by microbreweries and premium product offerings, is experiencing robust growth. “The brewery industry in India is not uniformly experiencing slow growth. Despite challenges, the sector has demonstrated resilience and adaptability despite regulatory obstacles and market fluctuations. Various factors, including shifting consumer preferences, evolving regulatory environments, and the rise of craft breweries, have contributed to a dynamic and multifaceted market landscape. While some segments may need more growth due to saturation or regulatory limitations, others are witnessing substantial expansion opportunities,” Teja Chekuri, Managing Partner at Ironhill India said. 

Growth of Craft Beer in India

The craft beer market in India is burgeoning, characterised by an annual growth rate projected to be around 24.41 percent from 2024 to 2032​ (IMARC)​. This growth is fueled by several factors, including an increased interest from the older demographic, who are attracted to the varied and sophisticated flavours offered by craft beers​.

Microbreweries play a crucial role in this expansion. These establishments not only provide a wide array of choices but also bring innovation right into the casual dining experience. The introduction of microbreweries has allowed for a personal touch in the brewing process, often located within restaurants and pubs, making craft beer more accessible and experiential for consumers​​.

Prasanna Kumar, CEO & Co-founder of BLR Brewing Co. cautions that starting a brewery involves more than just arranging finances and handling cash flow. Despite the allure of owning a brewery, which might seem trendy and less demanding than other businesses, plus the added perk of having beer readily available, the reality of entering the beer business in India can be quite different. Kumar emphasises that the actual challenges and learning experiences only become apparent through the process of setting up and running the business.

Consumer Preferences and Market Dynamics

Today's Indian consumer shows a growing preference for low-alcohol and non-alcoholic beers, reflecting a broader trend towards health-conscious choices. However, there is also a significant demand for premium alcoholic beverages, as evidenced by the surge in sales of high-quality, premium-category beers. This segment is expected to dominate the industry, driven by the middle-class's increasing disposable income and desire for innovative and high-quality products​​.

“The distribution channels for craft beer are also evolving, with both on-trade (bars, pubs) and off-trade (retail stores) venues seeing growth. The on-trade channel, in particular, benefits from the social dynamics of beer consumption, where trying new beers becomes a communal and shared experience,” Delhi-based industry expert Sudhir Upadhyay, in the trade for 25 years commented​.

Challenges and Competitive Landscape

While the craft beer sector is growing, it faces competition from other alcoholic beverages and a regulatory environment that can be stringent. Additionally, the market sees a high level of competition among existing players, with major brands continually innovating to capture consumer interest. Recent product launches by companies like Anheuser-Busch InBev, which introduced new varieties tailored to Indian tastes, signify the competitive dynamics in this sector​.

“Advancements in brewing techniques, product diversification, and strategic partnerships have injected fresh momentum into the industry. As India's economy develops and consumer purchasing power increases, the brewery industry is well-positioned to capitalise on the rising demand for premium and experiential beverages. Long story short, the brewery industry in India presents a nuanced picture. While challenges are present, it is essential to recognize that the industry is not uniformly experiencing slow growth. It is characterised by a blend of opportunities and obstacles, offering stakeholders a realistic and well-informed perspective,” Chekuri added.

Regional Insights

There are four to five states which have set clear guidelines for the setting up of a microbrewery, with complete excise policies such as Karnataka, Haryana, Maharashtra, West Bengal, Delhi, Pondicherry and a few more.

India's craft beer market displays diverse growth across its regions, driven by unique cultural and consumer dynamics. South India, with cities like Bangalore and Hyderabad, leads in craft beer innovation, supported by a rich culinary culture and urban populace that appreciates diverse, quality beers. North India, particularly Delhi and Gurgaon, shows dynamic market growth with its dense population and evolving tastes encouraging numerous craft breweries. In West and Central India, Mumbai and Pune are propelled by an urban lifestyle and corporate culture, making craft beers popular among young professionals. East India, with cities like Kolkata and Bhubaneswar, is rapidly growing as digital adoption increases and younger demographics seek innovative beers, making these regions crucial to the expansion of India's craft beer culture​.

Future Outlook

The future of India's brewery business appears promising. As the consumer base grows and matures, the demand for diverse and high-quality beer is expected to rise. The industry's potential is vast, with room for new entrants and innovation. Additionally, the increasing penetration of online sales platforms and the expansion of distribution networks are expected to further boost the market's growth.

While the Indian brewery business, particularly the craft beer segment, navigates through various challenges, its growth prospects remain strong. The shift towards more nuanced and quality-focused beer offerings continues to shape the landscape of alcoholic beverages in India.

 
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