India’s beer tax issues don’t hamper AB InBev

India is not a big beer-drinking nation and taxation issues stand in the way of increasing beer’s penetration from its current level of 20%, but despite this drinks company AB InBev India has successfully grown several of its brands over the past two years. 

Why it matters

Marketers are working in a difficult environment. COVID-period beer cess (a tax on tax, levied for a specific purpose) has not been removed everywhere, which has prevented the industry returning to pre-pandemic levels. Plus, a local quirk that sees alcohol taxes applied on total volume rather than on alcohol by volume, means that it’s easy for price-conscious consumers to switch from relatively expensive beers to cheaper hard spirits.

What AB InBev has done 

Speaking to Food Navigator Asia, AB InBev India and South East Asia president Kartikeya Sharma, outlined how the company has responded. 

• Local brewing of leading brands, including Budweiser, Hoegaarden and Corona, cut out import duties and lowered prices, leading to increased consumption at home (e.g. from once a month to two or three times a month) as consumers were willing to experiment more during lockdowns.
• Expanding the low/no-alcohol portfolio tapped into the work-from-home trend and exploited an e-commerce loophole that forbids the sale of alcohol via this channel. 
• Innovating across the portfolio, with new flavours (e.g. Hoegaarden 0.0 Rosé) and new products (e.g. Budweiser Beats energy drink), has helped boost growth. 
• During lockdowns, the company moved all its marketing online to stay in front of consumers and to promote sociable activities such as virtual concerts.

Takeaway

Budweiser’s market share has gone from 6.5% pre-pandemic to around 10% today.

Sourced from Food Navigator Asia