Delayed rains bring cheer to beer makers

BANGALORE: The delayed monsoon has brought some cheer to the Indian beer industry as volumes rose 6% in the first quarter. This is despite the fact that volumes in the largest beer market, Andhra Pradesh, plunged over 40% as top manufacturers United Breweries and SABMiller remained absent, following a litigation with the state government. The state government had stopped procurement of beer from these companies since March 31, following a dispute over revision of beer prices.

The summer months of April to June rakes in 40-50% of the annual volumes for brewers. Data from brewers suggest that excluding Andhra Pradesh, domestic volumes were up 13% in the April-June quarter.

North Indian states drove growth in the first quarter, reporting a 19% rise. It was this region that had been hit by the early monsoons in FY09. Uttar Pradesh showed a 52% volume increase, while Haryana and Delhi clocked a volume growth of 38% and 31%, respectively. The western states saw beer consumption grow 14%, while the eastern states showed a 39% increase with West Bengal and Orissa boosting sales.

The southern markets, however, continued to perform below expectations, down nearly 18% largely due to the ���no-supply��� situation in Andhra Pradesh till June-end. Tamil Nadu also reported flat growth. State taxation pressures hiked up retail prices of beer, causing volumes to fall 18% in Karnataka. Rajasthan, in turn, disappointed the industry with volumes dipping around 6% as the introduction of value-added tax in the state increased retail price by Rs 15 a bottle.

SABMiller India, which has been hit by a reduction in supply in several states, said, the company did not necessarily see a strong first quarter. ���The extension in summer period (due to delay in monsoon) has helped grow volumes largely only in a few small north Indian markets, such as Punjab, Haryana and Orissa,��� Sundeep Kumar, director of corporate affairs and communications at SABMiller India, said.

With beer supply in Andhra Pradesh normalising in the past two weeks, brewers expect double-digit growth rates over the next few quarters.