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May, 11 2017

India's beer industry expects to grow 5-7% in FY17-18

Danish brewer Carlsberg’s India business dragged down volume growth in Asia region. But for India volume, the region would have grown 2%, the company said.

After the Supreme Court’s mid-December judgement, several companies chose channel de-stocking as there wasn’t enough clarity on the implementation, which in turn hurt their January-March sales even as nearly 30,000 shops were shut in April.

Danish brewer Carlsberg’s India business dragged down volume growth in Asia region. But for India volume, the region would have grown 2%, the company said.

Cees't Hart, CEO, Carlsberg, said, "The totality of Asia (business) has, let’s say, declined or contracted a bit because of India. So, despite a good start in all the other countries, in India, because of the implication of the highway ban, we had a negative double-digit volume decline. So, it’s mainly India which impacts the performance in Asia in Q1."

The maker of eponymous lager and Tuborg saw Indian volume decline almost 20%, a steep fall from about 15-20% growth it has been posting for nearly a decade.

The world’s third largest brewer said it expects a volatile year in India with a hit in the first half of the calendar year in India due to the combination of closing, relocating and de-stocking.

Hart added, "What we see is a lot of creativity in India on how to mitigate this for, first of all, the states and secondly for local entrepreneurs. We don’t see a lower demand."

Michael Jensen, CEO, Carlsberg India, said, "It is very detrimental for investor confidence."

India’s beer sales fell 2% in the year to March 2017. Yet, the industry expects to grow 5-7% during the fiscal on the back of new launches.

Anand Kripalu, CEO, United Spirits, said, "We expect the impact to be mitigated eventually and where it doesn’t, consumption will shift to other outlets."

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