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India a large market, must be seen like a continent: Heineken

Heineken, the world's second biggest brewer, said India, a focus market, is similar to how China was twenty years ago and it should be seen as a continent instead of a country given its scale and complexity.

"There are some parallels to draw with China 20 years ago. India is more of a continent than a country and to really understand this large and complex market, you would have to de-average the market," Jacco van der Linden, president APAC at Heineken, told analysts during its Capital Markets event.

The Dutch brewing firm acquired a majority control of UBL, the erstwhile flagship brand of Vijay Mallya's UB Group, in July last year. India's beer market is worth ₹10 billion or 28 million hectolitres (mhl), much smaller than the Chinese market, where beer worth ₹65 billion or 488 mhl is sold annually. The maker of Amstel and Kingfisher beer said beer accounts for just 10% of the spirits market, with per capita consumption of two litres.

"We clearly see opportunities to unlock future growth. We have a job to do - to strive for a more fair regulatory environment for beer. The beer price is also relatively expensive and has very much to do with the excise regime," said Linden, also a member of Heineken's executive team. "And the outlet universe is relatively small. If you compare it to the average FMCG (fast-moving consumer goods) universe of 10 million, it is basically 90,000 licensed outlets that we have in India. And alcohol penetration, for example, is only 1% amongst women."

In India, strong beer accounts for over 80% of total volume and many consumers of strong beer are also potential purchasers of value and low-priced spirits. If regulations push up beer prices, gap between cheap Indian made foreign liquor and beer closes sufficiently for consumers to switch, according to IWSR Drinks Market Analysis report.

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