Literature Review:

Alcoholic beverages inIndiaappeared in theChalcolithic Era. These beverages were in use between 3000 BC - 2000 BC.Sura/ Somrasa, a beverage distilled from rice meal, wheat, sugar cane, grapes, and other fruits and was popular among theKshatriyawarriorsand the peasant population.

TheHinduAyurvedatexts describe both the beneficent uses of alcoholic beverages and the consequences of intoxication and alcoholic diseases. Most of the people inIndiaandChina have continued, throughout, to ferment a portion of their crops and nourish themselves with the alcoholic product.

Indians today drinks Whisky, Rum, Beer, Wine, Gin, and Vodka. Between 15 and 20 per cent of Indian people consume alcohol and, over the past twenty years, the number of drinkers has increased from one in 300 to one in 20. According to The Hindustan Times, it is estimated that of these 5 per cent can be classed as alcoholics or alcohol dependent. This translates into about five million people addicted to alcohol. The Intake of Indian Made Foreign Liquor (IMFL) is growing at the considerable rate of 15 per cent a year. Again, The Hindustan Times says that 65 per cent of the Indian liquor market is controlled by whiskey manufacturers.

Liquor industry is today exporting a sizable quantity of India Liquor products to other countries. The Indian market has traditionally been inclined towards the unorganized sector, which accounts for two-thirds of the liquor consumption in India. However, maturing tastes and preferences are making the Indian liquor market more Brand-led.

Roughly 60% of the population is under 30. What's more, incomes are rising, powered by an economy that's growing at 9%-plus. These trends are expected to fuel growth in beer consumption of up to 15% a year through the end of the decade.

Alcoholic Beverages:

The various categories of alcoholic beverages are as follows,

IMFL (India Made Foreign Liquor)

It is India's potential for whisky -- it accounts for about 60 per cent of the Indian Made Foreign Liquor (IMFL) market -- and other spirits such as rum and vodka that is attracting the MNCs to India. India is a big and growing market with a weakness for spirits, especially whisky. Branded spirits market in India is 119 million cases out of which Whisky accounts for 55%, Rum 27%, Brandi 14%, Gin 3%, and Vodka 1%. North and west India consumes more of whisky and South, more of Brandy and Rum. The UB Group (35%) has a market share of 35% + 13% = 48% after merger of Spirits Division of Shaw Wallace (13%), Jagajit (7%), Mohan Meakins (7%) and IDL (3.5%). AP (24), TN (19.3), Karnataka (11.2), Kerala (10.9) & Rajasthan (5.7) consume 60 % of the total Indian Liquor which is growing at about 11%.

Country Liquor

Indias country liquor industry, a commoditised and often chaotic business, is estimated at Rs 22,000 crore, with annualised volume sales of over 200 million cases. At one point, the country liquor market was projected at 2.5 times that of the more visible and heavily branded Indian Made Foreign Liquor (IMFL) industry, but has been loosing ground rapidly in recent years.

Country liquor, however, has remained almost stagnant in absolute size as consumers upgrade to IMFL on the back of economic expansion, and with more States banning the segment citing social risk.

The standard characteristics of country liquor vary with the States, with its alcohol strength in Maharashtra at 42.8% like IMFL, but 36% in Uttar Pradesh where the purchasing power of the mass consumer is believed to be lower.Not only the changing skyline, but also the changing lifestyle and habits of people are causing the slump in country liquor sales. The demographic profile of the area has seen a sea change in the past few years.

Several big markets, especially those down south, have banned country liquor immensely benefiting the IMFL sales. Country liquor was wiped out of the southern markets when Karnataka became the last State to ban it.. However, country liquor continues to go strong in northern States like Uttar Pradesh, Haryana and Punjab, while Maharashtra is one of the bigger States in the west.

A.P., Karnataka and Tamil Nadu have abolished RS based CL in favour of cheap ENA based IMFL. UP (19.5), Maharashtra (19.3), Karnataka (13.6), Punjab (10.2) & Haryana (9.4) consume 63% of the total CL.

Beer

Beer is traditionally associated with young age consumption and often considered as an urban socializing phenomenon. With the advent and availability of more number of Western premium brands of beers in India, the younger generation is also considering beer as an option to hang-out with. The staid image of earlier generations at-home whisky or rum drinking habits are mostly being replaced by a more jazzy club drinking culture in India

Youthful exuberance, rapid growth in disposable income and urbanization are the biggest selling points for the brewers to enter India.

The cult images of brands such as Carlsberg, Tuborg, Heineken, Tiger, Cobra, Budweiser, etc. are further helping the cause as more number of young Indians is influenced by Western cultures and customs. With India expected to remain the youngest among all the bigger economies even in 2030 across the globe, the outlook for the beer market is definitely much more than just bright.

In India the future of beer industry is very much optimistic because:

1. India has predominantly a warm/hot climate2. The beer-drinkers in the country are much younger than the average beer-drinker elsewhere in the world. This makes them more likely to carry the brand with them for a lifetime.3. Increasing exposure to beer and wine drinking, mainly due to media and consumer mobility.

All these factors combined make the scenario very promising for beer industry and are 'in sync' with their strategy for India.

The beer-drinkers in the country are much younger than the average beer-drinker elsewhere in the world. This makes them more likely to carry the brand with them for a lifetime. Also, as the target audience becomes younger, a light beer is expected to attract first-time drinkers, since it is much milder than any of the other beers in the country.

United Breweries and SAB Miller together, sweep close to 80% of the Indian beer market. Individual state oriented excise structure has further allowed these two companies to develop a near duopoly in the market, since differentiated alcohol policy in different states, localized distribution monopolies and state excise on imports and exports of alcoholic drinks make distribution and logistics of beer almost economically futile for most of the new entrants.

UB (United Breweries Ltd.) is the market leader in the Indian beer market with a 40% market share. Its flagship Kingfisher brand alone commands 25% market share. The company has however been focusing on strong beer, which has driven growth. The company introduced its strong beer, Kingfisher Strong during the year 2000 in the selected market of Maharashtra and Karnataka. The market is now skewed towards strong beer with more than 60% of the market being strong beer market.

Apart from Kingfisher, and Foster's Beer, the other brands in the Indian market are Carling Black Label, Carlsberg, Dansberg, Golden Eagle, Guru, Maharaja Premium Lager, Haake Beck, Haywards 2000 Beer, Haywards 5000, Haywards skol, Flying Horse Royal Lager, Taj Mahal, Heinekin, Hi-Five, Ice, Kingfisher Diet, Kingfisher Strong, Kirin, Knockout, Legend, London Diet, London Draft, London Pilsner, Royal Challenge, San Miguel Lager, Sand Piper, Strohs and Zingaro.

The major brands which belong to large groups in the industry (apart from UB) are Shaw Wallace - Royal Challenge Premium Lager, Haywards 2000 Premium Lager, Haywards 5000 Super Strong, Hi-Five and Lal Toofan.A lot of new variants promise to gain prominence, but mainly in niche urban segments. The sophisticated consumer who drinks beer for the experience and not to get drunk will lap up ice beer or light beer. In urban centres, apart from first time users companies are also targeting women, who as 'the times they are a changing,' are entering the market for beer. Essentially, women shy away from beer consumption because it is associated with calories, and has traditionally been a buddy drink, associated with pot-bellied men sitting at bars and shooting darts.

Beer, also known as liquid bread, has nutritional effects in our body. The relationship between alcohol consumption and health has always been a point of argument for years. The journal emphasized that beer has salutary results in the body when taken moderately. It mentioned that moderate beer drinking varies with sex. Men should drink 1-2 alcoholic beverages a day while women should drink 1 alcoholic beverage a day to enjoy the benefits of alcohol. Brewers yeast is known to be a rich source of nutrients including magnesium, calcium, and phosphorus.

Studies showed that beer reduced death from heart diseases, lower the risks of diabetes milletus, and promote bone health by inhibiting bone loss.

The relationship of moderate beer drinking and cardiovascular effects could no longer be doubted because a lot of demonstrations have been conducted for years which presented facts that in moderation, alcohol increases HDL (high density lipoprotein, also referred as good cholesterol), decreases thrombosis (blood clotting), and increases fibrinolysis (clot dissolving).

The relationship between diabetes milletus and alcohol should be taken under consideration. According to the journal, if a person does not have diabetes yet, moderate drinking of alcohol provides helpful outcome. The liver normally releases stored sugar to counteract falling blood sugar levels. But if your liver is busy metabolizing alcohol, your blood sugar level may not get the boost it needs. If you take insulin or oral diabetes medications, even as little as 2 ounces of alcohol the equivalent of two drinks can cause low blood sugar. Still a person should seek medical supervision before drinking beer because at some point alcohol can aggravate diabetes complications, such as nerve damage and eye diseases.

It also was mentioned in the journal that beer may benefit bones because it contains silicon and ethanol which has been shown to promote bone health by measuring bone mineral density. Certain articles showed that not all bone experts agreed to this study because they believe that better BMD does not always mean fewer fractures. Bone health is really dependent on the fracture risks.

Though beer has a reputation of being harmful to our body, the alcohol alone does not make it dangerous to our body. In my opinion, even though beer does have several health benefits, they can easily be hindered by drinking too much. To stay on the safe side and avoid headaches and other health effects of beer, you should always drink responsibly, never drink too much - and always drink a few glasses of water when you are drinking beer.2009 was highly dynamic in terms of new brand launches, with United Breweries Ltd and Carlsberg India Pvt Ltd expanding their domestic premium lager portfolios by launching Kingfisher Ultra and Tuborg, respectively. Brands such as Tennents, Kingfisher Blue and Indus Pride, which were launched in late 2008, became available in outlets nationwide in early 2009. Moreover, brands such as Tiger, Carlsberg and Budweiser saw lower prices and greater availability in India, as their new domestically-produced stock replaced imported SKUs in 2009. Niche products, such as dark beer, also saw greater availability, with the launch of ales from the Little Devils and Coopers portfolios in 2009.2009 total volume growth was two percentage points lower than the total volume CAGR recorded over the review period. Although 2009 volume growth was higher than that in 2008, growth rates did not bounce back to the highs seen in 2006 and 2007. While the long summer in 2009 buoyed the beer market in North and West India, sales growth in the key southern states, such as Karnataka, Andhra Pradesh and Tamil Nadu, was adversely affected due to taxation-related price rises in Karnataka and the withdrawal of United Breweries Ltds and SABMiller India Ltds brands from Andhra Pradesh in first half of 2009.

Domestic premium lager witnessed the fastest volume growth in 2009. Both domestic and multinational players were very aggressive with brand launches and promotional activities in 2009, and the category benefited from consumers trading down from imported premium lagers to domestic premium lagers. Moreover, brands such as Tiger, Carlsberg and Budweiser, which were available as imports in several cities in 2008, saw a sharp rise in availability and accessibility as domestically produced SKUs of these brands were rolled out nationwide in 2009. These international brands created additional buzz for this category in that year.

The average unit price of beer rose only marginally in 2009, by about 1%. Overall prices remained stable in most of the states in India. Nonetheless, fluctuations in taxation policy did drive up prices in some states, including Karnataka and Delhi-NCR.

Imported premium lager grew by 12% in 2009, which was significantly lower growth than the review period CAGR of 18%. Imported premium lager growth was adversely affected by the dual effect of a rise in import taxes in key markets, such as Maharashtra and Karnataka, and the economic uncertainty in the first half of 2009, which resulted in depressed on-trade sales. With major international brands, such as Carlsberg and Budweiser, being priced on a par with domestic brands, such as Kingfisher, consumers had access to several aspirational international brands within domestic premium lager, thus growth in imported premium lager sales slowed down.Domestic standard lager showed the slowest total volume growth in 2009, of 10%, as consumers shifted from regional standard brands, such as Thunderbolt, towards more high profile and aspirational brands, such as Kingfisher.

81% of volume sales of beer are derived from off-trade sales, as beer consumption is most common during social and family gatherings at home. Moreover, beer is priced on a par with spirits in on-trade outlets, and many consumers prefer consuming spirits with mixers, which provides a quicker high. Imported premium lager is dominated by on-trade sales, as these premium brands are not stocked by the majority of off-trade outlets. Draught beer is also restricted to niche premium outlets, due to the low awareness of this format and higher costs involved in setting up draught facilities in outlets. With Haryana legalising the setting up of microbreweries in 2008, at least two such outlets were operational by mid-2009. The expansion of the microbrewery format in the affluent towns is expected to raise the profile of draught beer in India.

Glass bottles of 330ml and 650ml are the dominant type of beer packaging available in India. However, canned beer continued to see strong volume growth in 2009. Canned beer volume sales grew by more than 20% in India in 2009. 500ml beer cans are more popular than 330ml cans. In February 2009, Rexam HTW, a joint venture between Rexam Plc and Hindustan Tin Works Ltd, signed an agreement with United Breweries Ltd to supply 500ml cans. In May 2009, Can-Pack India Pvt Ltd started its operations in India, with the aim of supplying 65% of its one billion can annual output to the beer industry, and gained contracts with most of the major beer players.Production, Imports and ExportsThe domestic production of beer is on the rise, with official statistics reporting an 11% increase in domestic beer production in 2008, which is in line with the 12% growth in volume sales of domestic lager in 2008. In October 2009, Carlsberg India Pvt Ltd started work on its new greenfield brewery in Medak (Andhra Pradesh), which is expected to have a production capacity of 4 million litres per month and start operations in late 2010.

Exports of beer out of India declined marginally in 2007, while imports rose by 39% in volume terms. This reflected the robust growth in sales of imported premium lager in India. Major imported brands in the latter part of the review period included Heineken and Corona in imported premium lager, and Hoegaarden in dark beer. Domestically produced beer is mainly produced for local consumption and only a negligible amount is exported to neighbouring markets. In 2008 and 2009, imports are expected to show strong growth, as players have increased their push behind imported brands, such as Stella Artois and Peroni Nastro Azzuro.

Imported beer accounted for less than 1% of beer volume sales in 2009. Imported beer is only available in niche premium on-trade outlets, where it is sold at significantly higher prices than domestically-produced beer, due to high import duties. In addition to more widespread distribution and lower price points, domestic brands also have the benefit of higher brand recall, due to high-profile marketing activities.

Apparent consumption levels grew by 24% in 2007 over the previous year, to reach 390 million litres. This is less than one third of the reported market size of 1,193 million litres in the year. This discrepancy between the calculated apparent consumption and total market size is chiefly due to problems associated with data collection by government bodies. Companies often underreport actual production figures. In addition, many units will be sold via both official and unofficial channels, such as with the illegal imports of beer into prohibition states.

Beer Demand: Past & FutureYearKls

1990-91201

1991-92208

1992-93224

1993-94305

1994-95272

1995-96362

1996-97391

1997-98422

1998-99456

1999-00493

2000-01528

2001-02565

2002-03632

2003-04676

2004-05723

2005-06770

2006-07820

2007-08875

2008-09930

2009-10985

2014-151320

Market Structure and SegmentationSegmentShare (%)

North12

East2

West37

South49

Standard Beer45

Strong Beer54

Premium, Diet1

Leading BrandsKingfisher, Heywards 2000, Heywards 5000, Kalyani Black Label, Kalyani Strong, Golden Eagle, Black Knight, Pelican, London Diet, Thunderbolt, Kaiser, Pilsner, Haake Beek, Lal Toofan, Castle Beer, Hi-Five.Wine Wine is an alcoholic beverage made by fermentation of grapes or grape juice. Global market for wine is estimated at well over 25 billion litres. Compared to other countries, wine manufacture and consumption in India is insignificant. This is attributed to earlier period of prohibition in the country and higher price compared to spirits like whisky and brandy manufactured in the country, referred to as Indian Made Foreign Liquors (IMFL).Challenge for industry is maintaining lower costs to control the cost of expensive packaging inputs. Another challenge for the company was to manage the distribution of the finished goods. Eighty per cent of wine consumption in the country is confined in major cities such as Mumbai (39%), Delhi (23%), Bangalore (9%) and Goa (9%)

There are new players entering the Wine playing field and India can now boast 3-4 large Wine manufacturers with capacity of about a million cases per year. 2008 has been great year for Indian Wine manufacturers as Indian Wines have won awards and acclaim in Europe and U.S. Indian Wines however still are not very well accepted and there is still a resistance to Made in India label.

Associations & Groups:

Confederation of Indian Alcoholic Beverage Companies (CIABC) (Delhi, India)

The CIABC is the apex body of the branded segment of wine and spirits excluding the beer industry in India. This includes leading domestic and international companies like United Spirits (USL), Radico Khaitan, Diageo, Bacardi Martini, Jagatjit Industries, Brown Forman Worldwide and Tilaknagar Industries as its members.

The CIABCs role is to interact with excise authorities at the state level and to find solutions that are in the interest of its stakeholders. State governments invite the body for discussions before formulating excise policies.

All India Distillers Association (AIDA)

In 1953, an all India body of distillers was constituted which was baptized All India Distillers Association. During the Intervening four decades this association has not only grown in size but has also widened its sphere of activity.

The Association has been carrying out a pioneering work with regard to catering to interest of the alcohol industry and has gone from strength to strength through out all these 54 years, to the extent that it is now a force to reckon with as far as the alcohol and distillery industry is concerned.

AIDA is the leading business support organizations for the alcohol & liquor industry in India and maintains the lead as the proactive business solution provider through continuous interaction at the constituent members level and various government agencies level. It is therefore now the largest and the oldest apex organization of Indian Alcohol Industry which stands for quality, industry Government- Society partnership and to enhance the quality and productivity of the distillery/ alcohol industry on the whole. AIDA today espouses the shared vision of the Alcohol / Distillery industry in the country and speaks directly or indirectly for the entire industry.

All India Brewers Association (AIBA)

The All India Brewers` Association is a prime body representing the interests of brewing industry of India. Its members account for more than 90% of production and sales of Beer in India. AIBA was formed in the year 1977 and was registered under the Karnataka Societies Registration Act 1960. From membership strength of mere 15, it has now swelled to close to 50 and is Indias leading business support organization. The membership includes leading brewers, malt companies, manufactures of brewing equipment and engineering & technological service providers. United breweries, SABMiller India, Bar Malt India, Alfa Laval, Praj Industries, and Briggs of burton are some of its members.

AIBA has been at the fore-front of working with the Government and been carrying out a pioneering work in addressing the interests of the beer industry. Besides providing policy support, it also represents the commercial and other interests of the industry with the various State Governments. The association has also been actively engaging both nation and regional media to highlight the immense agricultural and social benefits of encouraging beer in a country weaned on hard spirits

The principal functions of AIBA can be summarised as follows: To provide a common platform for its members to discuss issues of mutual interest To work with all stakeholders like Central & State Governments, raw material suppliers , consumers other than the brewing companies on issues affecting the industry To be able to present a common face and voice on industry issues whilst representing to other constituents of our environment To lobby with the regulatory authorities (decision makers- state government

All India Wine Producers Association

All Indian Wine producers association established their association in the year 1996. At that time there were only one or two grape processing units in working, having great scope to generate skilled or unskilled employment and to earn foreign revenue. By promotion of this Industry the Grape Growers community will get the assure market for their grapes produced. All over world there is 99% grapes are cultivated for processing and 1% is used for eating purpose. As of today there are 75 grape processing units all over the India and wine grape plantation is increased to 9000 acres.

Indian Government Regulation in the Sector

Indian Government heavily regulates this industry by influencing the movement and prices of alcoholic beverages along with intermediate goods (molasses, alcohol). They are heavily taxed thus providing a major source of revenue for state governments. Government license is required for the import of potable alcohol.

Gujarat, Manipur, Mizoram, Nagaland has imposed total prohibition on alcoholic products.

The general policy is to discourage the consumption of alcoholic beverages including total prohibition in some states. This usually causes illicit distillation, loss of government excise revenue and enforcement problems. The following initiatives have been taken by the government in the alcohol beverages sector.

1) The Cable Television Network (Regulation) Amendment Bill, in force September 8, 2000, completely prohibits alcohol advertisements.

2) Regulatory laws pertaining to hours of sale of alcohol, sale to minors and drunken driving are observed. Implementation of a nationwide legal drinking age of 21 years have achieved about 50-60 per cent cut in the consumption of alcohol

3) The Indian Motor Vehicles Act specifies a blood alcohol cut-off of 30mg.% for drivers, which is arguably one of the strictest in the world.

4) The Government has funded 483 detoxification and 90 counselling centres country-wide, under National Drug De-addiction Program, to treat people with substance abuse disorders. 45% of people seeking treatment in these centres are for alcohol dependence.

Various Indian states have independent laws, the legal age limit varies from 18-25 and some have implemented prohibition as well. Lots of taxes in the form of duties are imposed at various stages from bottling to sale.

Research Questions:1) Does age factor effect to the sale of beer?2) Does rising income levels affect the buying behavior of consumers for alcohol?3) Changing life style reflects on consumer buying behavior?4) Psychographic factors can be key driver for the success of beer?5) Does brand loyalty act as a key driver for success of a particular brand of beer?6) Weekend drinking habits increase the sale of beer on weekends?7) Does beer help to manage stress level?8) Wine shops profit out of sale of beer?9) Happy hour time attracts more customers in the restaurants?10) Does free samples and complimentary gifts affect the purchasing of beer?

Hypothesis:Null Hypothesis: Brand Loyalty is a key driver for success of beer.Alternative Hypothesis: Brand Loyalty does not play important role.Null Hypothesis: Taste factor attracts customer purchasing behavior for beer.Alternative Hypothesis: Taste factor does not attracts customers purchasing behavior of beer.Null Hypothesis: Income level effects the selection brand of beerAlternative Hypothesis: Income level does not affect the selection of brand of beer.Null Hypothesis: Trend is a cause for increase in demand for beerAlternate Hypothesis: Trend is not a cause for increasing demand for beer

Schedule for Survey:1) Please select your gender?A- FemaleB- Male2) Please select your age range?A- Under 18B- 18 to 23C- 24 to 29D- 30 to 39E- 40 and above3) Do you drink beer?A- YesB-No4) How much do you spend on beer each month?A-B-C-D-E-5) Where do you usually drink?A- KaraokeB- PubsC- HomeD- Public placeE- Others6) If you want to buy beer, what brand would be your best choice?A- CarlsbergB- KingfisherC- HeinekenD- TuborgE- Other7) Why do you like this brand?A- TasteB- PriceC- ShapeD- Friends recommendationsE- Others8) Carlsberg?A- Extremely impressiveB- ImpressiveC- Doesnt matter muchD- Less impressiveE- Not impressive9) Kingfisher?A- Extremely impressiveB- ImpressiveC- Doesnt matter muchD- Less impressiveE- Not impressive10) Heineken?A- Extremely impressiveB- ImpressiveC- Doesnt matter muchD- Less impressiveE- Not impressive11) Kingfisher?A- Extremely impressiveB- ImpressiveC- Doesnt matter muchD- Less impressiveE- Not impressive12) Carlsberg?A- Extremely impressiveB- ImpressiveC- Doesnt matter muchD- Less impressiveE- Not impressive13) Why do you like kingfisher?A- TasteB- PriceC- brand name/reputationD- InterestE- Other14) Why do you like kingfisher mild?15) Why do you like kingfisher strong?16) Monthly personal disposable income?a- less than 500b- Between 600 -1500c- More than 1500d- above 150017) TasteA-not importantb- Less importantc- Neutrald- Somewhat importante- Very important18) Price and alcohol content?19) Color20) ambiance/place and image of beer21) Quality22) Promotions23) I love kingfishera- strongly disagreeb- Somewhat disagreec- Neutrald- Somewhat agreee- Strongly agree24) The beer that I drink should have a good reputation?25) The appearance of the bottle must appeal to me26) I am loyal to a brand27) A kingfisher has a light taste28) A kingfisher is a cheap beer29) Flavor and aftertaste is important because?30) Are you ready to experiment with your brand of drinking?a- yesb- No31) Did your health problems restrict you from socializing?32) What is your highest level of education?a- high schoolb- Trade schoolc- Undergraduate courseworkd- Undergraduate degreee- Graduate courseworkf- Masters degreeg- Ph.D.h. other33) In last 12 months how often have you purchases beer?A- 4-5 days a weekB- 2-3 days a weekc- Once a weekD- 2-3 days a monthE- 6-11 times a yearF- 1-5 times a yearg- Once a month34) Please rank the occasions you would prefer to drink the beer?Eating outAt a partyWatching a gameAt a barDuring the holidaysAfter receiving a beer gift set35) Which style of beer do u prefer most?A. Aleb- IPAc- Largerd- Pilsnere- Stout36) What country would you consider to have the best beer?37) What country would you consider to have the worlds worst beer?38) What is your favorite brand of beer?39) How did you first year about for favorite brand of beer?a- friend or family memberb- print adc- Radio add- Received as gifte- Saw it at barf- Saw it in a storeg- Television adh- Internet adi- Others40)

40) Which picture will you consider most appealing one?