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Beverage industry in India
India offers the greatest potential for the beverage industry. The country accounts for almost 10 per cent of global beverage consumption. That makes beverage consumption in India the third largest in the world after the United States and China.
ALTHOUGH THE beverage industry has been in existence for quite some time now, yet it is still at an infant stage considering its size and place in the market. India stands at third number in the consumption of beverage, behind United States and China. It accounts for almost 10 per cent of global beverage consumption. Today, it is being looked as a country that offers the greatest potential, even more so than China. This year, the beverage industry in India is being estimated to grow at 17 per cent.

Non-alcoholic drinks company actually see India as a potential market because of the kind of summer that India sees. The Coca-Cola Co reported its profit climbed 43 per cent in the second quarter to two billion dollar, getting a boost from double-digit unit case volume growth. The Indian CSD (carbonated soft drinks) market stands at 1.2 billion dollar and the fruit-based beverages and bottled water at 600 million dollar and 300 million dollar, respectively.

The wine industry in India is one of the most sought after market at present and all eyes are on it. The budget announced by the finance minister is not being seen as very advantageous to the wine industry as it did not announce any significant or major benefits all round for it. It was expected to make wine sector a part of the food processing industry, which would lead to uniformity in the state-wise tax structures. The wine industry in India needs investment to grow to its rightful size of about 30 million cases (20 times the present volume) and it is possible only with lower production and marketing costs, taxes and increased competition.

As far as the beer industry is concerned, age-old excise policy on liquor and multiform regulations are hitting the beer industry. The Punjab Excise Policy of 1995, which inadvertently discourages breweries, while encouraging distilleries, has put the brewers in the country in a total mess. The beer industry is clearly at a disadvantage. Repeated pleas have failed to bang the government’s deaf ear. Apart from this, the government needs to make a uniform age limit to consume alcohol. It’s different in different states. While an 18-year old guy can consume alcohol in Goa, you need to be at least 21 to do the same in Mumbai. In Punjab, its even higher where it is kept at 25 years.

The budget was expected to cut down the taxes on beer that is more than most of the countries in the world. While the average global taxes on price of the beer are 33.6 per cent, in India its about 49 per cent and therefore, affordability of beer in the country is lowest compared to world standards. Hence, the perception is that the government is encouraging hard-liquor which is more harmful to the consumers.

However, the impact on non-alcoholic industry has been different. For eg, packaged coconut water will be cheaper by rupees three for 200ml as the retail prices have been reduced from Rs 15 to Rs 12, thanks to the abolition of a 16 per cent excise duty. The finance minister has also totally withdrawn the 16 per cent excise duty on tea and coffee mixes and puffed rice. India (1002 Mn kgs) along with China (990 Mn kgs), Sri Lanka (318.7 Mn kgs) and Kenya (286.0 Mn kgs) accounts for about 75 to 80 per cent of the world’s tea production. In May, tea production in India rose to 71,374 tonnes from 70,267 tonnes a year before. However, output has declined to 215.84 million kg till May this year from 240.24 million kg in the same period last year.

The budget has also made dairy majors like Amul, Mother Dairy and Nestle happy because the customs duty on bactofuges, that separates bacteria from milk, and increases the Punjab Excise Policy of 1995 helf life of milk, has been abolished. On a bactofuge that costs between Rs 1.5 two crore, the companies will benefit rupees eight to Rs 10 lakh a piece. The exemption of 16 per cent excise duty on refrigeration equipment (milk chillers) will save rupees five lakh per chiller.

More and more companies are entering and creating niche for themselves in the Indian budget industry, the latest being the fast moving consumer goods (FMCG) company ‘Dabur’. It is coming up with a new fruit flavoured beverage called ‘Real Burst’.

In the current scenario, many Indian food and beverage players aim to invest in Bhutan, as a follow-up of the Indo-ASEAN pact. About 11 key areas have been identified as area with enormous opportunities in Bhutan, where Indian and Bhutanese players can invest- agriculture, horticulture, agro and food processing, dairy, pharmaceutical, medicinal plantations are few of them.

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