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Beer manufacturers are expecting good sales this summer after two seasons were wiped out by the pandemic waves and ensuing lockdowns. Companies like Ab InBev, United Breweries, Bira 91, Simba, among others, are finally looking forward to surpassing their 2019 business levels and ramping up capacities. At the same time, they are flagging inflation as barley prices have hit all time high, so has packaging with both glass bottles and aluminium cans becoming dearer.

"We are extremely optimistic about the prospect of a bright summer. With the third covid wave receding, consumer sentiment is increasingly becoming positive," said Kartikeya Sharma, president for India and South East Asia at AB InBev that makes Budweiser, Corona Extra, Hoegaarden beers. “We hope to see beer demand go back to pre-pandemic levels especially in states where the government has kept excise duties in check, we expect demand to be significantly better than 2019 levels," he said. The firm said it makes more than 50% of its sales during the summer months.

Ever since the pandemic hit, the entire alcoholic beverage industry in the country witnessed a significant slump with almost 40% volume decline due to lockdowns and resultant shutting of bars and restaurants.

DeVANS Modern Breweries, that makes Godfather beer, is expecting a significant boost in sales too. The company has recently added production capacity in contract bottling units in Arunachal Pradesh and Jharkhand to significantly add to its sales and improve its top and bottom lines. The company hopes to sell 80 lakh cases through the year, hoping to double its units sold in 2021.

Abhinav Jindal, founder and CEO of Kimaya Himalayan Beverages, that makes brands like BeeYoung beer, said, given that the country has just seen the end of a covid wave, they expect the industry to perform robustly. "We expect to see a growth of 30% or more as compared to last year. We are operating from a leased brewery as of now and a few more tie-ups with production units will help us achieve the numbers expected for this year," he said. Along with that the company plans to expand to new states outside of Delhi, Punjab and Uttarakhand where it currently sells.

Bira 91, meanwhile, said it has reinvented itself in the last one and a half years especially as consumers are trying premium beers at home. "We not only doubled our volume but also tripled the market share as compared to pre-covid levels. In fact, our national market share exceeded 5% for the first time in FY 2022," said Ankur Jain, founder and CEO of the firm.

The company has rapidly ramped up its manufacturing capacity to 2.4 million cases a year, six times more than what it was selling in 2019. What has helped, Jain said, is that some drinking occasions have permanently moved in-home. With consumers keen on meeting in smaller groups, beer drinkers are entertaining and dining-in more in the safety of their homes.

According to Expert Market Research, the India beer market stood at a value of nearly 371 billion in 2020 and is likely to reach 662 billion by 2026 at an estimated CAGR of about 9.2% during 2022-2027.

Yet beer makers are worried about inflation as barley prices are up. "Unlike other agri-commodities (barring palm oil), which have witnessed relatively modest inflation, barley costs have been going up for a large part of the last ten months," analysts at brokerage Motilal Oswal Financial Services said in a note on the beer market on Tuesday.

Spot prices in India are up over 60% year-on-year, they said. This is a key worry for United Breweries, analysts said, adding that since Ukraine is among the top five global producers of barley, any escalation could affect global barley supplies. Though Indian brewers (barring some premium brands) largely source barley locally, prices in India can move in tandem with global prices if there’s disruption in supplies.

But United Breweries is confident about India. It said, the company’s volumes recovered to pre-pandemic levels in the December quarter and its premium beer portfolio outpaced the overall volume growth. “We continue to be confident on the long-term growth prospects of India’s beer market due to several factors – it is a hot country, the median age is below 30, there is growing prosperity as well as rising urbanization," said Rishi Pardal, MD and CEO, United Breweries Ltd.

“We believe that if there are no further waves in the next few months, we foresee strong consumption. Capacity creation is an ongoing process and we are fully prepared to meet the market needs for 2022 right now," he said. Prabhtej Singh Bhatia, co-founder and CEO of Simba Craft Beer, added: “Overall, the season is looking very promising for the firm in terms of volumes, but global supply chains have been disrupted."

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