Indian environment, highly uncertain and volatile: Carlsberg CEO Cees't Hart

Mumbai: Carlsberg's global chief executive Cees't Hart said India's environment is highly uncertain and volatile after posting a 30% volume decline in the country which it blamed on the market struggling socially and economically.
"In India, the infections are very high. 95% of the off trade outlets are open but the numbers of customers remain subdued as they fear contracting the virus as crowds are gathering," Hart told investors in a post earnings call.

The world's third biggest brewer said its Indian business at off-trade or retail channel fell 40% in the quarter ended September. Also, many restaurants, bars and pubs that account for nearly a third of beer sales, have either shut or opened last month.

With a market share of about 20%, the maker of Tuborg is India's third largest brewer after United Breweries and ABInBev and was also one of the fastest growing beer companies in the segment since its entry about 12 years ago. The latest performance, however, is better compared to the sequential quarter ended June when the brewer saw sales declining 75% after beer manufacturing, distribution and retailing came to a complete standstill during the nationwide lockdown for nearly 40 days.

"While recovery from COVID-19 is high due to a large young population, life and businesses are only very slowly, trying to return to normal, and the impact on the Indian economy is severe," Heine Dalsgaard, chief financial officer at Carlsberg told investors adding that the company's growth numbers were higher than the overall market expansion.

Several state governments hiked tax as covid cee on alcohol by up to 75% of maximum retail price since the Centre allowed reopening of liquor shops in the first week of May. However, markets such as Delhi, Odisha, West Bengal and Andhra Pradesh reversed the tax significantly after witnessing fall in demand due to high prices.

"In 3Q20, our business continued to be significantly impacted by the COVID-19 pandemic. Consumer demand was also impacted by the temporary COVID-19 cess imposed by some states, which further exacerbated the price differential between beer, an alcoholic beverage of moderation, and hard liquor," said Budweiser Brewing Company APAC in its earnings performance statement on Thursday. "This change, though temporary, may lead to unintended consequences such as increased consumption of low-quality or even illicit liquor that has lasting impact on public health adversely."

India is one of the largest beer markets, consuming about 334 million cases per year (at 7.8 litres per case), according to International Wine and Spirits Research (IWSR). The April-June quarter typically accounts for nearly 45% of annual beer sales in the warm, tropical country.