1. Beer is a fun drink… but we mean serious business

2. The All India Brewers` Association (AIBA) is an independent body representing the common face and voice interests of brewing industry of India. Its members account for more than 85% of production and sales of Beer in India AIBA was formed in the year 1977 at Bangalore. Membership also includes malt companies, maltsters and other associates of the brewing industry. AIBA has been at the forefront in addressing the interests of the beer industry through dialogue with stakeholders.  Promote policies that are conducive to the beer industry  Drive implementation of a rational operating platform for the industry  Promote responsible consumption  Enhance the image of the industry among the key stakeholders About AIBA

3. What is beer! An agricultural product directly processed into an end product – using barley malted and cereals locally available Beer making is a complex process and requires high degree of sophistication with good manufacturing hygiene standard comparable to dairy /pharmaceutical industry. The industry is capital intensive The alcohol content in beer is 5 to 8% only which is lower than wine which is 12% and IMFL which is at 42.5%. Beer is a socially accepted beverage the world over and industry promotes responsible drinking

4. India at a glance Youthful India –54% younger than 25 years –1.74 Million enter the drinking age every year Rapid Urbanization –379 million people will be added to urban space in next 40 years Societal changes –Social taboos disappearing –More Out of Home Consumption (DINK/ DISK) Expansion of Cuisines Creation of Lounge Bars –More Women entering Liquor Consumption –Modern trade/ retail Chains Ease of purchase More youth coming to the drinking age every year – their preference should be low alcoholic beverages – and its not happening

5. Beer matters The beer market in India valued at $ 4.13 billion (24000 crore) in 2013 Contributing to GDP & boosting tax revenues  Beer contributes more than 15,000 Crore to the states exchequer  There are now over 89 breweries in India Creating Jobs  The production and sale of beer creates jobs in agriculture, breweries, pubs, bars,restaurants and the wider supply chain  Beer is essential for the tourism Industry. Foreigners treat beer as a refreshing beverage in their countries.  In total the sector supports over million jobs. Supporting Communities  Best practice in agriculture  More yield & better prices for the farmers  Reduction in water consumption by 30% E&O

6. Reality Check! Beer vs IMFLBeer vs IMFL & Country liquor E&O

7. The Odisha Beer Market E&O

8. Alcobev: Global vs India Source: Beeronomics 2013 E&O

9. Taste and Preference The industry consists of 15% mild (5% and below abv) to 85% strong (8% abv). E&O

10. Taxation Why alcoholic drinks should be taxed solely on equivalent alcohol content

11. When it comes to tax, is all alcohol really the same? Virtually all countries outside India recognise that there are essential differences between high alcohol content drinks and lower alcohol content drinks like beer. That’s why spirits are taxed at a significantly higher rate  In France, it is five times higher and in Germany six times more than beer  The reason for this is that hard liquor has greater negative consequences for public health than beer.  In India beer is taxed more than spirits in all states Source: Scottish Beer & Pubs

12. The tax differential is because… – Beer is more expensive to produce – Beer is a socially acceptable beverage Cost of producing a unit of alcohol as beer and spirits World over, spirits are taxed at significantly higher rate than beer & wine “Production costs per litre of pure alcohol are higher for making wine and beer than distilled spirits. That is one of the reasons for the usually higher tax on spirits.” World Health Organisation, Global Status Report: Alcohol Policy “Production costs per litre of pure alcohol are higher for making wine and beer than distilled spirits. That is one of the reasons for the usually higher tax on spirits.” World Health Organisation, Global Status Report: Alcohol Policy Source: Scottish Beer & Pubs

13. Beer is a luxury in India! In India, a unit/alcohol content basis, beer is more expensive than spirits in India  Except Kerala, price of IMFL 180 ml (3 pegs) is lower in price than a Bottle of Beer (State wise price chart) Beer has lowest affordability in India  Excise duty per liter of beer is the highest globally  Since taxation is a state subject, the tax rates differ by state ranging from 25% to 70%* *UBS Ratio of IMFL duty to Beer E&O

14. Impact Industry Companies have little / no control over distribution system which means there is limited pricing flexibility leading to low margins for the manufacturers  Fragmented capacity, high overheads and poor economies of scale further impact margins Price sensitivity : The growth in the industry is sluggish because of taxation and consumers shift to IMFL Consumer Poor access  In most of the states of India, beer is only available in Hard liquor stores except Maharashtra  One licensed outlet per 18,000 Indians, compared with one per 300 in China* *UBS report CAGR Beer Vs IMFL (hard Liquor)

15. Irrational taxes leading to a decline in growth CAGR Beer Vs IMFL (hard Liquor) The sector is over regulated with sales tax, restrictive excise laws and local/ state taxes States have an irrational position on GST and alcohol E&O / IWSR

16. AS THE RATIO OF BEER TAXES INCREASE TO SPIRIT TAXES, BEER VOLUMES SHRINK AND SPIRITS VOLUME INCREASES Negatively impacting the nation’s health

17. Beer consumption rate is very low in India

18. Perception of Beer

19. Clubbed with IMFL by both - regulator and the consumer is perceived as intoxicating as spirits  Beer is a more socially acceptable drink the world over  In India, it should have been an entry level drink  Taxed higher than hard liquor  The policies are driving new drinkers to hard liquor Available mainly with hard spirits outlets only All restrictive rules for hard spirits and beer are same Age of consumption is same

20. Therefore… High taxation in beer ultimately compromises beer consumption Leads to consumption of cheaper high strength spirits  High level of alcoholism & addiction with spirits  Serious public health crisis Driving the new drinkers to Hard Liquor Beer with rational taxes and liberal positioning can help the state wean people away from hard liquor and achieve a reasonable social objective

21. Our Recommendation for Odisha 1.Rationalize Tax on beer - rate of duty on beer alcohol and spirit alcohol to be balanced Currently Beer alcohol is taxed 1.60 times Spirit ABV Basis - not to subsidize spirit alcohol tax by taxing beer more - after all beer has only 5 to 8% abv - revenue from beer is only 20% of state gross earnings - Will wean youth and others from hard liquor - Social and Health issues

22. 2.Whole Sale with Government Corporation - with reasonable margins for beer industry - free pricing - more depots/outlets - foreign tourists prefer only beer 3. Widen Distribution and reach by increasing availability - more depots - more retails to prevent illegal belt shops - low alcohol Beer Shoppes Stores only - low alcohol beverage Restaurants Beer “ON” premises - low alcohol beverage Modern Trade Shops - with reduced license fee and installment facility 4. Timely renewal/grant of licenses

23. All alcohol has inherent risks when it comes to excessive consumption, yet it is widely recognised that the consequences of over-consumption are greater for hard liquor products!

24. Thank You For All India Brewers’ Association Shobhan Roy Director General

25. When it comes to enjoying a quiet drink, beer is what people all over the world choose International Consumption Pattern