Carlsberg blames GST, highway ban to volume decline in India

Danish brewer Carlsberg blamed the new goods and services tax, highway ban and monsoon to a volume decline in India.

“The India market has been very volatile this year due to so called highway ban, implementation of GST and also heavy rainfall in some of the provinces. Our volumes declined by a couple of percentage points but we continue to strengthen our market share,” Carlsberg chief financial officer Heine Dalsgaard said at an investors call.

“Prices have been increased to offset the GST impact,” he added after declaring third-quarter performance which saw net revenue slip 1%.

The maker of Tuborg had posted 20% year on year volume growth in India last quarter, a sharp recovery from a 20% fall in Jan-March quarter.

In April, a Supreme Court order forced nearly a third of all outlets to shut shop last month and a significant portion hasn’t re-opened or relocated yet.

India’s beer sales fell 2% in the year to March 2017. Heineken, Anheuser-Busch InBev, and Carlsberg — which together control about 90% of India’s beer market — have introduced about a dozen new beer brands to fend off sales ban in a few states, shrinking store networks and stagnant demand in a warm, tropical country with promising demographics and increasing affluence.

Experts say the impact on retail outlets will be transitionary as they move away from highways in due course of time. India is largely a whiskey and spirits dominated market and per capita consumption of beer in India is about 2 litres per person a year, minuscule compared to the global average of about 30 litres.