AB InBev finds premium beer’s rural sweet spot

AB InBev, the world's largest brewer, is witnessing a surge in premium beer consumption in semi-urban and rural markets across India. This unexpected growth has led the company to expand its distribution of more expensive beer brands. According to Kartikeya Sharma, president of AB InBev India, rising premium beer consumption in traditionally considered unlikely markets is a major surprise. Sharma pointed to markets such as Jharkhand, Rajasthan, and Madhya Pradesh as key growth centers.

The company is also responding to policy changes in states like Maharashtra and Karnataka, which have improved beer's competitiveness against spirits. Sharma noted that premium beer growth in these states has reached over 40%, while Madhya Pradesh saw a growth rate of nearly 30%. Rajasthan and Andhra Pradesh recorded growth rates of around 35% and 40%, respectively.

AB InBev's premium beer segment grew by more than 20% in the first half of the year, making up 60% of the company's share in the premium beer market, a significant increase from previous years. The company also surpassed a 20% share of the overall beer market for the first time. In Jharkhand, a largely non-urban market, premium beer volumes rose from nearly zero to about 60,000 hectolitres, with the company now claiming the market leadership.

To capitalize on this trend, AB InBev is rethinking its sales strategy for premium beer. While Corona was previously distributed in 10 states, the company now plans to develop all 10, expanding its previous "five plus five" strategy. The company is also looking to expand Hoegaarden beyond its traditional urban strongholds.

Furthermore, policy changes have boosted the company's India business, with premium and super-premium brands now representing about two-thirds of its volume mix and nearly three-fourths of its revenue. These changes have opened up growth opportunities in previously overlooked markets, shifting the focus from mainly urban-led growth to rural and semi-urban markets.