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The Paper on the Audit Choice Process of Kingfisher Beer in India

Essay by   •  September 12, 2011  •  Research Paper  •  407 Words (2 Pages)  •  1,077 Views

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The Paper on the audit choice process of Kingfisher beer in India.

"Beer is the world's most widely consumed and probably oldest of alcoholic beverages; it is the third most popular drink overall, after water and tea. It is produced by the brewing and fermentation of starches, mainly derived from cereal grains--most commonly malted barley, although wheat, maize (corn), and rice are widely used." - Wikipedia

The beer market in India has grown manifolds in the past years, yet the per capita consumption of beer in India continues to be very low compared to other countries. India's per capita consumption of beer is about 1 litre compared to the global average of over 24 litres. More than three-fourths of India's beer sales is of the strong variety containing more than 5% alcohol, with demand for light beers coming mainly from upmarket towns and cities preferring. Indian Beer Industry has been growing at about 15% per year for the last five years, with Industry volumes crossing 200 million cases in financial year 2009-2010 from about 100 million cases in financial year 2003-2004. Considering the Indian demographics, with around 70% of the population below the age of 30 years, growing income and increasing international influence, the industry is expected to maintain if not exceed, its growth at present rate.

Despite the factors that enable the beer market to grow, there are certain barriers to higher growth such as Indian market infrastructure. In India, alcohol is available in around 65,000 outlets which include shops, bars and restaurants; this translates to roughly one outlet for every 18,000 residents. The global average is one outlet per 250 residents and the corresponding figure for China is one outlet for every 300 residents. For example, in urban areas such as Greater Mumbai, there are around 2,500 outlets while in Shanghai, which has similar population base, the number of outlets is 18,000. An encouraging development that should facilitate future growth is that the government has started to issue licenses for outlets to sell beer and wine only. Taxation is another major factor which affects the growth of the Indian brewing industry in an adverse manner. In India, all alcoholic beverages are taxed uniformly, irrespective of their alcohol content. Therefore, same tax rate applies for spirits, lager beer, strong beer and other alcoholic beverages, resulting in higher price for beer relative to high alcohol content beverages. Though globally, levies on beer are typically half the rate applicable to spirits.

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