A feel good economy perks up beer enthusiasts in emerging markets, said an investment report from Swiss bank UBS last year. India’s beer consumption in the peak summer months declined for the first time in eight years probably tracking sober economic mood and steep price hikes in the big guzzling states like Maharashtra.

The first quarter summer volume sales estimated at 71 million cases (of 9 litre each) was 5% below the year ago period. Maharashtra (-10%) and another key state Tamil Nadu (-13%) pulled down the national figures, said industry executives taking stock of the data. The country’s two largest brewers United Breweries (UB) and SABMiller separately confirmed that industry sales dropped between 4 to 5% in the April to June quarter, which is usually the busiest period accounting for nearly one-third of the annualized sales. And it was the first instance of declining summer sales since 2003.

UBS report on ‘Beeronomics’ was not the first to link economic buoyancy to beer guzzling. Consulting firm McKinsey & Co wrote about how strong gross domestic product (GDP) spurs per capita beer intake almost a decade ago. The premise that automobiles and beer were the first gainers of a positive economic outlook has been a widely held belief. But domestic brewers are not attributing the decline only to the feared economic slowdown. “It was a combination of factors, mostly region specific,” said Shekar Ramamurthy, deputy president, UB. “Duty hikes in Maharashtra and Delhi had an impact, while trade consolidation in states such as Punjab and Haryana saw consumer price moving up,” he added.

Andhra Pradesh, Uttar Pradesh and West Bengal were among the few states that served up growth for the industry, which was impacted by early monsoon showers as well. The overall national volume was pegged at 230 million cases in FY11, with consumption growing at 12-15% in the past few years. Global beer giants reckon India as their “potentially last big market”. Last month, North American brewing giant Molson Coors announced its entry into the country while the iconic Heineken’s local brew will hit the market as early as next month.

Still, India’s beer consumption remains hostage to fickle regulations and duty hikes that shows up every year. MNCs have long argued that cost of beer, a soft alcoholic drink, is the highest among the world’s sizable economies. The average cost of 650 ml beer here is around Rs 70 while more than 90% of China’s beer sales is priced below 4RMB, which is just under Rs 28. The domestic guzzlers’ affordability of the drink is 1:9 compared to China by purchasing power parity. And worse, China has one beer vend for 295 people as against one for 17,350 people in India.