United Breweries extends lead on Indias beer sector

United Breweries extends lead on India's beer sector

It's hard to see how other brewers will close the gap on United Breweries in India any time soon, but there is plenty left to play for.

United Breweries has continued to storm the Indian beer market, increasing volume sales by 28% in the six months to the end of September. That signals a slower pace of growth in the second quarter, following a 36% jump in volumes in the first three months, but it's doubtful that the firm will mind too much.

Crucially, India's beer market grew at a slower pace than United Breweries over the half-year, by 24%, which has helped United Breweries to notch up more market share at the expense of its closest rival, SABMiller.

The two firms account for the vast majority of beer sold in India's fledgling beer sector, but their fortunes have differed wildly in the last couple of years. While Vijay Mallya's United Breweries has pressed on, building up a market share of around 50%, SABMiller has struggled.

SABMiller's own volumes in India rebounded strongly with the market earlier this year, but have since been "held back by further regulatory constraints", the group said in its half-year trading update earlier this month.
It appears that, in the eyes of SABMiller's executive team, India's star has diminished in the presence of China and emerging markets in Africa and Latin America.

United Breweries, meanwhile, has the benefit of the UB Group's strong distribution network and also a tie-up with Heineken; a brewer that has less emerging market exposure than SABMiller and, so, arguably sees India as more central to its plans in the developing world. It is difficult to imagine the firm faltering in the near future when you consider that it will add the Heineken brand to its arsenal in India within the next few months.

That said, there is a lot still to play for in India. United Breweries is top of the tree, but the tree is merely a sapling for the time being. According to Mintel figures, India's beer market was 1.36bn litres in a population of around 1bn people in 2008, which compared to a UK beer market of 4.78bn litres in a population of around 60m.   
As India's beer market expands, opportunities for rivals will open up.