INDIA: A-B nears decision on India entry
Anheuser-Busch will decide whether to enter India "probably within three months", the head of the US brewing giant's international operations told just-drinks today (12 December).
The Budweiser brewer has been linked to deals with a number of Indian brewers in recent months but has yet to follow its multinational rivals into the country.
The world's brewing giants believe the booming Indian beer market will be a vital growth market in years to come thanks to growing disposable incomes and a burgeoning middle class in the country.
United Breweries, in which Scottish & Newcastle owns a 37.5% stake, and SABMiller are the two largest brewers in India, holding a combined 80% of the market. This year, Heineken's Asian brewing partner, Asia Pacific Breweries and, more recently, Carlsberg have also signalled their entries into a market growing at around 7% a year.
A-B, meanwhile, has yet to show its hand. However, after talks with a number of players in India, the US brewer has settled on one unnamed target and is deciding whether to make a formal approach.
"Internally, we've settled on who to approach and we're now in the process of making sure that any approach meets our strict financial criteria for entry into India," Steve Burrows, president and CEO of A-B's international operations, told just-drinks.
Reports so far in India this year have linked A-B with Crown Breweries, a greenfield project based outside Hyderabad, and Arlem Breweries in Goa. Burrows, however, refused to be drawn on A-B's target but said a decision on whether to make an approach would be made "probably within the next three months".
However, he added: "We're enthusiastic about India not because of what it is today but what it could be in the future if there are fundamental structural changes to the industry."
India's economic liberalisation has yet to reach the beer sector. On a per unit alcohol basis, the tax on beer in India is the highest in the world. The way that tax is levied compounds that problem.
The level of duty is decided at state level, leading to wide variations in tax across India. As such, the cost of transporting beer across state borders is prohibitive and only brewers that have a brewing presence in each state can absorb that cost.
Individual states also have a hand in deciding how beer is distributed among retail outlets, while beer advertising is banned, making brand-building difficult.
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