INDIA: Molson Coors takes control of Cobra India
Molson Coors bails out Cobra India and takes control of new JV
Molson Coors has agreed to bail-out Cobra India and take a controlling stake in the beer business, as part of the brewer's plan to expand in emerging markets.
Molson Coors said today (23 June) that it has agreed to take a controlling stake in a joint-venture with Cobra India, to be named Molson Coors Cobra India. It said that the stake acquisition plus extra upfront investment, to meet "working capital requirements", will total around US$35m.
When asked whether Cobra India has run out of money, a spokesperson for Molson Coors told just-drinks: "It's fair to say that Cobra India ran into capital difficulties." He said that Molson Coors will seek to "stabilise the business and establish a business plan going forward".
The move comes two years after Molson Coors rescued Cobra's UK business from the jaws of administration, by paying GBP14m (US$22.4m) for a 50.1% stake in a new joint-venture with Cobra's founder, Lord Karan Bilimoria. Molson Coors declined to specify the size of the stake acquired in Cobra India, which is a separate entity to the UK arm.
Molson Coors' move forms part of its push into emerging markets, in order for the company to reduce its reliance on sluggish beer consumption in the UK and North America. India's beer market remains small, with per capita consumption at only one litre, but is considered to have strong potential given the country's 1bn-strong population and rising middle class.
Currently, Cobra India has one, 175,000 hecotlitre-capacity brewery in India's Bihar state. Molson Coors said that there is potential to expand capacity at this site to 500,000 hectolitres in order to fuel growth for key brands, which include Cobra Premium and King Cobra Superior.
Molson Coors' CEO, Peter Swinburn, said: "Our joint-venture in India is an exciting opportunity for us to expand our footprint in Asia and represents the next major milestone in executing our global growth strategy."
The brewer does not intend to cover the whole of India, but will instead focus on building share in key regions. India's beer market is currently dominated by Vijay Mallya's United Breweries, which has around a 50% volume share of sales. SABMiller is the second biggest player.
Molson Coors Cobra India will be headquartered in Mumbai. Ravi Kaza will be its president.
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