INDIA: United Breweries cools Foster's speculation

By | 27 March 2006

United Breweries, India's largest brewer, has distanced itself from the sale of Foster's brewing assets in Asia.

United Breweries' part-owner, UK brewer Scottish & Newcastle, had been touted as a potential bidder for Foster's breweries in India, China, Vietnam, Fiji and Samoa.  However, United Breweries CFO Lesley Jackson told just-drinks today (27 March) that the brewer was "not pursuing" the acquisition of Foster's brewery in the Indian state of Maharashtra.

"We already have three breweries in Maharashtra so the actual brewing assets are of limited interest to us. We're not in conversation with (Foster's)," Jackson said.

Jackson also played down the possibility of United Breweries securing the Foster's licence in India, arguing that there were "plusses and minuses" of striking such a deal.

She said that United Breweries "recognised" that there was a gap in its portfolio for a "Western, premium brand" and that "maybe the Foster's brand would be helpful".  However, Jackson questioned the long-term potential of international beer brands in India, given the ban on alcohol advertising in the country and also asked whether the average Indian beer drinker could afford their premium price tag.

"It's never going to be a big market. Foster's has been in India for six to eight years and came into the market when it was less consolidated. They have only a 3-4% market share, which shows how incredibly difficult it is for international brands."

She added: "You'd need to look at whether Foster's has historically been positioned properly in India and whether its needs repositioning in terms of pricing. But, it's an academic question - we haven't given it much thought, we're not pursuing anything. We're not in talks with Foster's."

Jackson said United Breweries had "a big opportunity" with the Kingfisher brand in India and would "not want something to go head to head" with its flagship brand.

Just-drinks exclusively revealed two weeks ago that Foster's was looking to sell its Asian brewing assets after becoming dissatisfied with the returns from the businesses.

SABMiller is understood to be interested in Foster's assets in Asia but the sale process is believed to be at a very early stage with a conclusion still some way off.

SABMiller and S&N were said by industry analysts to be the most likely bidders for the breweries, given their licencing deals with Foster's in the US and Europe respectively.

Sectors: Beer & cider

Companies: United Breweries, Foster’s, SABMiller

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