INDIA: United Breweries plans capacity boost
India's largest brewer, United Breweries, is to spend INR4bn (US$90.7m) on boosting its brewing capacity as it aims to keep pace with the country's booming beer market.
United Breweries, in which the UB Group and Scottish & Newcastle both own a 37.5% stake, will undertake the investment over the next four years at up to eight "core" sites, CFO Lesley Jackson told just-drinks today (9 February).
She said the investment was necessary because the brewer "had simply run out of capacity". Earlier this month, the Kingfisher brewer reported a 21% rise in volumes for the third quarter of its financial year in an Indian beer market growing at around 7% a year.
Jackson said: "United Breweries has historically not spent a lot of money at all on capacity and we need to make sure we have the capacity if the market continues to grow as it is."
The race to gain market share in India has intensified with SABMiller, United Breweries' nearest rival, setting aside US$125m to spend on strengthening its presence over the next five years.
SABMiller has also declared its interest in acquiring Indian brewer Mohan Meakin but Jackson ruled out any offer from United Breweries.
"We're not looking at it at all. We're not interested, we've already got the breweries we want. (Mohan Meakin) has some reasonable brands but we already have India's national brand."
Kingfisher, Jackson added, was growing "phenomenally well" particularly in India's rapidly-growing strong beer segment.
The growth of the Indian beer market is attracting interest from international brewers and some, including Foster's Group and the UK-based Cobra Beer, have launched brands into the country.
However, Jackson was sceptical about the chances of international beer brands succeeding in India, given the ban on alcohol advertising in the country.
"You can't advertise alcohol so consumers have no exposure to international brands, they don't know they exist. It's very, very hard to move into India with international premium brands. Even an indigenous player like SABMiller struggled when it launched Castle."
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