INDIA: InBev India foray hits buffers?

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InBev will not be drawn on local reports suggesting that a proposed joint venture in India is on the edge of collapse.

The Economic Times reported over the weekend that InBev, which has yet to establish a presence in the country, has dropped its proposed deal with Varun Beverages, owned by Ravi Jaipuria.

When contacted by just-drinks today (6 November), however, a spokesperson for InBev would not comment on the reports. The silence follows InBev's refusal to comment in July on claims that it was within 10 days of securing a venture with Varun, which is owned by the Jaipuria Group.

The Indian paper cited sources as saying that the proposed venture, which would cover manufacturing, distribution and marketing, has run into trouble with a change in InBev's operational management in recent months. InBev was hoping to renegotiate the deal so that it would have a majority stake, the paper claimed, something that Ravi Jaipuria is not keen on.

The unit is about to begin selling one of Inbev's flagship brands, Beck's, in Mauritius. When asked how successfully the two companies are working together in the country, the InBev spokesperson said: "It's a very recent development, so it's too soon to get a flavour of how it is doing."

InBev's multinational brewing rivals have been faster in spotting the potential of India's fledgling but fast-growing beer market. Scottish & Newcastle and SABMiller have in the last few years moved swiftly to establish a foothold in India. S&N owns a 37.5% stake in United Breweries, India's largest brewer, while SABMiller is the country's second-largest beer maker.

Heineken, through its Asian venture Asia Pacific Breweries, has in the last two months also swooped to buy a majority stake in local brewer Aurangabad Breweries and announced plans to set up a greenfield site in the state of Andhra Pradesh, India's largest beer market.

India's beer market is growing at around 7% a year, buoyed by a wealthier middle class. However, consumption in the country lags behind emerging markets like China due to the country's stiff regulation on the advertising and distribution of beer, as well as high taxes placed on the category compared to locally-produced spirits.

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