India: United Breweries planning zero-alcohol beer launch

United Breweries will introduce a zero-alcohol beer by early next year, its managing director said, as the country’s largest beer maker seeks to use the full capacity of its brewery in Bihar where liquor is banned, and enter alcohol-prohibited markets, the Economic Times reported on September 4.

“We are working on a project to introduce non-alcoholic malt based beverages. We will manufacture these products at our Bihar site,” Shekhar Ramamurthy said.

“We are currently at an early stage of development and will introduce these products early next year.” He didn’t provide further details.

According to a person with direct knowledge of the matter, United Breweries that accounts for more than half the nation’s beer market is working on a name and evaluating the kind of product it wants to introduce. “No, this is not the same as the Heineken one,” the person said, speaking on the condition of anonymity.

The majority stakeholder in UB, Dutch-brewer Heineken recently launched an alcohol-free version of its namesake beer with half the calories of a standard Heineken in 17 markets globally.

For UB, the move will help the Kingfisher-maker push sales growth by re-establishing its presence in key states such as Kerala, Madhya Pradesh, Bihar, West Bengal, Jharkhand, Chhattisgarh and Tamil Nadu which have either banned liquor or nationalised liquor retail trade.

These states together accounted for close to 40% of the total alcohol consumption. After Bihar imposed the state-wide total liquor prohibition, UB along with peers Carlsberg, Diageo and Molson Coors had to close down more than 70 distilleries and breweries they operated in the state for more than a decade.

It was a big hit on the companies as the units were not just meant to meet in-state demand but also to serve as a manufacturing hub for neighbouring markets. Brewery companies like UB had been keen on investing in Bihar due to the abundance of raw materials, barley and wheat, and the availability of cheap labour.

Experts say the new product could prove to be tricky for the company in the value conscious Indian market where strong beer comprises 85% of sales.

“It depends on how the product tastes, the price and positioning of the product. In the West, on various instances, similar products have failed on account of taste,” said Abneesh Roy, senior vice-president at Edelweiss Financial Services. “(But) the zero-alcohol beers could offer brewers higher margins because of lower taxes and become a go-to-brand for health conscious and religious individuals,” he added.

05 September, 2017