E-Malt.com News article: Singapore & India: Asia Pacific Breweries bets on strong India growth

Singapore's Asia Pacific Breweries Ltd will tap rising incomes and younger populations in China, India and Vietnam to drive growth over the next decade, a senior company official said, according to Reuters, October 4.

India's per capita consumption of beer is just 1 litre, lagging other Asian markets such as Thailand and Singapore, but rising incomes and easing regulations are helping the market grow quickly, said Vivek Chhabra, director for South Asia at APB.

"The real attraction is the growth opportunity, as it's one of the fastest-growing beer markets in the world," he said at the launch of APB's first brand in India, Baron's Strong Brew.

"As the market matures, there will be a shift to more premium beers," he said. Premium beers made up less than 1 percent of the Indian market, compared to about 15 percent in Vietnam, he said.

Strong beer makes up about two-thirds of the Indian market, estimated at nearly 11 million hectolitres in the year to March 2007, up 27 percent from a year earlier, Chhabra said.

Strong beer is forecast to grow at about 18 percent annually over the next five years, with the total beer market expected to more than double to 23.3 million hectolitres by 2012. APB, a joint venture of Singapore's Fraser & Neave and Dutch brewer Heineken, last year bought 76 percent in India's Aurangabad Breweries Ltd and 67 percent in another joint venture for a greenfield brewery near Hyderabad city. It has spent about $43 million on the acquisition and the greenfield, which will be operational by year-end, Chhabra said.

The brewery in Aurangabad in western Maharashtra state has a capacity of 500,000 hectolitres, and already makes a local strong beer. The Hyderabad brewery will have a similar capacity.

A complex tax structure and restrictions on the production, distribution and marketing of alcoholic drinks in India bumps up the price of beer to many times the price in China, Chhabra said.

"That's the reason brewers choose to go to China first, and that's the reason India is one of those rare markets where consumption of spirits far outstrips beer," he said.

"But some states are slowly easing restrictions on distribution," he said, pointing to Punjab, Rajasthan, Maharashtra and Karnataka, which are also considered the biggest markets for beer in the country.

APB has 15 breweries in China and Mongolia. China accounts for nearly two-thirds of the Asia-Pacific beer market by volume, Chhabra said.

APB, which also makes Tiger and Anchor beer, will compete with local leader United Breweries Ltd, which has a venture with Scottish & Newcastle, SABMiller, Anheuser-Busch, Carlsberg and others.


05 October, 2007