E-Malt.com News article: India: United Breweries readies two plants for producing Heineken in India - sources

Vijay Mallya's United Breweries Ltd (UB) has started work on launching the locally brewed Heineken beer possibly within nine months in India, VCCircle communicated on August, 3.

UB's brewery at Taloja near Mumbai is being readied with a Rs 30-crore investment for rolling out Henieken while a second plant in Hyderabad has also been identified for the same subsequently, at least two sources directly familiar with the development said.

The Indian brewing giant has not indicated any time frame for uncorking Heineken locally, until now.

An associate firm of UB has directly taken over the distribution of imported Heineken in the country from last month, kicking off integrating Heineken's operations with the domestic brewing heavyweight. Mumbai-based Sansula International had handled Heineken for nearly two decades till June this year. Heineken and Mexican Corona are the leading imported beers in the country sold mainly at upscale hotels, restaurants and pubs.

In December 2009, Mallya, a beer-to-airline tycoon, brought in Dutch beer giant Heineken, makers of probably the world's most famous beer, as an equal joint venture partner with 37.5% stake.

A top company official said the plan was to launch Heineken by March-April next year just as the peak summer starts when beer consumption normally hits a high. It's a long drawn process and there may be some timeline changes, he added. The launch of Henieken is keenly watched as it could help UB storm over any potential challenge from rival global brewers in the higher-priced segments, and also boost the profitability of India's largest beer maker in the long run.

For Heineken, this will be a long anticipated entry into what is often described as the last frontier for the global beer industry. India is touted as the world's last potentially big maket for beer with an expanding economy and changing lifestyles pegging the consumption growth at around 15% annually. Of course, this comes on an abysmally low per capita consumption of around 1.2 litre (whereas it is 30 times bigger in China).

In the run-up to the Heineken launch, UB will be merging the two breweries owned by the Dutch brewer at Aurangabad in Maharashtra and near Hyderabad in Andhra Pradesh with itself. The brewery at Aurangabad has been renamed as United Breweries Ajanta and the second plant located outside Hyderabad will now be called United Breweries Nizam. Heineken took full control of these two breweries from its Singapore based ally, Asia Pacific Breweries, with the intention of creating a single brewing structure with UB.
A second source said UB will be spending Rs 25-30 crore on Tajola plant for the initial roll-out of Heineken. The plant is being spruced up with the installation of special 'horap tanks' for brewing Heineken, which uses a particular strain of yeast in its production. The facility may also have a dedicated caning line for Heineken as part of the expansion plan at the brewery. UB Nizam, another plant identified for brewing Heineken, may require lesser overhaul as it was built by Asia Pacific Breweries in recent years.

UB, makers of Kingfisher beer, controls 51% share of India's rapidly growing mainstream beer consumption estimated at around 200 million cases (of 7.8 litre each) annually. The London-headquartered SABMiller Plc through its Indian subsidiary is estimated to have around 30% share though this has fluctuated in recent quarters due to market access issues in some Indian states. AB InBev, Carlsberg A/S and Cobra Beer India Pvt Ltd compete with regional Indian brewers for the remaining share.


04 August, 2010