E-Malt.com News article: India: Combined entity of SABMiller and AB InBev could put up strong fight against competitors in India

Belgian-Brazilian brewer Anheuser-Busch InBev on November 11 announced the final terms of its $ 107-billion takeover of SABMiller, its British-South African rival. The coming together of the two brewing majors will make what analysts say a "truly global beer company".

More importantly, AB InBev, the world's largest brewer, gets access to emerging markets through the deal. SABMiller, the world's second-largest beer company, gets 35% of its revenues from Latin America and 34% from Africa, respectively.

As per a report by Business Standard, in India, SABMiller, with brands such as Haywards 5000 and Knockout, is ranked number two in the pecking order of beer companies, after Heineken-backed United Breweries. Its estimated market share, according to industry sources, is around 25-27%. UB, on the other hand, has a market share of around 51-52%, while Carlsberg, the third-ranked brewer in India, has a share of around 15%.

According to analysts, the combined entity of SABMiller and AB InBev could put up a strong fight against competitors such as UB and Carlsberg. The latter, a Danish major, which entered India in 2007, has grown quickly on the back of a portfolio of strong beer brands such as Palone 8, Tuborg Strong and Carlsberg Elephant.

Cees 't Hart, president and chief executive officer of Carlsberg, had said, "Our Indian business year-to-date grew 41% organically in a market growing by an estimated three%. The business also delivered a significant earnings improvement and, for the first time, achieved a positive earnings before interest and tax (Ebit) contribution, driven by a combination of volume growth and tight cost control. Tuborg grew 47%, and our total market share was around 15%, the highest level ever. In Q3, Tuborg maintained its position from Q2 as the second largest brand in India."

According to industry sources, Carlsberg is now said to be eyeing 20% market share, led by its beer brands that straddle the price pyramid. UB, in contrast, has the ubiquitous Kingfisher, a strong trademark in the Indian beer market.

The Indian beer market is about 285 million cases, in terms of sales volume. Per capita consumption of beer, however, is not more than 1.9 litres per annum in India, lower than most other beer markets across the world. Also, India remains a strong beer market accounting for 80% of sales volume in contrast to the global trend of mild beer, which is the dominant category.

In the last few years, most beer majors have attempted to trade up, as they try catching young, urban consumers in their quest for growth. Both SABMiller and AB InBev have also gone down that road and are expected to press the accelerator button further on this initiative, as they come together.

AB InBev, in particular, announced it was going solo early this year by exiting its joint venture with Delhi-based Ravi Jaipuria. The world's largest brewer, maker of Budweiser and Corona beer, said it would bring more of its international brands to India after the split. InBev is also importing its premium brands Stella Artois and Hoegaarden and is bottling Budweiser beer in India from its two plants in Maharashtra and Telangana.



13 November, 2015