India: Head of SABMiller India to depart

The head of SABMiller’s India operations is to leave the company at a time when its stand-off with local authorities in two large states has seen beer volume dry up significantly, the Economic Times reported on June, 29.

According to a source, Jean Marc Delphon de Vaux has decided not to renew his tenure in the country, in a move communicated past week. The decision not to extend his three-year Indian stint was a personal one, the source said.

A spokesperson of SABMiller, India’s second-largest brewer by market share, confirmed Mr Delphon de Vaux’s exit from India and said his decision was an independent choice. SABMiller appoints its managing director for a tenure of three years, but the contract can be extended. Richard Rushton, the previous India head, had a six-year stint.

In August 2006, Mr Delpon de Vaux took on the company’s reins after exiting the CEO position at Lever Faberge, France. His entry came at a time when SABMiller was aiming for the top slot in India’s beer market. A slew of acquisitions had made it the second-largest brewer in the country after Vijay Mallya’s United Breweries (UB).

SABMiller continues to trail UB, and has seen its key rival extend the lead in recent years. The global brewing giant’s domestic market share is pegged at around 36-38%, while UB estimates its share at over 48%, which has touched 50% in some recent quarters. India’s beer consumption was placed at 174 million cases (of 7.8 litre each) in FY09.

It is estimated that SABMiller — makers of Haywards 5000, Foster’s and Royal Challenge beers — may have lost between seven-eight million cases in the first quarter of the current fiscal following its run in with local authorities in Andhra Pradesh and Uttar Pradesh, both significant markets for the brewer.

This has possibly dragged SABMiller straight away into negative growth for the fiscal, said a top manager at a rival brewer, who did not wish to be quoted. India’s beer consumption is projected to grow at around 10%, which is lower compared to the recent years of boom.

But, this could well be passing phase for the brewer after rapidly paced growth in the two years between 2006-08 when it grew 34% and 16%, respectively. India’s potential to be one of the world’s largest beer markets remains undiminished in the long run, and some of SABMiller’s battles is for improving the industry’s low profitability.

01 July, 2009