E-Malt.com News article: India: AB InBev banking on Budweiser to extend reach to smaller Indian cities

Anheuser-Busch InBev, the world’s largest brewer, is banking on its popular Budweiser brand of beer to extend its reach to smaller Indian cities in the second phase of expansion, Livemint reported on July 17.

“Budweiser is the brand that helps us lead our overall play here in India,” AB InBev marketing director Kartikeya Sharma said in an interview. “I think I can say Budweiser will continue to be a big bet. India has started to become one of the biggest markets for Budweiser globally.”

AB InBev, which operates as Crown Beers India Ltd, began selling Budweiser in India in 2007, positioning the beer as a premium American pale lager, in contrast to its college-student popular image in the US.

The firm, which started manufacturing Budweiser in India in 2010, reported a revenue of Rs238 crore in FY15, according to data from the Registrar of Companies (RoC). This is a long way from its initial revenue of Rs3.49 lakh in FY08, as per its first reported set of financials according to data from the RoC.

However, the company is yet to turn profitable, posting an operational loss of nearly Rs60 crore in FY14-15, and a total loss of nearly Rs200 crore (after adding loss carried forward from the previous fiscal), as per the company’s latest filings with RoC.

After nearly a decade in the country, Sharma said, the brand’s strategy of focusing on only major urban centres is finally paying off.

“Our strategy dates back to nearly 2008-09, when we finally found our footing and got more active,” Sharma said. “We have resisted being pulled into the very natural appeal of a country as big as India with so many markets and so many consumers.”

AB InBev focused on the top metropolitan cities—primarily Delhi, Mumbai and Bengaluru—to help grow the Budweiser brand among the “aspirational” young consumers. Sharma declined to share sales and revenue numbers for Budweiser beer in India.

The brewer is now banking on the new manufacturing facilities and distribution muscle that the company’s acquisition of SABMiller India brings.

AB InBev acquired rival SABMiller Plc in 2015 to create the world’s largest brewer. The acquisition was completed at end of 2016 in India.

“This is a very natural consequence of the coming together of two very successful companies,” Sharma said.

“Our brewing facilities are fairly evenly spread out and they (will) allow us to expand beyond the two facilities from where Budweiser is being sourced right now,” he added. “This will in time allow us to brew from many of other facilities we acquired as part of this integration, and will allow us to meet the demand coming in from the North-East, from the south, from central India, (with) a lot more ease than we had in the past.”

With the acquisition of SABMiller, AB InBev will own other large beer brands, including the hugely popular Haywards 5000 and Foster’s that have a larger reach. “We now have a very complementary footprint from geographical and portfolio standpoint,” Sharma said. “Look at brands like Haywards, a brand like Fosters that have obviously been around longer than Budweiser have also taken their distribution to far beyond the urban centres where Budweiser is involved in.”

AB InBev also sells other beer brands in India, including Stella Artois, Hoegaarden, and Corona, which are relatively niche in reach and distribution as compared to Budweiser.

However, the company is choosing to focus its energies on Budweiser and rolling out the next phase of the brand’s targeted city-wise expansion. It is considering expanding the brand to “secondary urban centres” such as Visakhapatnam, Vijayawada, and Puducherry.

Its strategy is to market Budweiser through sponsorship of events such as music festivals and other niche local events. These include events involving global firms such as Tomorrowland and Electric Daisy Carnival, along with home-grown EDM events like The Boiler Room.

“We identify music and sports as major passion points for our consumers,” Sharma said. “In India, we believe that music is going to be the biggest emerging passion point,” he said.

While the market share of UB Group, the maker of India’s largest beer brand Kingfisher, has remained largely stagnant since 2014, market shares of other beer makers have risen. Carlsberg A/S, on the strength of its Tuborg and Carlsberg brands, jump the most from 4.7% to 6.8% in the alcoholic drinks market.

In 2013, AB InBev held merely 0.8% of the Indian market for alcoholic drinks, as per Euromonitor data. While this grew to 1.2% in 2016, the company gained SABMiller’s market share which was 10.7% of the market in 2016, allowing it to zoom past Carlsberg and be at nearly half of UB Group’s share.



18 July, 2017