E-Malt.com News article: India: SABMiller plans further strategic investment in India

SABMiller plc announced on June 14 its intention to invest further in India, which it has identified as a strategic growth market for the Group. The global brewing company’s Indian subsidiaries intend to commit in excess of $125 million in capital expenditure and marketing initiatives over five years to expand current operations and further develop market-leading brands in India.

SABMiller recently announced that its Indian subsidiary, MBL Investments, acquired the Shaw Wallace Group’s residual interest in the brewing operations of SABMiller’s Indian joint-venture. The Group’s brewing operations comprise 10 breweries across the subcontinent constituting India’s second largest brewer. Its key brands include Hayward’s 5000, the leading beer brand in the rapidly-growing strong beer segment; Royal Challenge Premium Lager, the second-largest mild beer in the country; Knock-Out and the international premium brand Castle Lager.

Graham Mackay, Chief Executive of SABMiller plc said: “It is widely known that India is a rapidly expanding economy and represents an exciting growth opportunity for SABMiller. We firmly believe that a vibrant beer business will not only contribute significantly to the economic development of the country, but a well regulated industry will encourage responsibility in the consumption of alcohol throughout the subcontinent. This can only be achieved, in our view, by working with the Indian authorities to reform the prevailing structure and reduce the complexity of the restrictions that are currently in place.”

André Parker, Managing Director of SABMiller Africa & Asia , added: “Climatic conditions in India are more suited to drinking beer, which is seen as a healthier alternative, than other alcoholic beverages. While the Indian beer market has been growing at 6 to 7 percent annually, SABMiller‘s brewing operations in the country have recorded a much higher growth rate of 12 percent in the last year. With the further investment we are able to upgrade and expand existing breweries, develop our brands and increase the standard of the barley farming industry through co-operative initiatives.”

During a visit to Group operations in India this week, Mr Mackay will meet with government officials and industry leaders to discuss SABMiller's involvement in India. He will also inaugurate the completion of a $14 million upgrade programme at the state-of-the-art brewery in Hyderabad as well as visit local communities.

SABMiller has operated in India since October 2000, when it bought the Narang Breweries, located near Lucknow , in the state of Uttar Pradesh. In June 2001, SABMiller acquired a controlling interest in Mysore Breweries Limited. Subsequently Mysore Breweries Limited has made other acquisitions in other brewing operations in India and later in May 2003, Mysore Breweries Limited entered into a strategic 50:50 joint venture with the Shaw Wallace Group of India.

The Indian Beer Market::

Currently, the total Indian beer market is still small with annual sales of around 7 million hectolitres, but has been growing rapidly over the last 10 years. This trend is continuing and overall market growth is estimated currently to be some 6% - 7% on an annualised basis. The Indian brewing industry remains highly regulated and beer is categorised with other alcoholic products for licensing and taxation purposes.

Strong beer (alcohol by volume of 5% - 8%) accounts for 65% of the total beer market and the key beer consuming states are Andhra Pradesh, Maharashtra, Tamil Nadu, Karnataka, Rajasthan and Uttar Pradesh. Per capita consumption of 0.7 litres is low, emphasising the significant growth potential in a country with a population in excess of one billion people.

Key drivers of high growth include rising gross domestic product, favourable demographics, changing lifestyles, and the opportunity to grow per capita consumption together with potential deregulation of the Indian beer industry.

About SABMiller plc:
SABMiller plc is one of the world's largest brewers, with 2004/05 lager sales volumes in excess of 148 million hectolitres. It has a brewing presence in over 40 countries across four continents and a portfolio of strong brands and leading market shares in many of the countries in which it has brewing operations. Outside the USA, SABMiller plc is one of the largest bottlers of Coca-Cola products in the world. In the year ended 31 March 2005 , the group generated US$2,194 million pre-tax profit from a turnover of US$14,543 million. SABMiller plc is listed on the London and Johannesburg stock exchanges.


15 June, 2005