SABMiller India

UB, SABMiller sales to look up on re-entry into AP markets

Business Line, 15-July-2009
K. Giriprakash
Bangalore, July 14 The country’s two largest beer makers — United Breweries and SABMiller — are expected to see a steep increase in the sale of their brands with Andhra Pradesh, which is the biggest market for beer in the country, lifting a ban on these two companies last week.

Andhra Pradesh alone accounts for 18 per cent of the total beer sales in the country, but the State government’s decision to stop procuring beer products from both United Breweries and SABMiller three months ago, had considerably weakened the total sales of these companies. About 12 per cent of sales of United Breweries come from Andhra Pradesh and for SABMiller, it is about 30 per cent.

Pricing issues
United Breweries’ Deputy President, Mr Shekhar Ramamurthy, told Business Line that the Andhra Pradesh Government had decided to resume purchase of beer products at existing prices even though the Government is involved in a legal battle with both the companies over price increase. “After discussions with the State Advocate General it was decided that the resumption of purchase will be independent of the court case,” Mr Ramamurthy said.

Both United Breweries as well as SABMiller are fighting a court case in Andhra Pradesh seeking an increase of Rs 3 a bottle of beer. The last price increase by the State government was nearly a decade ago.

Placing orders again
The State government had earlier stopped the purchase of beer as it believed that it could not allow sale of beer brands from these two companies as it was involved in a court case over the price. However, the State government later agreed to change its stance and has since last week started placing orders with both SABMiller and United Breweries.

The SABMiller Director for Corporate Affairs and Communications, Mr Sundeep Kumar, said with Andhra Pradesh resuming purchase of the beer brands, it should lead to a steep increase in sales for the company.