SABMiller India
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Aggressive SABMiller Closes in on Mallya's UB in Beer Revenues

SABMiller's sales jumps
SABMiller's sales jumped 20% in FY13 to Rs 3,349 cr while UB's rose to Rs 3,583 cr
MUMBAI: SABMiller, the world's second largest brewer, has moved within striking distance of market leader United Breweries in the Indian beer market, thanks to some aggressive product launches and significant innovations.

SABMiller India, the maker of Haywards and Knock Out beer, posted a 20% jump in sales in the year ended March 2013 at Rs 3,349 crore. During the same period, Vijay Mallya's United Breweries, the maker of KingfisherBSE 4.93 % and Heineken, grew its revenues 6% to Rs 3,583 crore.

Experts attribute the London-based brewer's impressive growth largely to innovations and new product launches.

SABMiller's sales jumps

On its strong beer brand Knock Out, for instance, SABMiller has put a thermo chromatic label that changes colour to indicate the optimal consumption temperature. It also relaunched Indus Pride as a premium beer that is brewed with Indian spices such as cardamom, coriander, fennel and cinnamon.

The firm has also introduced the 'strong' variant of Foster's in key states across the country and launched Royal Challenge Strong in southern India. "Both new brands are getting an encouraging response from consumers in these key markets," Darioush Afzali, marketing director at SABMiller India, said.

The company has posted a 20% growth in volumes, too, last year when it produced more than 5.5 million hector litres of beer. That is just about half of UB's production. The Vijay Mallya-led firm dominates the $2.2-billion (approx Rs 12,000-crore) Indian beer market in volume terms, accounting for 53% of production, followed by SABMiller India with 27% share.

Experts say that despite its impressive growth last year, SABMiller will have to rework its portfolio if it has to challenge UB in the world's third-fastest growing beer market.

"UB has the advantage of having brands across price-points, which brings them volume especially at the mass end of the market," Nitin Mathur, consumer research analyst at Espirito Santo Securities, said. "In India, premium beer doesn't necessarily translate into higher profit as the entire business is volume driven," he added.

Despite its low sales growth, UB managed to increase its profit 36% last fiscal to Rs 172 crore.

SABMiller, in comparison, posted a net loss of 88 crore for the year, largely because of increasing investments. It did manage to narrow the losses from the previous year's Rs 119 crore. Earlier this year, SABMiller invested around $77 million (about Rs 475 crore at current rate) to expand its capacity and portfolio, and revive its fortune in Asia's third-largest economy, where young urban consumers drive demand.

"The move reiterates the importance of India in the portfolio of SABMiller's global businesses and the fact that India continues to be a focus area for the group which has over the last 12 years invested over $800 million (approx Rs 4,950 crore) in the country," it said in its annual filing.

Global brewers are increasingly focusing on markets such as India as traditional markets are stagnating. Beer is forecast to be one of the slowest growing beverages categories in volume globally during 2013.

Dutch brewer Heineken, Belgium-based AB InBev, Danish firm Carlsberg and Chinese company Tsingtao are also looking at growing their profitability in India by encouraging consumers to trade up to premium beer, craft beer or categories such as cider.

According to Euromonitor International, Indian consumers continue to favour strong beer, which accounted for 80% of all beer sold in the country last year.
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