Budweiser deal may fizz up InBev's India play
The world’s second largest brewer, InBev’s India strategy, will be fizzing if its $47 billion bid for Anheuser-Busch, makers of the iconic American beer Budweiser, ends up creating a new global industry leader.
By Boby Kurian, ET Bureau |
BANGALORE: A delayed plan can sometimes turn out to be a blessing in disguise. The world���s second largest brewer, InBev���s India strategy, will be fizzing if its $47 billion bid for Anheuser-Busch, makers of the iconic American beer Budweiser, ends up creating a new global industry leader.
Belgian giant InBev, formerly Interbrew, has been eyeing the potentially big Indian market for some time now. It first attempted a foray with the Khemkas of SUN Group, joint venture partners in Russia in the 1990s, and was actively in the fray for buying into United Breweries (UB) on two occasions when Vijay Mallya tapped the market for a strategic partner.
Last year, it settled for a JV with domestic soft drink bottling king Ravi Jaipuria after considerable dithering and then surprisingly settling for a minority 49% stake. The JV faced further delay as quality concerns rocked its initial bottling plans in Goa. In between, Anheuser-Busch swooped down quietly to acquire 50% stake and significant management control in Hyderabad-based Crown Beers. Budweiser rolled into key guzzling markets such as Maharashtra, Karnataka, Goa and Andhra Pradesh last year, building a reasonable hold over the premium segment in cities like Mumbai, Pune and Bangalore.
Belgian giant InBev, formerly Interbrew, has been eyeing the potentially big Indian market for some time now. It first attempted a foray with the Khemkas of SUN Group, joint venture partners in Russia in the 1990s, and was actively in the fray for buying into United Breweries (UB) on two occasions when Vijay Mallya tapped the market for a strategic partner.
Last year, it settled for a JV with domestic soft drink bottling king Ravi Jaipuria after considerable dithering and then surprisingly settling for a minority 49% stake. The JV faced further delay as quality concerns rocked its initial bottling plans in Goa. In between, Anheuser-Busch swooped down quietly to acquire 50% stake and significant management control in Hyderabad-based Crown Beers. Budweiser rolled into key guzzling markets such as Maharashtra, Karnataka, Goa and Andhra Pradesh last year, building a reasonable hold over the premium segment in cities like Mumbai, Pune and Bangalore.
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Still, in the first full year of operations, Anheuser-Busch is expected to see its India volume cross a million cases, with Budweiser alone coming close to the million cases mark, probably making it the most successful international beer launch in a market where most companies have been struggling. Anheuser-Busch also operates another India-specific strong beer Armstrong. So, if the global bid triumphs, as most analysts predict it will, after InBev formally kicked it off on Thursday, the Belgian beermaker will be motoring along swiftly in India. The development may also see InBev looking to control the local JV with Mr Jaipuria.
���We have been just informed about the bid. Let us wait and see if they get it (Budweiser). The JV clauses are fairly strong and we have majority rights. As partners, we will do whatever is reasonable,��� Mr Jaipuria told ET. Budweiser, with its strong brand recall, will come to the rescue of InBev, which would have otherwise played a waiting game to build less familiar brands like Lowenbrau, Tennents, Stella Artois and Beck���s in a market where local heavyweights hold sway. Mr Mallya���s UB and SABMiller, primarily relying on acquired local brands, control over 80% share of India���s rapidly expanding beer consumption.
Industry observers said integrating local operations of the two global giants may not pose problems if InBev takes control of the existing JV in India. It would then buyout A-B���s local partners ��� while retraining them as bottlers ��� or accommodate them as minority shareholders in a bigger venture.
���We have been just informed about the bid. Let us wait and see if they get it (Budweiser). The JV clauses are fairly strong and we have majority rights. As partners, we will do whatever is reasonable,��� Mr Jaipuria told ET. Budweiser, with its strong brand recall, will come to the rescue of InBev, which would have otherwise played a waiting game to build less familiar brands like Lowenbrau, Tennents, Stella Artois and Beck���s in a market where local heavyweights hold sway. Mr Mallya���s UB and SABMiller, primarily relying on acquired local brands, control over 80% share of India���s rapidly expanding beer consumption.
Industry observers said integrating local operations of the two global giants may not pose problems if InBev takes control of the existing JV in India. It would then buyout A-B���s local partners ��� while retraining them as bottlers ��� or accommodate them as minority shareholders in a bigger venture.
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