SABMiller looks to brew in TN

BANGALORE: SABMiller has entered into talks with its main rival United Breweries (UB) to buy the latter’s brewery in Tamil Nadu. The global brewer has expressed interest in acquiring the Chennai-based Empee Breweries, as UB mulls divesting one of its plants in the state.

The deal, if it goes through, could top Rs 100 crore. It is not yet clear whether UB is considering sale of only the brewery or if the potential deal would include Empee’s beer brand Marco Polo as well. UB confirmed that preliminary talks are on with the MNC rival.

UB controls two breweries, Balaji and Empee, in TN, which is the second largest domestic beer market with annual sales of over 15m cases. Balaji brewery has a current monthly capacity of six lakh cases, while Empee’s brewing output is pegged at three and half lakh cases.

UB’s move to divest one brewery has surprised the industry observers even though the plant capacity of Balaji could be increased to a million cases per month. Incidentally, UB acquired Empee in ’02 to keep out competition, especi
ally SABMiller.

On the other hand, SABMiller is working on various options, including acquisition of Empee, to gain a manufacturing foothold in TN. The MNC brewer suffered serious reverses in the marketplace after the federal government banned import of beer from its Pondicherry plant, Sica Breweries, located just outside the state.

Informed sources said SABMiller is also in talks with the new state Government for a greenfield brewery licence in the state, which has only three breweries and could face serious production constraints as the consumption grows at a heady pace.

Sources said SABMiller might be having second thoughts on its bid for Mohan Meakin’s beer business, and was actively considering other options to tap TN.

SABMiller entered the expensive bidding fray for Mohan Meakin’s national beer assets to gain control of the latter’s affiliate brewery, Mohan Breweries, in the southern state. The global brewer has an existing limited contract brewing arrangement with this plant to service TN market.