Following a standoff with the Andhra Pradesh government, which led to a halt in production for 38 days during peak season, SABMiller India had seen losses mount to almost Rs 64 crore last year. Undeterred, the company says it has put the event behind and is currently busy sobering up. Paolo Lanzarotti, MD, SABMiller India, tells FE?s Shreya Roy how the brewer of popular labels such as Knock Out and Fosters is looking at expanding footprint and modernising production capacities.
Last year, your profitability had been impacted due to a standoff with the AP government over pricing issues. How has the company recovered since?
The first quarter of the fiscal began on a positive note for us. Our mainstream mild and mainstream strong categories grew by more than 40%, largely because of recovery in Andhra Pradesh, which is a key market for us. Last year, we saw growth in many of the key states where we are present. Punjab, Haryana, Bihar, MP, West Bengal and Kerala performed very well for us.
Haywards and Knock Out continue to perform and dominate the strong beer category. In mainstream mild category Fosters and Royal Challenge continue to be the popular brands. Our current brand portfolio is one of the widest in the industry and very well balanced. We don?t foresee discontinuing any of our brands in the near future.
You are currently the second largest beer company after United Breweries. UB has been talking about considerable capacity expansion and capital investment of Rs 200 crore a year over the next few years. Is SABMiller planning a similar expansion?
We will continue to work on creating a national footprint for our brands, both in terms of quality and content by modernising and improving efficiencies of plants, introducing new technologies, improving brand performance in key markets and make forays into newer territories. SAB Miller India will look to expand through modernising existing breweries as well as building greenfield breweries as necessary.
The beer industry is growing at approximately 12%, with a GAGR of 16% over five years. What do you think is slowing the industry down?
The biggest growth driver in India will be change in how regulation impacts availability and affordability of beer. Today, beer is taxed disproportionately higher than IMFL on a proof litre basis. Also, the outlet density is very low in our country. In some states over 75,000 consumers depend on one outlet. Companies on their part can further innovate, create brands which cater to diverse audiences and enhance brand experience by improving the retail environment and overall ambiance where consumers can enjoy their beer.
You had mentioned interest in exporting Indus Pride, your 100% malt beer, to UK earlier. Do you have any plans to do so?
Indus Pride is a newly launched brand and at present is only available in Rajasthan and Karnataka. Although its performance has been very satisfactory, it would still take some time before we start planning its export. For now our focus is towards identifying new markets for Indus Pride in India. Exports at present constitutes a small part of our overall sales.