UB In Contract Manufacturing Alliance With Balaji Breweries

Mumbai, February 27: | Updated: Feb 28 2003, 05:30am hrs
The United Breweries (UB) Ltd has finally managed to engage Balaji Breweries for exclusive contract manufacturing. UB has advanced around Rs 30 crore for the half-a-million hecto litre (five lakh cases per month) brewery in Tamil Nadu, which is expected to be commissioned by March 2003.

Said a top company source: "As a part of our ongoing expansion plans, we have been successful in entering into a contract manufacturing agreement for our brands with Balaji Breweries. We have advanced around Rs 25-30 crore for the contract manufacturing, however, there will be no equity transfer in the deal. We already have a brewery in Tamil Nadu (Empee) and this will be the second one."

Since the last two years, the company has embarked on an acquisition spree aimed at aggressively increasing the volumes as well as market share. Some of the companies in which UB has acquired controlling stake either directly or through its subsidiary include Associated Breweries, Mangalore Breweries, Empee Breweries and GMR Beverages & Industries Ltd among others.

UB acquired a controlling stake in Associated Breweries, manufacturer of beer brands such as London Pilsner, London Diet, Maharaja Premium, London 2001 Plus and London 5001 Plus. The acquisition has given UB exclusive marketing right for San Miguel beer in India.

After acquiring a 65 per cent stake in Associated Breweries, UB plans to acquire the remaining 35 per cent stake within this year.

The company source added: "We already have a majority stake in the company and there is a put option on us. We hope that we will acquire the remaining 35 per cent stake in the company during this year which will be done through a valuation process."

UB is a leader in the Indian beer market with over 40 per cent market share.

During 2001-02, the company had achieved a volume of around 26 million cases of beer, reflecting a growth of 12 per cent in volume and value terms over previous year.

The strong beer (Kingfisher Strong) registered a growth of 36 per cent and crossed 5.5 million cases in the second full year after its launch.

The company continues to dominate the mild beer segment with a market share of 67 per cent.