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Domestic, MNC liquor firms in high spirits

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C H Unnikrishnan Mumbai
Last Updated : Feb 26 2013 | 12:10 AM IST
Lured by projections of heady growth, domestic as well as multinational liquor companies have lined up sizeable investments in capacity expansion in India.
 
The country's beverages market is growing at 25-30 per cent a year across the two main segments of spirits and breweries.
 
The growth in the Indian liquor market will be driven by fresh investments by existing Indian players like United Spirits, Radico Khaitan, United Breweries, Jagatjit Industries and the three leading wine makers, Sula, Champaign Indage and Grover Vineyards.
 
The proposed expansion plans of the global drinks majors like Diageo, SABMiller and Asia Pacific Breweries would also push the growth both in the number of products and the overall market size.
 
Asif Adil, the new managing director of Diageo India, said the company was expanding its direct presence. Apart from the premium spirit segment, it will look at the fast growing beer and wine markets in the country.
 
"India is the most important market for us in Asia now. We will explore all these new segments with our own products from the international portfolio using the bottling and distribution networks of local partners with whom we are in talks now," says Adil.
 
Abhishek Khaitan, managing director of the country's second largest spirit company Radico Khaitan, which has raised a $120 million FCCB for expansion, said the company had a very focused growth plan in the domestic market.
 
The Indian beer market, which was growing at 7-8 per cent a year in the last five years, was pegged between 80 to 85 million cases in 2004.
 
Riding high on the current market trends, the beer companies in the country are expecting the growth at the rate of over 18 per cent in the current financial year and a growth of between 20 to 25 per cent to touch the market size 200 million cases by 2010.
 
United Breweries, the beer manufacturing and marketing company of UB Group, suggest the total market size was close to 85 million with the company accounting for around 30.5 million cases in India.
 
The company which is expanding the manufacturing capacity looking at the emerging market opportunities, targets to take its share to more than 60 per cent of the expanded market at market.
 
UB is planning a total investment of over Rs 150 crore in the brewery segment apart from its proposed expansion plan in the other segments like wine and spirits.
 
Making the scenario more competitive, Asia Pacific Breweries (APB) has made its second investment in South Asia by expanding its brewery network to include India.
 
It has acquired an initial 76 per cent stake in Aurangabad Breweries Limited (AUBL) which owns 2 breweries in Maharashtra and Goa, for about $18 million. The deal includes an entitlement for APB to increase its stake in AUBL to 100 per cent by the end of 2008.
 
The global beer major SABMiller's recent acquisition Foster's India for Rs 564 crore ($120 million) has thrown open the market for yet another big expansion of the country's beer market.
 
SABMiller India, the wholly owned subsidiary of global beer giant SAB Miller and the second largest beer company in India is also planning to quadruple the brewing capacity at its Aurangabad facility.
 
With a recent investment of about Rs 40 crore, the brewery's annual capacity is already up by more than 400 per cent from 20 lakh cases to 84 lakh cases.
 
The Aurangabad brewery expansion and modernisation project of SAB Miller was part of the global beer manufacturer's Rs 625 crore investment plan in India for improving efficiency at its breweries in India, over a period of five years.
 
The company embarked on this modernisation programme as the beer market in India is all set to grow substantially in the coming years.
 
The domestic wine market, another big segment in the country's beverages industry, is also set for an exponential growth with UB group's plan to enter the wine segment following the acquisiton of French wine maker Bouvet-Ladubay.
 
The domestic premium wine market which is currently pegged at 5 million bottle per annum. The UB's entry into the wine market in India is expected to open up this comparatively smaller business segment with the exposure of a host of internationally established brands.
 
UB is also planning to introduce few of the international brands in India as the French company is already an established player in the international market with a number premium brands.
 
UB chairman Vijay Mallya had recently announced his plans for the emerging wine market in India. The company is also currently in talks with few wineries in the country to establish a strong sourcing base within the local market.

 

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First Published: Aug 10 2006 | 12:00 AM IST

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