SabMiller, India’s second-largest brewery company, has a difficult task on hand. It is up against the brand of Kingfisher from United Breweries and in the recent past lost market share due to regulatory issues in some states. It is at this juncture that SabMiller is actively working on beefing up its varied portfolio of beer brands to ramp up market share in India.
“We have a portfolio of products and our attention is to focus on our product basket catering to the need of consumers,” Derek Jones, director (marketing) of SabMiller India, said. The company, which is the second-largest beer firm in the world in terms of volume, offers brands like Fosters, Haywards 5000, Knock Out, Royal Challenge and Peroni, among others to its Indian consumers. While Haywards 5000, Knock Out and Royal Challenge are placed in the mass-market category, Fosters and Peroni are its premium products.
SabMiller, which has clocked a double-digit growth in the last two financial years in terms of volume, has witnessed sound response from consumers for both of its categories. “If you consider both categories of products, premium segment is growing faster than the regular offerings. However, the growth is faster as it is on a low base. Otherwise, our regular products have also registered double-digit growth in the recent time,” Jones told Business Standard.
According to industry data, United Breweries Ltd (UBL) is the market leader in Indian beer market with more than 50 per cent of market share. SabMiller is placed second, with around 30 per cent of total market size of 200 million cases. (One case is 12 bottles of 750 ml).
Referring to competition with regard to UBL, Jones said there was enough space for all players as market was growing very rapidly. “We don’t think we have to break anyone’s dominance to increase our market share. The Indian market is growing very fast and it is expected that there will not be a single dominant player in coming years,” he said.
In the coming years, there will be group of brands in the market, which will not increase their share at the cost of others, but will be benefited out of the growing market size, he added. The company also feels that volume is a very misleading concept in Indian context. “Volume is a very misleading concept in Indian context as demand for beer is seasonal. While we struggle to meet the demand in summer, we are comfortably placed in other seasons of the year,” Jones said.
SabMiller meets 90 per cent of its demand of beer from its own 10 breweries. The remaining volume is procured from other sources with which the company has procurement contracts in place. Also, the beer company has a strong distribution network in place to reach out to interior places of various states.
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“If you look for our brands, you will realise that we do have a strong distribution network in the country. For example, if you go to any part of Andhra Pradesh, then brands like Royal Challenge and Knock Out are available in most of the places. Knock Out is also hugely popular in the northern part of Karnataka,” Jones said.
However, things are not that hunky dory for this Indian subsidiary of London-based beer company as it is facing a lot of regulatory issues in various states. For example, the new procurement policy of Andhra Pradesh government has made life difficult for the beer company there. As per the new policy, the state-run wholesaler procures stock based on a company’s national market share. This policy puts SabMiller at a disadvantage as its market share is lower in comparison to the dominant player in the domestic market, which is now being contested by the company in court. Similarly, it is also facing regulatory hurdles in Tamil Nadu in the recent past due to absence of their own manufacturing plant.
However, the company is trying to offset this loss of market share by concentrating on more profitable markets like Karnataka, Rajastan, among others. It is also now being complemented through advertisement and other such branding initiatives. “Typically, we spend around 12-13 per cent of our revenue on advertisement. Our recent advertisement campaign on Haywards Soda has also given us sound response from consumers,” Jones said.
However, to match UB which has a lot of brand support in the form of airlines, sporting ventures and celebrities, SabMiller is more focused on its portfolio of products to meet the gap in branding. “It’s not that we don’t want some celebrity to endorse our products as our brand ambassador. But we want to choose one who carries our brand and has a perfect match to convey the desired message,” he added.
However, it is yet to be seen how SabMiller fights its way in a highly regulated market like India and break the dominance of a player who has an iconic brand presence in the country.