InBev brews joint venture with RKJ Group

Updated on May 19, 2007 03:30 AM IST
Vijay Mallya maybe busy making global forays but global competitors are knocking at his doors, reports Ranju Sarkar.
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None | ByRanju Sarkar, Mumbai

Vijay Mallya maybe busy making global forays but global competitors are knocking at his doors. After SAB Miller, Carlsberg and Anheuser Busch (makes Budweiser) comes InBev, the world's largest beer producer by volume, to India.

InBev, which boasts beer brands like Lowenbrau, Stella and Beck's, has formed a joint venture with Ravi Jaipuria promoted RKJ Group, who's the biggest bottler for Pepsi. Initially, InBev will hold 49 per cent stake in the venture with the option to increase it at a later date while RKJ Group would hold 51 per cent equity.

The Belgium-based beer maker, which brings in strong know-how and brands, hopes to ride on the strong distribution network of RKJ Group: it distributes over 40 million cases of Pepsi bottles (Kingfisher sells 20 million cases, according the UB Group website). ''That's what we plan to leverage,'' said Ravi Jaipuria, chairman of the Delhi-based RKJ Group.

''We plan to acquire breweries as well as set up greenfield breweries,'' added Jaipuria. For starters, the joint venture will source beer from other breweries, and will ensure quality by having its brew-makers sit in the plant. The products will be launched the end of 2007, but will available across country by 2008.

InBev, which began brewing in 1366, has a portfolio of more than 200 brands, including Stella Artois, Brahma, Beck's, Leffe and Skol - the third-largest selling beer brand in the world. With revenues of 13.3 billion euros, InBev operates in
over 30 countries across the Americas, Europe and Asia Pacific.

While the joint venture is yet to firm up its business plan, sources say the project may see an investment of close Rs 400 crore, including debt. ''Since InBev has strong brands like Lowenbrau, Stella and Beck's, they may not need to invest a lot of money on brand-branding,'' said an expert who didn't wish to be identified.

The Rs 7,620-crore, 127-million case per annum beer market, growing at 27 per cent, is witnessing a lot of action: almost all big players in the business have entered India. In January, the US-based Anheuser-Busch International, which brews Budweiser brand of beers, formed a joint venture with Crown Beers of Hyderabad to make and market the Budweiser brand in India.

In December 2007, Carlsberg announced plans to build a brewery in Rajasthan in a joint venture with a group of investors to tap into the growth potential in the Indian beer market. India is among the top three markets in Asia in terms of expected growth rates, Carlsberg said while announcing the venture.

Growth in future could depend on the extent to which the government liberalises the trade and retail sale of liquor in the country. States like Punjab and Haryana saw beer sales growing by 520 per cent and 320 per cent, respectively, last year after the states threw open the trade (earlier, states would sell distribution rights to one businessman, and every company had to deal with him).

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