The Hindu Business Line : Empee returning to beer business

The group through its liquor entity, Empee Distilleries Ltd, is finalising manufacturing pacts with two breweries in Central and North India, besides chalking out plans for three greenfield projects over the next three to four years, company officials have said.

The Rs 500-crore Chennai-based Empee Group has diversified interests in liquor, sugar, hospitality and non-conventional energy. It is a notable player in the Indian Made Foreign Liquor (IMFL) markets of Tamil Nadu and Kerala.

"We are entering into a contract manufacturing arrangement with Som Breweries in Madhya Pradesh and are also in talks with Cool Breweries in Haryana for a similar tie-up," Mr Satpal Chaudhry, a former Shaw Wallace & Co official, who was roped in to spearhead the group's new initiatives, said. The company is initially eying markets such as Orissa and Rajasthan, which will be serviced from these units.

Mr S. Subramaniam, President, Empee Distilleries Ltd, said the company would look at setting up greenfield breweries in Orissa, Rajasthan and Uttar Pradesh over the next three to four years. The officials, however, refused to divulge how much the group would invest in its rekindled beer plans. "We already have a Letter of Intent from the Rajasthan Government in this regard," Mr Subramaniam said.

Similarly, the company is working towards a composite licence for a brewery and distillery in Orissa. It is expected to hit the market with new registered brands, such as Horse Power and Max 7000, in the high alcohol content strong beer category and would also cover the diet beer and mild beer segment with more brands.

It is learnt that Empee would stay away from the Southern markets for the time being following a no-competition clause that it signed with the UB Group in the wake of a transaction two years ago. It had sold Empee Breweries with two units in Tamil Nadu and Kerala along with the flagship brand Marco Polo to Millennium Alcobev, a UB Group entity, for Rs 112 crore.

However, industry observers reacted with surprise to Empee's fresh plans to tap the beer market outside the South, which accounts for nearly 50 per cent of the total domestic consumption pegged at 80 million cases annually. "The market is in consolidation mode and is being carved up between leaders UB Group and SABMiller. We reckon it will be difficult for a new player to enter now and create brands and an effective business structure. What may have beckoned Empee is the fact that beer consumption in North India has been showing more buoyancy and slowly coming out of the seasonal nature," they said.