The Hindu Business Line : Foster's looking for fizz in brand, not volume

FOSTER'S, the Australian beer giant, plans to stay clear of chasing volume in the Indian beer market in the near future. Instead, Foster's, which was the first international beer to enter India in 1998, would focus on ramping up its brand salience here.

Mr Pradeep Gidwani, Managing Director of Foster's India Ltd, said the message from the brewing giant's Melbourne headquarters was to do "profitable business" in the complex domestic beer market. "We are not chasing beer volume," Mr Gidwani said and explained the company was currently working towards establishing Foster's brand firmly in the local market. This would mean that Foster's is in no tearing hurry to expand its manufacturing footprint in India either through contract arrangements or greenfield project even though it would continue to assess opportunities, he added.

At the time of India foray, a bullish Foster's had talked about establishing brewing presence in the key markets, and actively pursued acquisition possibilities only to see most of its targets being picked up aggressive rivals such as United Breweries (UB) and SABMiller.

Meanwhile, the industry remains sceptical about the longevity of Foster's current strategy in a consolidating market that is yet to throw up exponential growth. The fiercely competitive domestic beer industry, pegged at 82 million cases annually, has been working on narrow margins with spiralling input costs and lack of pricing flexibility bleeding most of the players.

The company's only brewery in the country is located at Aurangabad in Maharashtra, from where it rolls out Foster's nationally and its India-specific Amberro beer in select markets. Its annual depletions during the financial year ended June 30 crossed two million cases and the company has been reporting operating profit for a while now, Mr Gidwani said. Foster's brand closed the year with 1.9 million cases, reporting 23 per cent growth year-on-year. The branding and marketing efforts of Foster's is mainly associated with Formula-1 racing and the visit of Australian cricket team to India.

"We are already considered as one of the successful foreign brands to make its presence felt in the country. The evidence is there in the awards and accolades which the brand and the company has received in recent times," Mr Gidwani said.

At present, Foster's - which sells at a premium over rivals Kingfisher and Castle Lager in many markets — is spread out across the country except in Bihar, Madhya Pradesh and Himachal Pradesh. The brand's strongest market continues to be Maharashtra where it accounts for nearly 26 per cent of the lager (mild) beer sales. Amberro's lager variant sells over 15,000 cases monthly in Mumbai placing it as the third largest mild beer in that market.

Mr Gidwani said the company's focus on profitable business and creating better brand salience forced it to move out of unviable markets in many states including Andhra Pradesh, which is the biggest guzzler. "After the initial roll out, we pulled out Foster's from many depots in that State and decided to focus on attractive markets such as Hyderabad, Vishakapatnam and some others. We lost numbers in the process but we were prepared for it," he added.