The Hindu Business Line : UB to hike breweries capacity to meet peak season demand

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Bangalore Feb. 20 United Breweries expects to increase capacity of its breweries 50 per cent ahead of the peak season, which is between March and July, even as it eyes launching a few more brands in the super-premium category.

The beer major has also put on track the construction of its greenfield brewery in Rajasthan, which will now go on stream this March and add 7 lakh hectalitres annually to the total capacity of United Breweries. It is also in the process of signing up more contract with brewers, which will increase the capacity to 5 lakh cases per month. Even though South is the traditional market for beer, UB is adding more capacities in the North to cater to the boom this market is experiencing currently.

market growth

"We expect market growth to be between 25 per cent and 28 per cent during the peak season. As market leaders, we will increase capacity 50 per cent," UB's Executive Vice-President for Manufacturing, Mr Cedric Vaz, told Business Line.

He said UB itself expects to grow 35 per cent during the peak season, which is between March and July.

Mr Vaz said the beer major expects to launch a few brands in the super-premium category to rope in young consumers into its fold. "Those who drink gin, and even those who want to try out foreign brands would be our target," Mr Vaz said. The super-premium brands will be priced between 30 per cent and 40 per cent higher than other existing brands.

contract breweries

UB currently has around 16 of its own breweries and with the addition of new contract brewers, the number of contract breweries will rise to 12. But all its breweries are undergoing expansion. Mr Vaz said most of the expansion was being carried out in such a way that the company would be well positioned to take advantage of the peak season. Even the greenfield breweries are expected to start production sometime in March and April.

UB expects the market to grow 25 per cent during 2007-08 from the current size of 140 million. It expects to sell between 100 million cases and 110 million cases of its own during this period. Currently, UB has a market share of slightly less than 50 per cent. It expects its market share to grow to 55 per cent in another two years.