The Hindu Business Line : Five years after entry, SAB Miller posts profit

Brewing growth
The company invests Rs 134 crore in expanding capacity and plant upgradation.
Foster’s brand to be launched in 500 ml cans.
Greenfield as well as brownfield expansion of breweries on cards.

K. Giriprakash

Bangalore, Sept. 11

The Indian operations for beer giant SAB Miller is looking up as it has been able to post its first-ever profit since it entered the country five years ago.

According to official sources, SAB Miller’s flagship brand, Foster’s too has started gaining ground with its market share nearly doubling to 9 per cent from a year ago. Sources said SAB Miller, which operates through Skol Breweries in India posted a net profit of Rs 40.19 crore during 2006-07, while sales grew 43.25 per cent to Rs 1,348 crore during the same period.

In 2005-06, SAB Miller posted a loss of Rs 5.31 crore but healthy profits during 2006-07 saw the beer major’s accumulated losses reduce 23.52 per cent to Rs 130 crore. But the interest cost grew to Rs 31 crore from Rs 30 crore during the previous year.

Expanding capacity

During 2006-07, SAB Miller invested about Rs 134 crore in expanding capacity as well as for plant upgradation. It is expected to invest the same amount during the current year as well.

For SAB Miller, the biggest gain during 2006-07 came from the steady increase in the market share of Foster’s. When the company relaunched the brand a year ago after acquiring Foster’s operations in August 2006 for about $120 million, the brand’s presence was limited. Since then, the market share has nearly doubled to about 9 per cent while the brand awareness has grown 17 per cent to 64 per cent.

SAB Miller now wants to strengthen the footprint of the brand with Foster’s being manufactured in five of its 10 breweries as well as launch the brand in 500 ml cans. Sources said SABMiller is in the process of rolling out big projects in another six months, which will add 4.5 million hectolitres capacity.

This would be through a combination of greenfield as well as brownfield expansion of breweries.

Foster’s will add 4.5 million cases every year to SAB Miller’s total capacity, which will take the company’s production to 35 million cases annually.

During the last one year, the beer giant has been able to more than double its capacity.

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Five years after entry, SAB Miller posts profit