The Hindu Business Line : SABMiller plans four greenfield breweries

Bangalore, Nov 22 SABMiller will invest $100 million every year for the next five years and set up four greenfield breweries in India as part of its plans to consolidate its operations in the country.

“We will add about 9 million cases every year and hence need to expand our existing capacities as well as set up newer ones,” the SABMiller India Managing Director, Mr Jean Marc Delpon de Vaux, told Business Line.

SAB Miller plans to set up between three and four greenfield breweries including one each in Karnataka and Haryana during the next 3-4 years, he said. The beer maker, which already has 10 breweries in the country, is also planning to launch more international brands in the country and look at launching local brands too.

Market share

SABMiller with a share of 36 per cent of the market is the second largest beer maker in India. The new investments does not include $150 million, which the company has earmarked for increasing capacities as well as modernisation of its plants during the current fiscal (2007-08). SAB Miller has invested about $650 million in its Indian operations during the last five years. Its current capacity is about 57.6 million cases (12 bottles of 650 ml each).

Mr Deplon de Vaux said a medium-sized brewery in India with a capacity of about 1 million hectalitres could cost up to $50 million. He said his company wants to build breweries whose capacities can be expanded to as much as between 3 million hectalitres and 4 million hectalitres.

“Ideally, we would prefer higher capacity breweries but lesser number of them. But the tax structure in the country does not permit us to do that. Hence, we have approximately one brewery in each State we operate in,” he said.

Export tax

Each State in the country levies import and export tax on the movement of beer cases and some of the States even prohibit entry of beer brewed in another State. There are as many as 60 breweries across various States in the country which produce a total of a mere 11 million hectalitres.

SABMiller recently hived off Asia as a separate business division because of the current scale and future growth potential of the group’s business in the Asian region. Though India’s beer industry has been on an average growing at 15 per cent every year, the company believes that its growth is being held back because of tough regulations of the Government. “Compared to our growth across countries, India is not growing at the pace we want it to because of heavy taxation by the local governments,” Mr Deplon de Vaux said.

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