New Delhi, May 3
Asia Pacific Breweries (APB), an arm of beer major Heineken, has announced its entry into India by acquiring an initial 76 per cent stake in Aurangabad Breweries Ltd (AUBL).
The company will invest about $18 million funded through a combination of internal resources and external borrowings.
APB said the deal includes an entitlement for it to increase its stake in AUBL, which owns two breweries in Maharashtra and Goa, to 100 per cent by the end of 2008.
This acquisition closely follows APB's announcement in November last year to build a brewery in Mongolia and its recent entry into the Sri Lanka market via a 60 per cent stake in Asia Pacific Brewery (Lanka) Ltd.
APB Chief Executive Officer, Mr Koh Poh Tiong, said the investment marks APB's first footprint in India.
"In the last 16 years, our focus was mainly on South East Asia, Australia and China.
"As our breweries in these markets have shown good growth, it is timely that we look beyond our current markets and set our sights on South Asia for our next wave of regionalisation," he said.
Highlighting that the investment presents new market opportunities to bring APB's corporate brands, such as Tiger, Anchor and Baron's Strong Brew into the Indian beer market, he said the investment is a continuation of the company's growth strategy to venture into emerging markets to capitalise on the inherent growth potential of emerging economies.
AUBL's two breweries in Maharashtra and Goa together have a combined annual production capacity of approximately 250,000 hectolitres.
AUBL produces and markets local beer brands including Cannon-10000 and Arlem.
On why APB is keen on the Indian beer market, Mr Koh explained, "The obvious attraction of the India market is its size and growth.
"The beer market has been growing at a compounded rate of over 7 per cent annually and growth is expected to accelerate as deregulation gains momentum across the Indian States. The beer market is also anticipated to grow strongly on the back of a growing young and affluent middle class.
"Our investment in AUBL places APB in a good position to ride on the economic growth of India and the accompanying growth of the Indian beer market."