India, New Delhi: Moves have been initiated in the direction of SABMiller’s acquisition of the remaining 50% stake in its beer joint venture with Shaw Wallace. According to India Economic Times statement from February 14, a top Jumbo Group executive was in South Africa three weeks ago, and that this topic had figured in discussions with the SAB top chiefs. Mysore Breweries, a subsidiary of SAB Miller India, had in May ‘03 joined hands with SWC, to create an equal joint venture (JV), Shaw Wallace Breweries.

Richard Rushton, MD, SAB Miller India told Economic Times, “SAB Miller is always interested in acquiring equity stakes as and when opportunities arise. If some good opportunity comes our way, we would be keen to take it up. I don’t want to comment at this stage about picking more stake in Shaw Wallace.” SAB Miller had paid $132.8m to Shaw Wallace for taking a 50% stake in the venture in ‘03. Industry sources familiar with the development said the deal may be concluded in the next few months. A Shaw Wallace spokesperson told ET, “As of date, there is no such move.”

The relationship between the joint venture partners is governed by a comprehensive shareholders’ agreement, under which the SAB Miller group has operational management control of the venture.

It has a 28% share of the domestic beer market and is a leader in the strong beer segment, with its Haywards 5000 accounting for about 30% of that market. Shaw Wallace’s beer brands include Royal Challenge, Haywards, Hi-Five, Lal Toofan, Rosy Pelican and Kohinoor. Kohinoor and Hi-Five are mainly exported to the US and the UK.

“The JV has given SABMiller a strong footing in the Indian beer market, which is seeing a shift from strong to mild beers”, Economic Times said. SAB has already tasted significant success in the domestic market with its Castle Beer.

Of the 85m cases sold in ‘04, mild beers accounted for 36m. Shaw Wallace currently has seven fully-owned brewing units and contractual arrangements with 12 more breweries in India and Nepal. The company is setting up four greenfield breweries in Madhya Pradesh, Kerala, West Bengal and Goa at an investment of about Rs 100 crore. The domestic beer market, which had been posting flat or negative growth over the past many years, returned to high spirits in ‘02-03 with a 15% growth. Shaw Wallace has adopted a strategy of creating regional brands and then launching them nation-wide.

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