India: United Breweries targets 25% sales from premium brands within the next 4-5 years

United Breweries (UBL), India’s largest beer manufacturer, anticipates its premium beer brands to contribute 25% of its total sales volume within the next 4-5 years, according to a company official, The Financial Express reported on September 3.

“Currently, premium beers make up 10% of our portfolio, but their growth is rapid. We expect this segment to account for 20-25% of our total business over the next five years,” Vivek Gupta, CEO and managing director of UBL, said.

The Bengaluru-based firm, which is part of the global beer giant Heineken, holds a 50% share by volume in the Indian beer market, which produces 400 million cases annually.

Gupta noted a significant shift in consumer preferences towards premium mild beers in India, driven by a growing legal drinking age population, rising number of earners, and a desire for high-quality beer experiences with moderate consumption.

“Premium isn’t just about the price. These are beers with less than 5% alcohol content, designed for those who prefer moderate drinking experience and enjoy better social conversations,” Gupta explained.

UBL currently boasts a portfolio of nearly 30 domestic and international beer brands, including Kingfisher Strong, Kingfisher Premium, Kingfisher Ultra, Heineken Original, Heineken Silver, and Amstel. The firm also produces and markets packaged drinking water, soda, and non-alcoholic beverages.

UBL operates 21 breweries across India and collaborates with contract manufacturers at 14 additional locations. Presently, UBL has manufacturing plants in Maharashtra, Rajasthan, and Telangana dedicated to producing Heineken’s premium beer brands. The company recently announced that Heineken beers will now be brewed locally in Mysuru, Karnataka.

Gupta said that UBL is enhancing its manufacturing capacity to produce premium beers at existing facilities instead of moving them from one state to another, which has tax implications. “For example, in Telangana, we have two fully operational breweries, so we’re considering further investments there. Similarly, we are exploring opportunities in Uttar Pradesh, West Bengal, and Odisha,” he added.

Two quarters ago, UBL announced a capital expenditure of Rs 340 crore. While Gupta did not disclose any new investment plans, he said the company remains in investment mode, with discussions ongoing with various state governments regarding land allocation and policy support.

“Barley is a key ingredient in beer, but India still imports it. We are working with local farmers in certain states to promote barley cultivation, which aids in crop rotation. Once we secure local barley supplies, we plan to establish malting plants, canning units, and bottle recycling facilities to strengthen the entire supply chain,” Gupta said.

UBL maintains a 50% market share in India, while competitors like Carlsberg and AB InBev hold around 30-32%, with the remainder divided among local players. Market share varies by region; for instance, in Tamil Nadu, local players command 65-70% of the market.

Gupta highlighted that globally, beer accounts for 75% of alcohol consumption compared to wines and spirits. In India, however, beer represents only 15-20% of the market, with the majority consumed as country liquor and spirits. “If people consume 10 drinks a year, they are drinking beer less than two times, so there’s significant headroom for growth in the beer category,” he added.

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