India: UB to invest in contract brewer; increases sourcing

Som Distilleries & Breweries Ltd. announced on November 23 that United Breweries Ltd. (UB) has doubled the quantum of beer that it sources from the company. As part of its overall strategy to increase the production capacity, UB is investing Rs 50 lakh in this firm to upgrade the facilities at Som Distilleries plant at Raisen in Madhya Pradesh and are planning to increase its sale in the states of Maharashtra and Andhra Pradesh.

UB has also added that it is doubling the sourcing agreement with Som Distilleries and would lift close to 1 lakh cases of beer from this firm from the existing 50,000 cases of beer.

This move is part of UB plan to increase the brewing capacity to 65 million cases over the next year from the current 55 million cases. The company is also working out funding options and is veering towards reliance on owned capacities as against contracted facilities.

Kalyan Ganguly, president, breweries division, UB Group had recently said: “The Indian beer market is on an upswing and the market should be in the range of 100 million cases by end of this year from the 92 million cases during 2004-05. We need to build up capacities for this growth and are open to organic and inorganic routes for this expansion.” He added that funding is not at all an issue for this expansion.
He said that UB currently enjoys a 50 per cent marketshare, while SAB Miller after the recent consolidations has around 32 per cent.

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