India: SABMiller tipped to win auction for Indian brewery, Mohan Meakin

The world’s brewing giant, SABMiller plc, has emerged as the front-runner in the auction of the beer interests of Mohan Meakin Ltd, the Indian drinks group, as it seeks to cement its position in one of the world’s fastest-growing beer markets, The Business Times Online communicated on January 6.

Asia Pacific Breweries (APB) and SAB Miller Breweries are touted as the favourites to partner the Kapil Mohan family’s brewery business, Indian media revealed in a statement. The said the consultants for the selloff, PricewaterhouseCoopers, along with the Mohan family are expected to thrash out matters in 10 days.

Despite the strong interest from rival bidders, SABMiller is being tipped as the likeliest purchaser, as it has a bottling agreement with the company.

The group, which recently swallowed Grupo Empresarial Bavaria, of Colombia, for $7.8 billion (£4.5 billion), is understood to be up against InBev, the Belgian owner of Stella Artois, and possibly Heineken in the final round of bidding.

Mohan Meakin, which is based in the Tamil Nadu region, last year appointed Pricewaterhouse Coopers to elicit expressions of interest in its beer business from international brewers. Carlsberg, of Denmark, is said to have dropped out at an earlier stage.

While the north Indian division of its beer business is owned by the company itself, the southern division is run by associates and the bottler Mohan Distillers. It is seeking to consolidate the two units to achieve a better price, although that may delay a sale for four to six months.

Mohan Meakin, the third-largest in the country, which has about 8 % of the Indian beer market, traces its origins to the 1820s, when Edward Dyer left Britain to set up the country’s first brewery, at Kasauli. Its main brand is Golden Eagle lager.

SABMiller is already India’s second-biggest brewer behind United Breweries. In June last year it committed to spend $125 million over five years to develop its existing business, which has about 37 per cent of the market.

The Indian beer market is growing at about 6 to 7 per cent annually, although SABMiller claims that its own business is growing at about 12 per cent. The level of bids in the auction is unknown, but a local source put the figure in the “tens of millions of dollars rather than hundreds of millions”.

Sources said APB, an offshoot of the famous Heineken group, which boasts of an arsenal of beer brands including ‘Tiger’, is desperate to enter the market. InBev is also a contender, but could end up an also-ran.

APB has been making fast inroads in China, Indonesia, Vietnam and Sri Lanka, where it acquired a strategic stake in the UB group’s beer business. “The fight is between APB and SAB Miller,” said industry sources.

APB, a 75-year-old firm, has reported sales of $1.44 billion (Rs 6,500 crore), as it increased its presence in Indo-China, with the operational losses in China coming down sharply this year.

China, is looked on as a long-term growth market for the Group. China achieved a 63% reduction in losses, this year. China a market with the highest potential for growth, APB is now confident to take a plunge into the Indian market.

APB recently entered Mongolia and sources say it’s continuously looking at newer growth markets in Asia.

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