India: SABMiller and S&N interested in taking over Foster's India

SABMiller is in the race to acquire the beer assets of Foster's in India with the latter mulling an exit from a few Asian markets. Foster's is arguably the most visible MNC beer brand in India till date, India Economic Times posted on March 12.

Informed sources said SABMiller has already initiated talks with Foster's Brewing International, exploring takeover possibilities. The acquisition will cover the physical assets of the Australian beer company and the rights to use the Foster's brand in perpetuity.

"SABMiller is tracking multiple deals in India, and Foster's is one among them," added sources. The brewing giant's spokesperson in London declined to comment when contacted.

Foster's Brewing International is considering the sale of its Asian beer operations spread across India, Vietnam, China and Fiji. Foster's, which has handed over the brand distribution and marketing rights in the rest of the world to other brewers, owns beer operations in these emerging Asian markets.

Besides SABMiller, the other contenders for Foster's assets include UK's Scottish & Newcastle (S&N) and the usual list of global brewing biggies. Sources said the battle for Foster's Indian assets could prove to be interesting as S&N is an equal partner in United Breweries (UB).

“It need not be the case that S&N's interest in Foster's will bring the brand to the UB fold. (S&N) have a fully-owned subsidiary in the country, which can do that,” said a top UB official. However, the arrangement won't be done in conflict with UB, which controls 50% of the Indian beer market with its flagship brand, Kingfisher. In fact, sources said such a move would be a trademark Vijay Mallya strategy to drive all future consolidation in favour of UB, without participating in it directly. And it could happen only in understanding with him.

It must be mentioned that other brewers like InBev and Heineken are charting plans to enter the country, and acquiring Foster's could be a profitable entry strategy.

Foster's India, the first beer MNC to enter India, operates a greenfield brewery at Aurangabad in Maharashtra with an annual capacity of 3 lakh hectolitres. The brand Foster's sells about two million cases (of 7.8 litre each) with bulk of the volumes sold in Mumbai and in the rest of Maharashtra.

Foster's, with significant brand appeal in urban India, could be a useful fit for SABMiller's domestic portfolio. SABMiller, in the midst of an aggressive push to bolster its presence, has been on the look out for a strong, mild beer brand in the local market where the bulk of its volumes come from the higher alcohol content strong beers.

SABMiller accounts for 33 percent of the Indian beer market, following the leader UB which has a 50 percent market share with its flagship Kingfisher brand. Pradip Gidwani, who headed the Indian operations of Foster's declined to comment on reports of a takeover of Foster's beer by other MNCs. He said, "We do not comment on speculation."

But, Mr Gidwani said he had recently resigned from Foster's and joined international soft drink major Red Bull. He will be in charge of the Asian operations of the company.

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