India: Anheuser-Busch is revisiting its India plans

Anheuser-Busch (A-B), maker of Budweiser beer, is revisiting the India story after nearly a decade. A-B is engaged in talks with a few mid-sized domestic brewers, including a greenfield project, as it looks to tap the market here finally, Economic India Times communicated on March 20.

Informed sources said A-B was in formal negotiations with Crown Breweries, which is a greenfield plant coming up near Hyderabad. The US brewer also had informal parleys with the Vijay Chougule-managed Aurangabad Breweries in Maharashtra and Arlem Breweries in Goa as it looks for a viable entry plank.

Sources added that A-B looked at Mohan Meakin’s plans to divest 51% stake in its beer business, but was unlikely to proceed with an aggressive bid.

According to industry observers, for A-B — which still mops up the bulk of its volume from its home turf, USA — reviving interest is a big boost to the promise of the Indian beer market.

The market is reporting a robust 10%-plus growth, and most global brewers are charting plans to foray into what is perhaps the last potentially big emerging beer market in the world.

Domestic beer sales are expected to cross 100m cases (of 7.8 litre each) in the current financial year, but per capita consumption still remains at 0.7 litre in an economically buoyant market with changing lifestyles.

In the mid-90s, A-B had negotiated for a joint venture with Shaw Wallace & Co in the wake of the nascent economic reforms, which induced the global brewers’ first bout of interest in the Indian market.

However, the erratic market growth and a heavily regulated industry meant most of the biggies, including A-B, pulled back. While the regulatory environment is yet to see any major improvement, the sustained economic buoyancy and consumption growth can no longer be ignored.

It is learnt that A-B will go for a marketing-led play initially as it sews up bottling arrangements with mid-sized brewers. It is not likely to go in for outright acquisitions or set up own greenfield projects in the beginning, even though the Centre has recently allowed FDI in breweries.

However, manufacturing investments leading to minority equity stakes in the bottling tie-ups are not being ruled out. In fact, A-B has followed a creeping acquisition strategy with regard to its brewing partners in China — Harbin and Tsingtao.

A-B’s revived interest in India is interesting, given its well-documented battles across the globe with the most aggressive rival, SABMiller. The latter, which is A-B’s primary rival in the US, already accounts for one-third of the domestic consumption after the complete takeover of Shaw Wallace Breweries last year.

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