India: SABMiller is getting closer to buy India's Mohan Meakins beer business

SABMiller, the world's second-largest brewer, is close to acquiring the beer business of India's oldest beer & spirit company Mohan Meakins. The latter has in its portfolio the Golden Eagle brand that sells nearly 9 million cases of the 107 million cases in the Indian beer market, sources cited October 26 The Economic Times.

Both companies have been in negotiations for the past few months, and a senior official from SABMiller - a specialist in acquisition and mergers - was in India to finalise the deal. Kapil Mohan, the patriarch of Mohan Meakins family told ET that the issue of the South African company taking a stake in the company will be clear within a week.

He said the stake may be around 49% to 51%. He, however, declined to discuss the valuation of his beer business. If the deal materialises, SABMiller will be close in on UB's position as the leading beer major in India. SABMiller already has 37% of the beer market through the Shaw Wallace brands it acquired.

With Mohan Meakins' 8% share, it will have about 45% of the market, just a whisker short of the UB group's 47% share as the market leader. In this scenario, SABMiller will be a major threat to UB's pole position in the Indian beer market. SABMiller has the advantage of deep pockets.

Mr Mallya's strength lies in his knowledge of the local market and even his detractors admit that no one feels the pulse of Indian beer and spirit market better than this beer baron from Bangalore. Mr Mallya has initiated the launch of new beer brands under the umbrella of Kingfisher Ultra, which he thinks will checkmate the overseas beer major.

The question of a threat to the No 1 position of UB first came to the fore when Foster's Indian business, including its state-of-the-art brewery, was acquired a couple of months ago by SABMiller.

The Australia-based Foster's - though its market share is about only 2% - is a visible and respected brand in the Indian market and hence, its acquisition was a morale booster for SABMiller's India foray. But the acquisition of Mohan Meakins' beer business will turn the game from a war of perceptions to real numbers and industry-watchers already see a beer war brewing between the two entities.

Mr Mallya told ET: “Yes, I am aware that they are close to finalising the deal.” On an earlier occasion, he had told ET that Mohan Meakins' market share could not be more than 5% and even if SABMiller acquires Mohan Meakins, UB's leadership position was not threatened.

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