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| Heineken inks beer alliance with UB |
| BS Reporter / Bangalore Dec 07, 2009, 12:25 IST |
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United Breweries Holdings (UBL) has forged an alliance with Heineken to distribute the Heineken brand in India. The partnership in India is expected to drive growth in one of the world's fastest growing beer markets. As part of the agreement, Heineken will acquire Asia Pacific Breweries (APB) India -- Asia Pacific Breweries (Aurangabad) and Asia Pacific Breweries-Pearl -- for Euro 25 million (Rs 174 crore). Following completion of this transaction in the first quarter of 2010, Heineken intends to transfer these businesses into UBL during 2010. APB is a joint venture partnership between Heineken and Fraser and Neave.
Heineken will also merge its interest in Millennium Alcobev Private (MAPL) into UBL. Heineken holds 50 per cent equity in MAPL with the other 50 per cent held by UBL. This was the joint venture through which Scottish & Newcastle first invested in India and has been managed as part of the UBL's business following the direct investment in UBL by Scottish & Newcastle in 2004.
Under the new agreement, Heineken will be active in India solely through UBHL. The alliance will offer customers a portfolio of national and international brands, including Kingfisher and Heineken beers. Both companies have also agreed upon the key commercial terms to produce the Heineken brand in India. UBHL will simultaneously work with Heineken to expand the international presence of the Kingfisher brand via Heineken's global presence.
Following a UBL Board meeting in on Monday, Heineken nominee Guido de Boer was appointed chief financial officer. René Hooft Graafland, a member of Heineken's executive board and CFO, and Siep Hiemstra, regional president, Heineken Asia Pacific, were appointed as non-executive directors.
Vijay Mallya of United Breweries said in a statement that the agreement with Heineken would help United Breweries further its leadership position in the Indian market in the years to come. The Indian beer market is expected to grow to 14.4 million hectolitres in 2009. Beer consumption per capita is currently estimated at 1.3 litres per annum.
Jean-François van Boxmeer, chairman of Heineken's executive board and CEO said in a statement that a strong Indian presence is important to the company in order to increase its exposure to and growth from developing markets. "Our partnership with United Breweries and the combination of Kingfisher and Heineken brands will transform our ability to unlock the market's considerable potential and shape the premium segment. We are now uniquely positioned to benefit from the highly favourable demographics and strong economic fundamentals in the Indian market."
Heineken also announced that it has transferred its controlling interest in PT Multi Bintang Indonesia and Grande Brasserie de Nouvelle-Caledonie S.A to create a more profitable business and stronger platform for growth in South East Asia and the Pacific Islands. "The integration of our Indonesian and New Caledonian businesses with our joint venture Asia Pacific Breweries, considerably strengthens our platform for growth and our leadership position in South East Asia and the Pacific."
Heineken remains Asia's number one international premium beer, with 25 per cent market share in the Asia-Pacific international premium beer segment. APB's portfolio of brands includes Tiger Beer, Heineken, Anchor and ABC Stout. It operates breweries in 12 Asian countries and exports to more than 60 countries
UBL reported volumes of 6.4 million hectolitres in 2008-09, which is a volume growth of 9 per cent that accelerated to a 16 per cent volume growth in the half year ending September 2009 against an industry growth of 8 per cent -- a market share increase of 3 per cent.
Heineken and Vijay Mallya and his associates jointly hold majority interest of 75 per cent in UBL, the number one brewer in India with 48 per cent market share. Heineken holds 37.5 per cent interest in UBL. Mallya and associates also hold 37.5 per cent interest in UBL, with the remaining 25 per cent held publicly.
Based on local GAAP, the company reported net revenue for the accounting year ended March 2009 of Euro 302 million (Rs 2,105 crore), earnings before taxes of Euro 27 million (Rs 188 crore) and net profit of Euro 7 million (Rs 49 crore).
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