Mainstream beer will keep driving business: Shekhar Ramamurthy

Interview with Managing Director, United Breweries

Dutch beverage major Heineken is strengthening its ownership in United Breweries, the country’s largest beer maker. Shekhar Ramamurthy, a UB veteran of 26 years who took charge as managing director in July, says the management of the company, with Vijay Mallya as chairman, has not changed. Edited excerpts.

How is the strategy to sell premium brands working for UB?

Heineken or Ultra sales are small in our overall volume. We sell a lot of Kingfisher Strong and Kingfisher. The growing consuming class will feed growth in the regular beer category, and the prosperous are willing to spend on (higher priced brands). What will drive the business is mainstream beer.

How is growth this year?

Business was flat in the first half. Excise policies in many states have raised beer prices and there were was unseasonal summer rainfall in key consuming states. We are hopeful the second half will show five to six per cent growth.

Bihar has banned alcohol from next year. What will be the impact for you?

Beer is not consumed by poor people, so it can’t be abused. We must find a solution for illicit consumption and consumption of very cheap alcohol but allow wider availability of quality products. Kerala also has a partial ban and have curtailed hard liquor in retail shops but issued licences for beer and wine bars. This policy is socially and politically acceptable. Outright prohibition has not worked anywhere. Andhra Pradesh and Haryana tried it and had to withdraw.

How has the marketing expenditure been this year?

We are associated with IPL (the cricket league) for long and have sponsorship deals with many teams. We are very active in digital and social media. We have put together an interesting campaign with Sushant Singh Rajput.

How are exports doing?

We are leveraging our Heineken network. We have an organisation in the UK that sells and markets Kingfisher in Europe. It is produced by Heineken for us.

We sell through UB Holdings in Singapore and the Middle East. They are exploring the possibility of supplying draught beer in Bahrain and other countries there.

Are you looking at adding new breweries?

Our plant in Bihar opened this year. The brewery we bought in Rajasthan last year will be commissioned in December. It is a continuous process; we build new breweries and expand existing facilities to meet growing demand.

The Central Ground Water Authority has come up with notifications for heavy water users such as breweries. How is UB responding?

We have over the last decade been working on reducing our water consumption. Our consumption at 3.5 litres per litre of beer is among the lowest in the world. We have also started recharging water outside our breweries. Our objective in the next eight years is to put back as much water as we consume.