As competition intensifies, UB attempts market expansion in premium segment

United Breweries account for about 50% of the segment which AB InBev follows at around 25%, while Carlsberg is the third largest company in the space with a share of around 18%

United Breweries (UB), the country's top beer manufacturer, has said that it is working to regain market share and set the fundamentals of the company right as the competition in the space intensifies, a report published in The Economic Times (ET) said. UB is making special efforts to gain a share in the premium market, the newspaper reported. As things stand, the company is facing challenges with the growing competition and state-specific regulatory issues.

Managing Director of UB, Vivek Gupta told ET that UB has an adequate capacity to innovate. However, the company also needs to work on its fundamentals and grow its business. He added, "We are humbled that we have a lot of ground to cover and put fundamentals in place."

Challenges faced by breweries

Most companies in the sector, including UB and Carlsberg struggled in the July quarter due to various factors. The companies have blamed supply-chain issues in addition to the state-specific regulations. For example, Telangana prohibited Sunday shifts in plants which led to capacity constraints, whereas inter-state sales were affected as import duties ate into the profits of these companies, the ET report added.

Besides Telangana, companies faced administrative supply-chain issues in Karnataka, which led to loss of market share for UB. However, the company has claimed that it is gradually gaining back the lost market share. UB is also lining up an investment of Rs 350 crore in the current financial year as a part of its capital expenditure.

The company has acquired permission from the Haryana government to export its product to Delhi and this could support the export of premium brands like Kingfisher Ultra, the ET report stated. United Breweries account for about 50 per cent of the segment, which is followed by Anheuser-Busch InBev (AB InBev) at around 25 per cent, while Carlsberg is the third largest company in the space with a share of around 18 per cent. Together, these companies control 90 per cent of India's beer market.