SABMiller feasibility study on barley contract farming soon

SABMiller India Ltd (SMIL), a subsidiary of the world's second largest brewing company SABMiller Plc, plans to conduct a study during the next three months to explore the feasibility of taking up contract farming of barley in the states of Andhra Pradesh, Haryana and Rajasthan.

SMIL director, corporate affairs and communication, Sundeep Kumar said the company would also be commissioning an independent study to quantify the multiplier effect of beer industry on the country's economy. As per the current estimates, for every job provided in a brewery, 30 jobs were created outside.

SABMiller, which acquired the brewing business of Shaw Wallace & Co in May this year, currently requires 15,000 tonne of barley ( 12,000 tonne of malt) for its ten breweries spread across nine states. It is currently sourcing this raw material from Haryana and Rajasthan.

"We will be identifying places in Andhra Pradesh, where barley can be grown," company's operations director for south, Ashok Dhingra said, adding that the demand for malt by the beer industry in the country was expected to rise ten-fold within a decade from the current level of 40,000 tonne year.

He said SMIL will invest Rs 250 crore in five years for upgrading its breweries. It has upgraded the Charminar Breweries in Andhra Pradesh, acquired from Shaw Wallace, at a cost of Rs 60 crore. The company has targeted to achieve a turnover of Rs 1,200 crore in the current fiscal as against Rs 1,000 crore last year.

With sales of 11.5 million cases in Andhra last year, SMIL accounts for 62 per cent of the beer market share in the state.

However, Dhingra said, SMIL's sales had declined by 7 per cent in the state during the peak months of April, May and June this year when compared to the corresponding period last year.

The decline was due to various reasons including a rise in excise duty and stoppage of beer sales by the company for a 40 days period.