AB-Inbev expansion on the Subcontinent
After Carlsberg established a presence in India, the world’s largest brewer, AB-InBev, is now also planning a new bottling plant there. The Belgian brewing giant wants to consolidate its presence in India, in order to reduce the taxes it pays, at least in the one state where it plans to open its new facility.
"We are looking to expand in India. In the short term, we are looking to set up a greenfield facility, which might come up in north India”, explained AB-InBev India’s CEO Kapil Agarwal. The company did not provide any details regarding the level of investment, the capacity of the plant or the time frame for commissioning the new facility. Until now, however, the company has maintained a very limited presence in the country, and its percent of market share is negligible. It is betting big on its future in India. Currently, the company operates two facilities in the south and west of the country (Hyderabad and Pune, each with a capacity of 50,000 hl). AB-InBev is considering the northern part of India for its new plant. Geographically, India is a large country, and therefore the company’s plans for building a facility in the north appears to be a wise decision. The new facility would bottle Budweiser, which is the top brand for the company in the country and is currently produced at the AB-InBev brewing facility in Hyderabad. Aside from Budweiser, it sells brands such as Hoegaarden, Stella Artois and Leffe in the Indian market. The number of brands sold by the company in India is miniscule, considering that AB-InBev has over 200 beer brands in its portfolio. Currently, AB-InBev bottles Budweiser and the brand Tennent in India and imports the rest.
As part of its strategy to capture the popular strong beer market in the country, it has recently launched Budweiser Magnum in the super premium beer category. Budweiser Magnum is a full-bodied, dark golden American-style lager beer, brewed using Budweiser's exclusive beech wood aging process. According to a company release: “The brand will first be rolled out in the four major metros – Mumbai, Delhi, Bangalore and Hyderabad, which together account for 25 percent of the beer market”. However, AB-InBev is keen to scale up the volume of its existing brands in the country, instead of launching other brands in its international profile.
The company, which began trading in India in 2007, has been experiencing double digit growth, selling 246 million cases annually in the Indian beer market. InBev entered the Indian market in 2007 through a joint venture with RJ Corp (the company bottles Pepsi in India). Anheuser Busch also took similar steps in the same year through a joint venture with Crown Beers. InBev India produced 1.9 million cases annually prior to the merger through two contract-brewing arrangements, at Regent Breweries in Madhya Pradesh and Dasappa and Sons in Bangalore. Subsequently, after InBev had already acquired Anheuser-Busch holdings worldwide in 2008, the conglomerate consolidated both of its Indian subsidiaries, creating AB-InBev India. However, this did not take place immediately but rather in 2010, a couple of years after the acquisition. Operating in 23 countries globally, AB-InBev garnered USD 39 billion in revenues in 2011.
