SABMiller needs to double capacity over the next five years

India currently has 18.5 million hl brewing capacity. Even assuming modest deregulation, capacity will need to double every four to five years, says SABMiller.

At its recent Africa and Asia Seminar, the world’s number two brewer forecasted that India’s middle class is to double from 90 million people to 183 million people by 2013, thus underpinning the opportunity for premiumisation of the market. At the moment, says SABMiller, beer only accounts for 5 percent of the total alcohol consumed in India, cheap local spirits accounting for most. But beer is gradually becoming an acceptable form of alcohol and the tipple of choice among the younger consumers. Half the Indian population is younger than 25 years, ready and willing to experiment with new products and to embrace new habits.

Also women have learnt to enjoy a beer, which means that consumption growth will require SABMiller to invest some USD 500 million within the next five years to retain its share of the growing market. Ultimately, SABMiller will have to migrate from its acquired breweries towards a smaller number of bigger, more efficient, strategically located and easily expandable breweries.

In the year ending September 2007, the Indian beer market stood at 11.7 million hl. The bulk of the market was strong beers (7.8 million hl), followed by mild beers (3 million hl), premium beers (294,000 hl) and economy beers (643,000 hl). The market grew 22 percent compared to the previous year. Premium beers at 30 percent experienced the highest growth rate. SABMiller at 22.2 percent outgrew the market, yet lagged behind in the premium segment. Here SABMiller’s brand Foster’s only grew 26 percent. However, SABMiller claims to control 97 percent of the Indian premium beer market. SABMiller’s total market share is 34.4 percent.