| Beer majors unite
Mumbai, Aug. 3: Friendship is brewing between the beer Big Daddies. United Breweries and Shaw Wallace, the feisty twosome who rarely spared each other an unkind word, are raising a toast to a new phase of co-operation that will see them fight common problems.
The rivals, with foreign partners Scottish & Newcastle and SAB Miller in tow, now control nearly 76 per cent of the Rs 5,160-crore Indian beer industry — the reason they traded accusations in the market and court-rooms.
“However, things are now changing and the players are turning professional,” says Ravi Jain, vice-chairman and managing director of McDowell Alcobev.
Shaw Wallace Breweries managing director Richard Rushton says leading players in the Indian beer industry are stepping up efforts to forge an alliance for “furthering the industry’s common cause”.
And causes there are many. Wracked by political interference, the industry is staring at a sales slide in Tamil Nadu, a state known for its beer-guzzling potential. “Beer is so sensitive to taxes, distribution systems and price bands. They are bleeding and so are we,” says Jain.
The entry of foreign companies, which have a reputation for transparency in the way they do business, as partners has prompted the foes to sheathe swords.
UB has a three-way joint venture with Scottish and Newcastle (S&) and Ravi Jain — McDowell AlcoBev — in the equity in the ratio of 40:40:20 respectively. The foreign partner has invested over Rs 250 crore in it.
Partner SAB Miller has picked up a 50 per cent stake — and management control — in a brewery venture with Shaw Wallace by pumping in around Rs 625 crore. Analysts say the sheer amount of money at stake has forced firms to find common ground with other players.
The efforts at burying the hatchet are being speared by the All India Brewers’ Association, the apex body of beer companies. Shaw Wallace Breweries says an independent study of regulations that could lead to a blueprint for a viable policing regime is already in the works. The alliance could even throw up an agreement on uniform size and shape of a beer bottle.