Business Opportunities in India
Heineken partners with United Breweries, brings in APB India
Our Bureau
Date of posting: 12-12-09
      Heineken N.V., one of the largest brewers in the world, has just announced a new shareholders’ agreement with Dr. Vijay Mallya and United Breweries Limited (“UBL”) and agreed the key terms for the brewing and distribution of the Heineken brand in India. Heineken exspects that the new agreement creates a strong partnership that will drive growth in "one of the world’s fastest growing and most exciting beer markets", the company said in a release.

      As part of the new agreement, Heineken would acquire APB India and in a subsequent transaction intends to transfer this into UBL during 2010.

      The changes in India come along with changes in shareholding in other Asian markets. In that regards Heineken has also announced that it has strengthened and enlarged Asia Pacific Breweries Ltd (“APB”), its joint venture partnership with Fraser and Neave Ltd (“F&N”), through the transfer of Heineken’s controlling stakes in PT Multi Bintang Indonesia (“MBI”, 68,5%) and Grande Brasserie de Nouvelle-Calédonie S.A. (“GBNC”, 87,3%) to APB. "This will create a more profitable business and a stronger platform for growth in South East Asia and the Pacific Islands", Heineken comments that move.

      “In the world of beer, there is no bigger or more exciting growth opportunity than India. We have long regarded a strong Indian presence as important in order to increase our exposure to and growth from developing markets. We are therefore extremely proud to announce our partnership with UBL, the strong market leader. Our partnership and the combination of the Kingfisher and Heineken brands will transform our ability to unlock the market's considerable potential and to shape the premium segment. We are now uniquely positioned to benefit from the highly favourable demographics and strong economic fundamentals in the Indian market", Jean-François van Boxmeer, Chairman of Heineken’s Executive Board and CEO, commented the announcement.

      Commenting on the agreement, Vijay Mallya said that led by United Breweries and its flagship brand Kingfisher, the Indian beer market has been a strong and exciting growth over the last several years. "Given the young demographics of the country, I foresee many decades of strong and profitable growth to come", Mallya said. "Heineken is among the most respected and recognized names among beers all over the world. The combination should help United Breweries to further its leadership position in the years to come”.

      Heineken informed that the new shareholders’ agreement would give Heineken a strong role in the governance of the business. Under the terms of the new agreement, Heineken has the right to nominate three members of the UBL Board, including the executive position of Chief Financial Officer. In a UBL Board meeting in India on the day of the announcement (Dec. 7), Heineken nominee Mr Guido de Boer has been appointed Chief Financial Officer, and Messrs René Hooft Graafland (Member of Heineken N.V.’s Executive Board and Chief Financial Officer) and Siep Hiemstra (Regional President, Heineken Asia Pacific) have been appointed as non-executive directors.

      After the deal, which still has to be approved, Heineken and Dr. Vijay Mallya and his associates jointly would hold a majority interest of 75% in UBL, the number one brewer in India with a 48% market share. Heineken holds a 37.5% interest in UBL. Dr. Vijay Mallya and his associates also hold a 37.5% interest in UBL, with the remaining 25% held publicly.

      UBL’s flagship brand, Kingfisher, is the number one beer brand in India and available in more than 50 countries. UBL’s brands include Kingfisher Premium, Kingfisher Strong, UB Export Lager, London Pilsner and Kalyani Black Label.

      APB India is located in Aurangabad in Maharashtra. The brewery has a technical capacity of 300,000 hl/year and brews Cannon 10000, Tiger and Barons. APB Pearl is located in Andhra Pradesh. This brewery has a technical capacity of 160,000 hl/year and brews Cannon 10000 and Tiger.

      APB, whose brands include Tiger Beer, Heineken, Anchor and ABC Stout, operates breweries in 12 Asian countries and has export operations to more than 60 countries.

      According to Heineken, the Indian beer market is expected to grow to 14.4 million hectolitres in 2009. The beer market has historically been experiencing double-digit volume growth and is expected to continue a strong growth driven by the rapidly developing middle class, favourable demographics, strong economic fundamentals and a shift from other alcoholic beverages. Beer consumption per capita is currently estimated at 1.3 litres per annum.

      Through the cooperation with UBL, Heineken hopes to achieve a strong position to accelerate growth of the Heineken brand in the growing premium beer segment, which is currently estimated at 6% of the total beer market.


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