Premiumisation strategic priority, to launch brands from Heineken: UBL

Premiumization of the beer market is a “strategic priority” for United Breweries Ltd (UBL) and the company has plans to introduce brands from the global portfolio of Heineken, the Dutch multinational, which now owns a majority stake, said a top company official.

Besides, the company would continue to drive the mainstream portions through a category penetration share gain route, which contributes a larger chunk of the business.

Presently, the Indian beer market is “underpenetrated” and it has “immense” potential led by factors including a sizeable young population, growing prosperity and rising urbanisation, said UBL CEO and Managing Director Rishi Pardal.

“Other than beer penetration, our other strategic priority is premiumization of the market. Today the premium segment of the beer market is a small portion of the overall beer market.

“While we continue to drive the mainstream portions through a category penetration share gain route, we are also focused on how we can premiumize the portfolio in the long run,” Pardal told PTI.

Heineken, which owns a 61.5 per cent stake in UBL, sees India as a “significant market”, with an ambition to scale as one of the company’s top markets in the foreseeable future.

The company is seeing beer consumption back “in line with pre-pandemic levels”, he added.

Earlier this year, Heineken had acquired additional ordinary shares in UBL on June 23, taking its shareholding in the company from 46.5 per cent to 61.5 per cent.

When asked as to whether UBL has any plans to expand its portfolio by adding more brands from Heineken’s global portfolio to tap the growing Indian premium beer market, Pardal answered in the affirmative.

Pardal did not share information about the Heineken’s brands, that UBL is considering to introduce here, but noted that “some brands are under evaluation and we will launch each at the right time.”

“Our plans are starting with the consumer and understanding what their needs are and based on that where we think a significant gap in meeting the current demand is, we will not be shy of introducing brands from Heineken’s portfolio,” he said.

He further said that “this is a very good platform for us to reach and understand the consumer’s need and marry that with a huge portfolio of brands Heineken has worldwide.”

Meanwhile, Pardal also added that UBL’s Kingfisher as a brand and as a product has a large franchise in India and would like to continue to drive that as well.

“This is all about driving Kingfisher and complementing it with the portfolio from Heineken,” he added.

UBL may initially import the new foreign brands here but in the long-term, it would go for localised production through its network of breweries across the country, which is its “strength”, Pardal added.

Over expansion of UBL in the smaller tier III and below markets, Pardal said there are already 90,000 outlets that are sanctioned by various state governments.

“To us, the game is how do we expand the depth of consumption in outlets,” he said, adding “our conversation with the state governments is how to expand the outlet universe itself.”

In states such as Telangana and Rajasthan, more outlets are added and in Delhi, there is a radical policy change, wherein they have moved from a corporation plus a private shop market to a private model only.

“There are changes that are happening. Wherever there is an opportunity to have an outlet we will be present and our job is to make beer more aspirational and acceptable to people so that we can drive category penetration,” Pardal added.

Besides the domestic market, UBL also exports to several other markets.

“There are some markets, where a large number of Indian expats are living and crave for a taste of Kingfisher There we supply directly or have some licensing arrangements with Heineken. They can manufacture and service the market and we earn some royalty,” said Pardal, adding UBL has a number of models tapping foreign markets.

In FY 2020-21, UBL’s revenue was at Rs 10,183.40 crore.

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