April 18 (Bloomberg) -- United Breweries Ltd., India’s largest brewer, expects sales of Heineken NV’s namesake brand to climb more than 50 percent in the country this fiscal year as it ramps up distribution of the pricier foreign beer.
Heineken is the fastest growing line in the company’s portfolio, Samar Singh Sheikhawat, United Breweries senior vice president of marketing, said in an April 16 interview. The Amsterdam-based company owns about 37 percent of United Breweries, which began distributing the European brand in 2011.
The brewer, based in Bangalore, is seeking to boost sales from the international label as demand for premium beers surges and global rivals from SABMiller Plc to Carlsberg A/S market new products to increasingly affluent young Indians. A quart of Heineken costs 170 rupees ($3.14) including taxes in Mumbai, about 70 percent more than United Breweries’ Kingfisher brand.
“Heineken is a small but useful business, and it is gaining traction,” Sachin Bobade, an analyst at Brics Securities Ltd. in Mumbai, said via phone. “European and American beers have a different taste and people in urban markets like that.”
The company doesn’t disclose its annual sales from the Heineken brand.
Shares of United Breweries rose as much as 1.4 percent to 766.9 rupees, before trading at 760.40 rupees at 10:13 a.m. Mumbai time. The S&P BSE Sensex rose 0.12 percent.
“The strategy for Heineken is to limit it to certain select markets”, Sheikhawat said. “We are in all five-star hotels, pubs, nightclubs, fine-dining restaurants, clubs, but not in small retail stores.”
United Breweries, which began as a supplier to British troops stationed in India, benefits from a wider distribution network than competitors in a beer market that London-based Euromonitor International projects will expand about 74 percent to 447.9 billion rupees in the five years to 2016.
As much as 83 percent of the beer sold in India’s beer industry is “strong,” with alcohol content of six to eight percent, according to Sheikhawat’s estimate. United Breweries gets most of its revenue from its flagship Kingfisher brand, under which it sells lines including Strong, Draught and milder variants such as Ultra.
A fourth of the company’s beer sales by volume comes from regional lines such as London Pilsner, Zingaro, and Bullet. The company only sells one mild beer under the Heineken brand, and all of it is brewed at its manufacturing plant in Mumbai. There are no plans to introduce any other Heineken variants, Sheikhawat said.
With Kingfisher and Heineken “we are present in every state at every price point,” Sheikhawat said. ‘At the back of all this growth is the very low per capita consumption in this country.’’ The Indian beer market is expanding about 15 percent annually, he said.
Heineken’s share of United Breweries’ profit increased by 20 percent due to higher pricing and lower bottle costs, according to the Amsterdam-based beermaker’s annual report.
United Breweries, owned partly by alcohol to airline tycoon Vijay Mallya, increased its share of the beer market to 57 percent in 2011 from 43 percent in 2006, according to Euromonitor.
Carlsberg, which entered India in 2007 and had a 4.4 percent share in 2011 has introduced stronger brews, including Carlsberg Elephant and Tuborg Strong. SABMiller’s offerings include Haywards 5000 and Fosters Strong.
United Breweries’ profit rose 75 percent to 342 million rupees in the second quarter ended September. That contrasts with Mallya’s money-losing Kingfisher Airlines Ltd. The carrier, which has defaulted on payments to creditors, aircraft lessors and airports, lost its license to fly from Jan. 1.
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