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  1. 1. Presentation on UB Group Presented By: Harshal Shah 91 Suprita Shetty 100 Geeta Singh 101 Madhuri Tambe 103 Amit Agarwal 112
  2. 2. PRESENTATION SUMMARY <ul><li>INTRODUCTION </li></ul><ul><li>ORGANISATION AND PRODUCTS </li></ul><ul><li>STRATEGIES </li></ul><ul><li>INDUSTRY AND MARKETS </li></ul><ul><li>STRATEGY AND COMPETITORS </li></ul><ul><li>ACHIEVEMENTS </li></ul>
  3. 3. Introduction <ul><li>The UB Group was founded by Scottish gentleman Thomas Leishman in 1915. </li></ul><ul><li>The group started manufacturing beer from south Indian based British breweries and elected its first Indian director, Mr. Vittal Mallya in 1947. </li></ul><ul><li>Kingfisher the most visible and modest brand made its entry in 1960. </li></ul>
  4. 4. Contd… <ul><li>During the 60’s they added Mc dowell as a subsidiary which helped them to extend its portfolio in to wine & spirits business. </li></ul><ul><li>Latter on Mr. Vittal Mallya ac quired UB Group and after his untimely death Mr. Vijay Mallya became the chairman of UB Group. </li></ul>
  5. 5. Mission & Vision <ul><li>We are focused on assuming leadership in all our target markets. </li></ul><ul><li>We seek to be the most preferred employer wherever we operate. </li></ul><ul><li>We recognize that our organization is built around people who are our most valuable asset. </li></ul><ul><li>We will always be the partner of choice for customers, suppliers and other creators of innovative concepts. </li></ul><ul><li>We will operate as a decentralized organization and allow each business to develop within our stated values. </li></ul><ul><li>We will be a major contributor to our National Economy and take full advantage of our strong resource base. </li></ul>
  6. 6. UB Group (India) <ul><li>The UB Group, is the market leader in both Spirits & Beer business in the country </li></ul><ul><li>The Group has a turnover of Rs 3700 crores </li></ul><ul><li>The core Beverage Alcohol business account for 80% of the group turnover </li></ul><ul><li>Other interests include Fertilizer, Engineering , Life Science, Infrastructure development & Media </li></ul><ul><li>The Group is professionally managed and is headed by Dr Vijay Mallya, the Group Chairman </li></ul><ul><li>The UB Group- An introduction </li></ul><ul><ul><li>Beer : </li></ul></ul><ul><ul><ul><li>48% market share nationally </li></ul></ul></ul><ul><ul><ul><li>Sold in over 52 countries </li></ul></ul></ul><ul><ul><ul><li>India’s 1 st global consumer brand - Kingfisher </li></ul></ul></ul><ul><ul><li>Spirits : </li></ul></ul><ul><ul><ul><li>54% market share in the domestic market </li></ul></ul></ul><ul><ul><ul><li>2 nd largest player in the world </li></ul></ul></ul><ul><ul><li>Both businesses poised for spectacular growth </li></ul></ul><ul><ul><ul><li>Compelling demographics </li></ul></ul></ul><ul><ul><ul><li>Rapid rise in disposable income </li></ul></ul></ul><ul><ul><ul><li>Changing lifestyle & spending pattern </li></ul></ul></ul><ul><ul><ul><li>Slow but sure dismantling of regulatory controls </li></ul></ul></ul><ul><li>India’s leading drinks group </li></ul>UB Group (India)
  7. 7. ALBV 2 <ul><li>Historically low profitability, but now changing as a consequence of de-regulation and industry consolidation. </li></ul><ul><li>Previously : </li></ul><ul><li>- Monopoly suppliers of key inputs (glass etc.) </li></ul><ul><li>- Multiple suppliers fighting for market share. </li></ul><ul><li>- Monopoly customers (State Govts. / State sponsored monopolies) </li></ul><ul><li>- Value chain skewed to retail due to oligopolic structure. </li></ul><ul><li>- Strict licensing meant few new outlets. </li></ul><ul><li>Now : </li></ul><ul><li>- Industry consolidation leading to redefining of relative </li></ul><ul><li>strength vis-à-vis Supplier & Customers. </li></ul><ul><li>- Mindless trade spends being curtailed as a consequence of consolidation. </li></ul><ul><li>- UB leading the dialogue with Govt to increase the retail universe. </li></ul><ul><li>- New packaging initiatives to reduce costs and curtail counterfeiting. </li></ul><ul><li>- Demographics, Higher disposable income & change in spending patterns favour growth of more profitable products. </li></ul>Evolution of the Alcohol Beverage Market
  8. 8. <ul><li>The Indian Market </li></ul><ul><li>The UB Group enjoys a unique advantage as the </li></ul><ul><li>Leader in both Spirits and Beer Segments </li></ul><ul><li>Re-distribution structure – </li></ul><ul><li>Government market (65%) –State government is the sole distributor </li></ul><ul><li>Auction market (16%) – State government auctions geographical territories which has led to monopolies / cartels </li></ul><ul><li>Free market (19%) – Through trade licenses </li></ul><ul><li>Bargaining power in the distribution network is commanded by players with premium brands, large volume base and product range </li></ul>UB Group (India)
  9. 9. Market Share Mar 07 Brand Market Share Mar 07 Indian Beer Market UBL 2
  10. 10. The Market for Beverage Alcohol <ul><li>These regulatory hurdles constitute an entry barrier to the industry </li></ul><ul><li>Regulatory environment : </li></ul><ul><ul><li>The Indian market is highly regulated, </li></ul></ul><ul><ul><li>highly restricted and highly taxed. </li></ul></ul><ul><ul><li>Licensing requirement exists for Raw material procurement, Stocking of raw material, Production, Inter-state movement, Retailing and Distribution. </li></ul></ul><ul><ul><li>Controls also exist on Brand entry, Advertising, Distribution & Pricing. </li></ul></ul>UB Group (India)
  11. 11. <ul><li>Regulatory environment : </li></ul><ul><ul><li>Regulatory hurdles constitute an entry barrier to the industry </li></ul></ul><ul><ul><li>The alcohol distribution structure is 65% State government controlled </li></ul></ul><ul><ul><li>UB Group with its premium brands, large volume base and product range has better bargaining power with the distribution network </li></ul></ul><ul><ul><li>Market Category and Consumption : </li></ul></ul><ul><ul><li>Whisky constitutes 54%, followed by Rum at 27% </li></ul></ul><ul><ul><li>Youngsters seeking western life styles typically begin by drinking beer and move upto spirits. The brand positioning of UB Spirit Brands are designed to attract these upwardly mobile and aspirational consumers. </li></ul></ul>ALBV 1
  12. 12. UB Group- One of India’s leading wealth creators <ul><li>Market Cap : </li></ul><ul><li>Market cap has grown 10 times in last 5 years </li></ul><ul><li>Some of the large funds who have invested in McDowell </li></ul><ul><li>and United Breweries include- </li></ul>McDowell & Company Ltd Sloane Robinson LLP Goldman Sachs (Mauritius) Merril Lynch Capital Mkts DB Funds (Mauritius) FID Funds (Mauritius) Platinum Asset Mgnt United Breweries Ltd Oppenheimer Fund Inc Citigroup Global Mkts Goldman Sachs (Mauritius) FID Funds (Mauritius) Arisaig Partner (Asia) Pte HSBC Financial Services (ME
  13. 13. Group Holding Structure (UB City Project) Investments Real Estate Spirits Business United Spirits Shaw Wallace Ltd Beer Business United Breweries Millenium Alcobev Aviation Others Kingfisher Airlines Ltd. Aventis Pharma Mangalore Chemicals & Fertilizers UB Engineering UB (Holdings) Ltd. (36.54%) (37.50%) (50%) (100%) (10.28%) (30.44%) (34.74%) (55%) ( Erstwhile McDowell & Co Ltd) (75%)
  14. 14. UB GROUP A Group in the process of Transformation FY 1990 FY 2007
  15. 15. UB Group Unique Leadership in both Beer and Spirits <ul><ul><li>Spirits : </li></ul></ul><ul><ul><ul><li>Controls about half the domestic market - 60% in first line brands </li></ul></ul></ul><ul><ul><ul><li>3rd largest player in the world </li></ul></ul></ul><ul><ul><ul><li>Has 5 brands which are in the Top 50 Spirits Brands World wide list of Impact International. </li></ul></ul></ul><ul><ul><li>Beer : </li></ul></ul><ul><ul><ul><li>50% market share nationally </li></ul></ul></ul><ul><ul><ul><li>Sold in over 52 countries </li></ul></ul></ul><ul><ul><ul><li>India’s 1 st global consumer brand </li></ul></ul></ul><ul><ul><ul><li>Kingfisher. </li></ul></ul></ul>Both Beer and Spirits share a common distribution channel
  16. 16. The UB Group’s competitive advantage <ul><li>Strongest brands </li></ul><ul><li>Significant upgradation </li></ul><ul><li>Least vulnerable to policy volatility due to large spread </li></ul>Branding Local Sourcing Value Chain ownership Segment-Market Presence Manufacturing Technology Beverage Business <ul><li>Optimal, as almost completely locally sourced </li></ul><ul><li>Largest manufacturing base </li></ul><ul><li>Maximum capacity utilisation </li></ul><ul><li>Initiatives planned for integration into retailing </li></ul>Management Team <ul><li>Professionally managed </li></ul><ul><li>Seasoned professionals with significant industry experience </li></ul>
  17. 17. COMPANY SWOT ANALYSIS Strengths Threats Weaknesses Opportunities Market Leader Strong Brand Image Global Presence Aggressive Advertising Quality & Innovation Long Development Cycles Relatively Static Market Growth Expensive Brand Maintenance Demographic Changes Changing Societal Attitudes Consumer Brand Preference Demand for High Quality New Competitors Cloning of Successful brands Increasing Buyer Power Growth in Substitutes Economic Downturn
  18. 18. PORTER’S FIVE FORCES MODEL Industry Competitors Strong image, Brand Loyalty, and Innovative R&D. Potential Entrants Barrier to entry - customer loyalty, high set-up costs. Buyers Retailers power increasing. Substitutes Other emerging brands Suppliers Global economies of scale keep suppliers prices low. Source: Porter, 1978
  19. 19. PRODUCT MARKET PORTFOLIO RMS MARKET GROWTH (%) 1.0 <ul><li>Breweries </li></ul><ul><li>Airlines </li></ul>15% 10% 18% 1.5 0.6
  20. 20. Medium Term Business Strategy STG 1
  21. 21. UB – A Company in transition <ul><li>From </li></ul><ul><li>Multiple legal entities </li></ul><ul><li>Primarily volume focus </li></ul><ul><li>Growth driven by market share across segments </li></ul><ul><li>“ Spirits” player </li></ul><ul><li>Focus on India </li></ul><ul><li>Focus on annual performance </li></ul><ul><li>To </li></ul><ul><li>One legal entity </li></ul><ul><li>Primarily top-line and profitability focus </li></ul><ul><li>Growth driven by increased “premium-ness” of the portfolio </li></ul><ul><li>Spirits and wine player </li></ul><ul><li>Global ambitions – pragmatically calibrated </li></ul><ul><li>In addition to annual performance, accountability for 3 year strategic plan </li></ul>STG 2
  22. 22. Strategic direction - focus on significantly increasing profitability <ul><li>Strategic Themes </li></ul><ul><li>Increase profitability to bring UB in line with other FMCG companies in India. </li></ul><ul><li>Focus on increasing market share in premium segments and on managing market share for profitability in other segments. </li></ul><ul><li>Enhance focus on brand building, formalising innovation processes. </li></ul><ul><li>Metrics & Objectives </li></ul><ul><li>Value growth to lead volume growth. </li></ul><ul><li>Enhance MS in scotch and premium whisky segments – 25% in scotch by 2008-09. </li></ul><ul><li>Maintain MS in regular categories. </li></ul><ul><li>Develop and implement product innovation agenda. </li></ul><ul><li>Leverage scale with trade. </li></ul>STG 3
  23. 23. <ul><li>Strategic Themes </li></ul><ul><li>To Increase exports </li></ul><ul><li>Enter wines segment </li></ul><ul><li>Align performance metrics with the strategic plan </li></ul><ul><li>Metrics & Objectives </li></ul><ul><li>Indian whisky to be exported in bulk to African countries for packaging in sachets </li></ul><ul><li>To build 3 large multi sub-strate plants, enabling manufacture and export of grain based whisky to USA and Europe </li></ul><ul><li>Development of Existing Brands </li></ul><ul><li>Acquisition of International brands and Viticulture technology – Bouvet Ladubay </li></ul><ul><li>Enhance existing winery facility at Baramati </li></ul><ul><li>Bottling bulk imported wine as well as domestic wine </li></ul><ul><li>Introduce balanced scorecard to assess performance </li></ul><ul><li>Revise incentive system to include a long term component, in addition to short term incentive </li></ul>STG 4 Strategic direction - focus on significantly increasing profitability
  24. 24. New Product Initiatives USL 15 To achieve the national roll out of McDowells’ Diet Mate whisky (using a proprietary and US patented technology from the Group Research Foundation – VMSRF)
  25. 25. New Product Initiatives USL 16 - Launching the unique diet vodka (using proprietary and US patented technology from the Group Research Foundation - VMSRF) in export markets
  26. 26. New Marketing Initiatives USL 17 - To pursue the launch of existing products in innovative packaging variants (tetra packs, pre-formed sachets, etc) and there by reduce the packaging cost as well as the price point to consumers in addition to the convenience of the pack itself . 180 ml Tetra Pack Pre-formed Sachets
  27. 27. <ul><li>Acquisition of Shaw Wallace </li></ul><ul><li>Shaw Wallace was the 2 nd largest player in spirits in India (MS - 15%). </li></ul><ul><li>UB Group acquired ~ 55% stake for a consideration of Rs.13,000 mio in July 2005 </li></ul><ul><li>Stakes increased to 75% through open offer. </li></ul><ul><li>Valuation underpinned by growth prospects and synergies arising from combined MS. </li></ul><ul><li>Vision to bring all Spirits business together and create “United Spirits” </li></ul><ul><li>Combined business would be amongst top 50 private sector companies in India. </li></ul>UB Group (India) <ul><li>Combined brand portfolio gives leadership in ALL flavors, geographies and price points </li></ul>
  28. 28. - Acquisition of Bouvet Ladubay ACQ 1 <ul><li>Part of Taittinger Group , Bouvet Ladubay has been </li></ul><ul><li>repurchased from Credit Agricole Du Nord . </li></ul><ul><li>Largest producer of sparkling wine in Saumur </li></ul><ul><li>region. </li></ul>
  29. 29. ACHIEVEMENTS <ul><li>The largest selling Beer in India. Commands a 29% market share in the country. 6 bottles of Kingfisher are sold every second in India. Available in 52 countries across the globe. </li></ul><ul><li>Won the World's best Lite Lager Award at the Stockholm Beer Festival in 1994 & 1995 </li></ul><ul><li>Won the Gold medal at the World Beer Championship held in Chicago in 1997. </li></ul><ul><li>Won the first prize for the label work category at the Asian Grand Prix Cyrel 2000 Label award. </li></ul><ul><li>First Prize in the International Beer Awards organized by the New Zealand Hop Marketing Board. </li></ul><ul><li>Won the Bronze award at the 'Australian International Beer Awards' in the &quot;International Packaged Beer Section for the year 2000.&quot; </li></ul>
  30. 30. <ul><ul><li>Thank You </li></ul></ul>