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  1. 1. IntroductionIt is the conceptual structure within which the research is conducted. It constitutes theblue print for the collection, measurement and analysis of data. The design includesan outline of what the researcher will do from writing the hypothesis and itsoperational implication to the final analysis of data. It constitutes the steps takenbeginning with the collection of data, classifying, analyzing and interpretation,processing and finally putting in textual form. This is one important chapter of projectand can be considered as skeletal of project.Objective of the study: To understand the importance of promotional and market analysis. To study how the growth is maintained over the years by the company. To study the various aspect relating to the marketing of UB products. To study the influencing factor for the retailer to sell a particular breweries.Scope of the study:The scope of the study is limited to marketing activity of United Breweries inmundkur and kinnigoli. It will give an in depth theoretical and practical knowledgeabout the marketing aspects. This study also covers ratio analysis, of the balance sheetof the united breweries and also analyses the marketing activity of the unitedbreweries. The study offers an insight into the cell breweries industry.Methodology and limitation:Methodology of Data CollectionThe data collection is done using both primary and secondary sources.The primary sources used are Discussions with the dealers Questionnaire was prepared for survey 1
  2. 2. The secondary sources includesArticles on websites, research reports, the reports from variousLimitation of the study Visiting official website of the company and other related websites. Referring to newspapers and various business magazines.There are some factors which, if present would have resulted in a more detailed study.Still proper measures are taken in maintaining the quality of the study. Thoselimitations are- The study is limited to the marketing activities of UB only in mundkur and kinnigoli. The data recorded was presumed to be authentic The study is designed in such a way that proper research is done in the selected area within the given time. 2
  3. 3. Industry OverviewGlobally, over 133 billion litres of beer is sold each year. In comparison, the Indianbeer Industry contributes a meagre 1.28% of the global sales. The industry has beenwitnessing on an average, a steady growth of about 10% per year over the last tenyears with volumes crossing 172 million cases in 2008-2009 from 70 million cases in2002. With a relatively younger population and income levels on the rise, India isseeing an increase in the popularity of beer.Consumption of beer in India is also constrained by lack of adequate marketinfrastructure. In China for instance, there is one outlet for every 300 persons. Incontrast, India has one outlet for every 21,000 persons hampering free availability ofbeer. Total consumption of beer in China grew by 33.56% between the years 2000and 2006 to reach a total market volume of 30.47 billion litres. With a per capita11consumption of 22 litres, China is one of the largest beer consuming nations in theworld.Though beer is a milder form of alcohol, it is taxed by most states on the same basisas Spirits. The charge is on absolute alcohol basis. Globally on a per unit of alcoholbasis, beer bears approximately 50% of levies imposed on Spirits whereas in Indiataxation is regressive on beer.India is predominantly a hard liquor market and beer has a minority preferenceamongst those who consume alcohol. The per capita consumption of beer constitutesa meagre 3% of global average. Typically the size of beer volumes in most countriesis 7 to 10 times larger than spirits, whereas in India, spirits is larger.The alcoholic beverage industry in India operates under a very complex regulatoryenvironment, which is the biggest challenge. In addition to restrictions on advertising,distribution infrastructure and retailing, varied tax structures, controlled pricing andlicensing make operations more complex, consequently leading to higher costs,though providing entry barriers for new entrants as well.The Indian beer market is dominated by strong beer, which accounts for 74% of thetotal beer sale.The market for alcoholic beverages has been growing consistently. The Future ofWine, a report on the state of the wine industry over 50 years, suggests that themarket for wine in India was growing at over 25 per cent per year 3
  4. 4. Company ProfileUnited Breweries (UNITEDBREW), incorporated on May 13, 1999, is engaged inmanufacture, purchase and sale of beer including licensing of brands whichconstitutes a single business segment. Earlier known as UB Beer, it got its presentname on Aug. 7, 2002. The company forms the beer division of the UB group, adiverse company with business interests in beverage alcohol, aviation, fertilizers,international trading and infrastructure. Aventis Pharma, Herbertsons, MangaloreChemicals & Fertilizers, UB Engineering, United Breweries (Holdings), MangaloreBreweries and Distilleries, United Racing & Bloodstock Breeders, and UB ElectronicInstruments are some of the other group companies.The company offers leading brands such as Kingfisher, UB Export, London Pilsner,Premium Ice and Kalyani Black Label. Innovation with the introduction of 5-literkegs of Kingfisher draught beer and a four-pack of London Pilsner has already gainedthe company a domestic market share of over 50%. With 11 own and more than 15contract manufacturing facilities, the company has no capacity constraints forincreasing production. A joint venture company Millennium Alcobev (MABL) withScottish & Newcastle Plc. (S&N) having manufacturing locations in critical markets,the company has increased capacity considerably. In August 2007, the UB groupplanned to pump in INR 12 billion in capacity expansion of its breweries across thecountry, which will consist of setting up Greenfield projects in Andhra Pradesh, UttarPradesh, Madhya Pradesh and Tamil Nadu. After expansion, the group`s beermanufacturing capacity will increase to 130 million cases from the current 100million by 2010.Subsidiaries Associated Breweries & Distilleries Limited (ABDL) Maltex Malsters Limited (MML)Associate: United East Bengal Football Team Private Limited (UEBFTPL) 4
  5. 5. Joint Venture: Millennium Alcobev Private Limited (MAPL) Subsidiaries of the Joint Venture: Empee Breweries Limited (EBL) United Millennium Breweries Limited (UMBL)  Millennium Beer Industries Limited (MBIL)The company‟s leading brands Kingfisher UB Export London Pilsner Premium Ice Kalyani Black LabelBusiness Strategy:UBL has a manufacturing network of 22 breweries across India. The company enjoysa market share of 48% in the industry and plans to expand its share further. KingfisherStrong is the single largest selling beer brand in India, while Kingfisher Premiumcontinued to outperform in its category.UBL plans to set-up two new green fieldbreweries at Mallepally in Andhra Pradesh and Nanjangud in Karnataka in order tosupport the revenue growth. UB Group firm United Breweries Ltd today said it isplanning to locally produce Dutch beer brand Heineken by next fiscal besideslaunching a refurbished Tiger brand in India this yearThe group Mission Statement embodies these objectives: To be the recognized leader in our target markets. To be the preferred employer wherever we operate. To recognize the value of our human assets. To be the partner of choice for customers, suppliers, and other creators of innovative concepts. 5
  6. 6. Board Of DirectorsDr. Vijay Mallya - chairmanDr. Vijay Mallya, a well known industrialist, is the Chairman of the United BreweriesGroup. The Group today has an annual turnover of U.S. $ 1.2 billion.Mr. Ravi Nedungadi – DirectorMr. A.K. Ravi Nedungadi is a Chartered Accountant and a Cost Accountant. Havingqualified in 1978, he started his career at Macneill & Magor Ltd.,Mr. Chugh Yoginder Pal - DirectorMr. Pal completed his Graduation in Engineering with First Class (Distinction) in1958. He then started his career at TELCO & was trained in Industrial Engineering,Mr. Sunil Kumar Alagh - DirectorMr. Sunil Kumar Alagh is a graduate in Economics (Hons.) and MBA from IIM,Calcutta in the year 1968. He worked with ITC Limited, Jagatjit Industries LimitedMr. Chhagan Lal Jain - DirectorMr. Jain has more than 40 years of work experience with various organizationsincluding ICI, Hindustan Lever Limited, Hoechst India Limited, etc.Mr. Rene Hooft Graafland - DirectorRene Hooft Graafland studied Business Administration at the Erasmus University inRotterdam and finished the Post-Graduate study for Chartered Accountancy.Ms. Kiran Mazumdar Shaw - DirectorAs Chairperson and Mission Leader of CIIs National Task Force – Biotechnology,she has led several delegations to USA, Canada, etc., to propel India 6
  7. 7. Mr. Madhav Bhatkuly – DirectorMr. Madhav Bhatkuly is a recipient of the Foreign and Commonwealth Scholarshipfrom the British Government. Mr Bhatkuly was a country partner of Arisaig PartnersMr. Siep Hiemstra - DirectorMr. Siep Hiemstra joined Heineken in 1978. The first six years, he worked withGedistilleerd en Wijngroep Netherlands. He started various commercialExecutive DirectorsMr. Kalyan Ganguly- Managing DirectorMr. Ganguly is an Alumni of Harvard Business School, having done his AdvanceManagement Programme.Mr. Guido De Boer - Director, CFOMr. Guido De Boer completed M Sc. in Economics & Business from ErasmusUniversity, Rotterdam. He has completed various Executive DevelopmentProgrammes.Awards 1. Won the Bronze Award at the Australian International Beer Awards in the "International Packaged Beer Section for the year 2000." 2. First Prize in the International Beer Awards organised by the New Zealand Hop Marketing Board. 3. First Prize for the label work category at the Asian Grand Prix Cyrel 2000 Label award. 4. Gold Medal at the World Beer Championship held in Chicago in 1997 5. Worlds Best Lite Lager Award at the Stockholm Beer Festival in 1995. 6. Worlds Best Lite Lager Award at the Stockholm Beer Festival in 1994. 7
  8. 8. HistoryThe UB Group was founded by a Scotsman, Thomas Leishman, in 1857. The Grouptook initial lesson from manufacturing beer from SouthIndian based British breweries.At the age of 22, Vittal Mallya was elected as the companys first Indian director in1947. After a year, he replaced R G N Price as the chairman of the company.United Breweries made its initial impact by manufacturing bulk beer for the Britishtroops, which was transported in huge barrels or "Hogsheads". Kingfisher, the groupsmost visible and profitable brand, made a modest entry in the sixties. During the1950s and 60s, the company expanded greatly by acquiring other breweries. First wasthe addition of McDowell as one of the Group subsidiaries, a move which helpedUnited Breweries to extend its portfolio to wines and spirits business. Strategically,the Group moved into agro-based industries and medicines when Mallyaacquired Kissan Products and formed a long-term relationship with HoechstAG of Germany to create the Indian pharmaceutical company now known as AventisPharma, the Indian subsidiary of the global pharma major Sanofi-Aventis.The Pegasus, which is the symbol of the United Breweries, first found its place as theGroup logo in 1940. Then, the Helladic horse – associated with beer and nectar inGreek mythology – carried a beer cask between the wings, ostensibly because beerformed the core operations of the Group. Later, the beer cask was removed torepresent the Groups multifaceted operations. Now, it is just the horse.Present historySales of United Spirits Ltd products are expected to exceed 60 million cases duringthe fiscal year 2005–06, making the Group the third-largest manufacturerof spirits products in the world only after Diageo PLC and Pernod Ricard. In addition,USL is one of only three in the world to own seven millionaire brands and at least fivebrands rated by Drinks International, UK, to be amongst the ten fastest growingbrands in the world in their respective categories. The market share of the SpiritsDivision in India is currently 60% and exports to the Middle East, Africa and Asiancountries are growing rapidly. 8
  9. 9. The UB Groups brewing entity – called United Breweries Limited (UBL) - has alsoassumed undisputed market leadership with a national market share in excess of 50%.Through a process of aggressive acquisition and market penetration, The UB Grouptoday controls 60% of the total manufacturing capacity for beer in India. The flagshipbrand, Kingfisher, is now sold in over 52 countries worldwide, having received manyaccolades for its quality.With plans to become a global player, United Spirits Ltd. (USL), the flagship of theUB group, purchased the Scottish distiller Whyte and Mackay in May 2007 for £595million (Rs. 4,800 crore).This would bring the brands of W&M like The Dalmore,Isle of Jura, Glayva, Fettercairn, Vladivar Vodka, and Whyte & Mackay Scotch underits portfolio.The UB group is also into manufacture of fertilizers. The group company MangaloreChemicals and Fertilizers has a factory at Panambur in Dakshina Kannada district ofKarnataka.UB Engineering Limited is the groups engineering business arm. It undertakes EPCProjects, Infrastructure, on-site fabrication of structures, installation, testing andCommissioning of Electrical and Mechanical Equipments, Piping etc. for largeindustrial projects such as Power, Refineries, Steel, Cement, Fertilizer, Petrochemicaland Desalination Projects. The company was initially established as Western IndiaErectors in 1963 and came under the UB Group in 1988.The group entrance to the IT sector had also been marked by the formation of UBICS,Inc. The company provides IT consulting, Bodyshopping services and professional ITproducts to business companies.Market OverviewIndian beer market is valued at INR 35 billion with volume sales of 172 million casesfor FY 2008-09 and at the current trend the market is expected to grow at an annualrate of 17.2% till 2011. Foreign brewers are eyeing the Indian beer market which islargely untapped and has huge growth potential. International beer companies have agood enough reason to tap markets like India. That their main markets, North 9
  10. 10. America and Europe, are either flat or in a state of decline is no secret. Carlsberg, forinstance, said it could look at closing select European breweries due to a slump indemand.In contrast, beer is flying off the shelves in India. A recent report by global beverageconsultants Canadean states that consumption of beer in BRIC countries (BrazilRussia, India and China) increased by almost 50 per cent during 2002-2007. In India,beer sales grew at nearly 90 per cent, compared to a less than 60 per cent growth forother alcoholic drinks. Industry sources estimate that the Indian beer market isexpected to nearly double to 23.3 million hectoliters by 2012 from 12.5 millionhectoliters at present.But the market is difficult to break into. The two players, UB and SAB Miller, controlmore than 80 per cent of the market. While UB with brands like Kingfisher, Zingaroand Kalyani Black has a 48 per cent market share, SABs bouquet of acquired brands-- Haywards, Royal Challenge, Knock Out and Fosters deliver a combined marketshare of 37 percent.(See exhibit 6 for Market share)In the last 9 years beer consumption has been growing rapidly at a CAGR of 7%Looking from the industry perspective, the Indian beer industry has been witnessingsteady growth of 10% per year over the last ten years. With the average age of thepopulation on the decrease and income levels on the increase, the popularity of beer inthe country continues to rise. 10
  11. 11. CompetitorsCurrently more than 80% of the market is controlled by two major players UnitedBreweries Limited (48%) and SABMiller India (35%).Strong beer is predicted togrow faster as it is perceived to offer value for money alternative to spirits. WithInBev acquiring Anheuser-Busch, it has potential to emerge as the third major playerin the Indian beer market. The future of beer market in India looks positive with theentry of many international players. Beer sales will increase along with increasingnumber of brands and sub-categories in India. Existing players like UBL andSabmiller are planning to expand their range of products.New players like Abinbev,Carlsberg are bringing their internationally renowned brands to India.SabmillerSabmiller India is a subsidiary of SABMiller PLC registered in India as SKOLBreweries Limited. For FY 2007-08 the company reported a net turnover of INR10860 million and profit after tax of INR 344 million.Brands: Haywards 5000 Haywards 2000 Haywards Black Foster‟s Indus Pride Peroni Royal Challenge Knock OutNote on Foster’s:Fosters Lager is a uniquely international beer, brewed with the finest sun-driedmalted barley, the purest water, and Fosters own specially bred Pride of Ringwoodhops imported directly from Australia to give the beer an authentic flavour. Its crisp,clean flavor won it immediate international acclaim when it was first brewed inMelbourne in 1888. Today, more than one hundred years later, it is still recognized asone of the worlds best beers. Fosters Lager is a uniquely international beer, brewed 11
  12. 12. with the finest sun-dried malted barley, the purest water, and Fosters own speciallybred Pride of Ringwood hops imported directly from Australia to give the beer anauthentic flavour. Its crisp, clean flavour won it immediate international acclaim whenit was first brewed in Melbourne in 1888. Today, more than one hundred years later,it is still recognized as one of the worlds best beers.Business Strategy:SABMiller has 10 breweries located strategically across India to serve the beermarkets efficiently. The company has a market share of 35% and stands in the secondposition. The company has invested about INR 1250 mn in the past two years forupgrading the breweries to global standards. Sabmiller has leveraged its globalexpertise in packaging, pricing, occasion and product gaps were improved based onconsumer insights.Also it plans to bring the iconic Dutch premium beer Grolsch toIndia. Sabmiller Plc has acquired the brand for USD 1.2 billion in 2007.Other PlayersInbev IndiaBrands: Tennents Super, Beck‟s, Stella Artois, Hoegaarden, Leffe Anheuser-Busch(AB) was acquired by Inbev in 2008 and formed AB Inbev India; currently operatesusingtrading name Inbev India. Inbev operates in India through a 49:51 joint venturewith soft drink bottler RKJGroup.AB started operations in India through a 50:50 joint venture with Crown BeersInternational initially but later AB purchased the remaining ownership from CrownBeer India Ltd. Business Strategy: Inbev India has a production capacity of 1.9million cases a year through two contract brewering arrangements in RegentBreweries in Madhya Pradesh & Dasappa and Sons Bangalore. Inbev plans tointroduce Tennents brand in North India either by finding a contract brewer or bysetting up a brewery. AB Inbev India launches Budweiser beer in North India inAugust 2009. It has received a good response in the Southern states and Maharashtra.The company expects to cross 2.9 million cases in sales of Budweiser beer byDecember 2009. 12
  13. 13. CarlsbergIt entered Indian market in 2006 & operates here through a joint venture named SouthAsia Breweries and positioned itself as a premium mild beer. With the launch of itsflagship brand, the company is trying to create a premium, all-malt beer category. In2009 Carlsberg was the 4th largest brewery group in the world. Its products are soldin more than 150 markets. In 2008 the Group sold more than 120 million hectolitersof beer, nearly 100 million bottles of beer a day. Their major consumers are inSouthern India. Howsoever, it consciously chose the north, east and west regions ofthe country to set up its breweriesStrategy adopted by Carlsberg is to concentrate on to the untapped market of northand west India in the initial stage of the production. Moreover, since it has positioneditself as a premium product, it is only catering to the urban cities of India.ChallengesBottling shortageWhat often happens is people have more bottles at home than they drink on a weeklybasis because they tend to buy regularly and bring them back irregularly. SABMiller,which manages Shaw Wallace Breweries Ltd, has warned that the country could facea beer shortage in the approaching summer, the peak consumption season. Mr.RichardRushton, Managing Director of SABMiller India Ltd, told Business Line in aninterview that he feared industry would not be able to adequately service the demandin the summer months on the back of "an inefficient bottle pool management" in amarket that is heavily dependent on recycled bottles. MrRushton said, "The routewhich the bottle takes to the trade and ultimately to the consumer should be the sameit takes back to the brewer through the value chain. But in India, it gets fragmentedand dispersed to spend a lot of time in the trade and results in high incidence ofbreakage," he added. The 650 ml beer bottle is common to all companies and only the250-300 ml bottle has proprietary designs and logos on it. Thanks to breakages anddiversion to other unorganized players, only around 60-65% of bottles are actually 13
  14. 14. returned to the company, says liquor industry consultant, UB Bhat. Till about a yearand half ago, bottles were being returned to companies at an average of Rs 3.00 to Rs3.50 per bottle. Taking advantage of the shortage, second hand bottle traders hikedprices from the normal Rs 3.00 to Rs 3.50 to Rs 7.00, almost equal to the price of anew bottle! Not to be left out of the party, glass manufacturers sharply increasedprices too. The shortage in bottles took their toll on profitability of the companies.Richard Rushton, managing Director of SWBL admitted that bottle prices hadseriously affected the company‟s profitability, especially considering that regulationsin a number of states prevent companies from passing on cost increases to. UB tootalks of an “unprecedented cost push” caused by the shortage in its annual report. Infact, UB disclosed that the spiraling bottle costs shaved off Rs.30 crore - 40 crore inits operations during the last financial year, 2003-04. Indian brewers have injectedabout 250 million new returnable glass bottles into the beer market during the lastnine months to beat down prices of recycled bottles. [8] Many bars across the State ofKerala now display the sign „No beer and several others tell their patrons: “Only onebottle per person, sir.” They apologetically tell the customers that they are not from the Kerala State Beverages Corporation (Bevco),Advertisements barrierBuilding brands, particularly for alcoholic beverages, is easier said than done. In themid-1990s, the Indian government banned advertising of alcoholic beverages. Bythen, existing brands such as Kingfisher, Fosters and Haywards had already builttheir brand without any surrogate branding efforts. In contrast, the new entrants willhave to rely only on surrogate advertising. For instance, Cobra is now advertised ontelevision as sparkling water with the tag line "so smooth, anything goes down well".As the advertisement of liquor is banned in India, Carlsberg has cashed itsinternational image to boost its sales in the domestic market. They have targeted thepublic houses and discotheques for their promotion thatis very apt. Kingfisheremploys the style of surrogate advertisment, where it try to gain customer attention byadvertising about its mineral water etc. But with government banning even indirectadvertisements of wine, alcohol, liquor and any tobacco products forthwith in theinterest of public health, the brand building is going to be a great challenge. 14
  15. 15. Beer highly taxedMinority preference for beer in India and high tax structure are the major challengesfor Indian beer industry. One of the reasons for the low preference for beer is hightaxes imposed on beer consumption. On absolute alcohol basis, beer is taxed higherthan spirits in most of the states in India. There are about 26 different alcohol specifictaxes that constitute 50% of the consumer price, which is among the highest in theworld. In India, beer taxes are levied by individual states and taxes are also paidbetween states. (See Exhibit 5 for comparison of tax rates) Beer, which is a softerform of alcohol consumption, is taxed higher by most states compared to Spirits onabsolute alcohol basis. This is primarily because taxes on beer in India tend to berelatively higher than spirits whereas in most parts of the world, in fact, the reverse istrue. Globally, on a per alcohol basis beer is taxed at 50% of hard liquor whereas inIndia, beer is actually taxed 60% more than hard liquor.The Indian beer industry is plagued with myriad taxes & levies that vary from state tostate. In fact no two states or UTs have a same or even a similar policy. Theinconsistency in the state policies leads to fostering an environment ofmismanagement & lack of focused strategy to manage state finances. States usuallydo not adopt policies based on scientific management or by considering the socialaspects of managing this trade. The policies are generally short term in their outlook,with little or no thought to long-term interests of all stakeholders, including thegeneral public.Price restrictionsPrice restrictions in many large markets remain a biggest challenge for the industry.The Government decides the End Consumer Price (ECP), leaving the manufactureswith no say in determining the price of the beer. In a free market economy this has norationale.Inadequate market infrastructureThe market infrastructure for beer in India is inadequate. For every 21000 personsthere is one outlet hampering the availability of beer. In China, for instance the figureis 300. The highly regulated market hampers beer sales, unlike most developedcountries where beer and wine are not regulated in grocery/retail stores. The retaildistribution channels are not completely open for selling beer in India. Regulations 15
  16. 16. are stiff with respect to selling beer through modern retail chains where as in mostdeveloped nations beer and wine is available in grocery or retail stores.Restriction of movement of beerFor the movement of beer from one state to another, an export license and an importlicense is required. Export fee is imposed in the state where beer is manufactured andimport fees on the State where it is sold. In some states only beer manufactured in thatstate can be sold. Few states like Tamilnadu have strict rules of selling only beermanufactured within the state.Consumer choice and preferences:India is predominantly a hard spirits market and beer is a minority preference forthose who consume Beverage Alcohol. Beer makes only 4% by revenue of the totalalcoholic market. It would be pertinent to mention that while per capita consumptionof spirits in India is 65% of global average, in the case of beer it is a mere 3% ofglobal average. (See Exhibit 4 to compare beverage consumption across the world)World over it has been identified that policy focus should not as much be oncontrolling consumption but more importantly on reducing harm. Therefore, beer andwine dominate the alcohol market in most countries. It is considered to be commonman‟s drink and in many countries is even priced in parity with soft drinks. But inIndia things are different in India. The per capita consumption of beer in India is just1 liter per person per year as compared to the world average of 22 liters. This is one ofthe lowest in the world.Capital barrierThe capital required to set up and maintain a brewery is very high. Branding isanother issue. It takes time fora new beer brand to gain acceptance and shift loyalcustomer tastes. So the companies prefer to grow inorganically by acquisitons andmergers.The Government-owned monopoly distributor of liquor.Distillers are owned by government so they are the only distributors in the country.For each district there is one depot. 16
  17. 17. Scope Of The Breweries Industry In IndiaYoung populationNearly 28% of Indian population live in urban areas which comes close to thepopulation of USA. Urbanization is happening at a very fast pace and about 40% ofthe total population is expected to live in urban areas by 2020. Also people in Indiaare relatively younger when compared with global average. About 50% of the Indianpopulation would be under 30 years even in 2015.Low per capita consumptionIndian per capita beer consumption is very low compared to global average. In thetotal alcohol market in India, beer contributes only 4% of revenue. The lowpenetration in beer consumption provides a substantial and sustainable growth indemand for beer in future.Rising income levelsIndia is one of the most attractive consumer markets in the world with about one-sixthof the global population. The rising income levels has a direct positive impact on beersales in India. Also, urban consumers who are more exposed to the western culturesocialize with beer. The growing income levels particularly in the urban earning classis a potential market for beer manufacturers in India.Dynamism in Beer marketMany foreign beer manufacturers have entered or plan to enter the Indian beer marketwith their product line. The market is set to flourish with 15 new breweries and 10international brands in the next 3 years. With the global markets experiencing low orstagnating growth and focus shifting to India, the Indian industry is expected towitness fast growth in the coming years. 17
  18. 18. Ratio analysisCurrent Ratio:Current ratio is one of the oldest of financial ratios. Its usage dates back to 1891; theprimary users were short-term lenders. Even today, this ratio is regarded as a key ratioin the credit appraisal system of banks in India in spite of the fact that current ratiohas lost most of its shine in modern-day financial management whose approach is toreduce the value of this ratio rather than increase it. The attention received by currentratio from short-term lenders for such a long time is due to their preoccupation oranxiety over sudden slowing down of realization of current assets from which they areto receive payment. The 2:1 historical standard was evolved to ensure that even if ashigh as 50 percent of current assets fail to realize in time, the lenders would not beworse off. The cushion, which is popularly termed as net working capital, provided asense of security to the lenders. Current Ratio = current asset/ current liabilityyear Current asset Current liability Current ratio2010 894.4 373.01 2.392009 672.79 246.25 2.732008 446.02 253.10 1.762007 395.32 219.26 1.802006 286.4 169.77 1.69Interpretation:Current ratio indicates short-term solvency of the firm i.e. ability to meet the short-term obligation. Higher the current ratio higher is the amount available to pay formeeting current obligations. By looking into table above we can say that the currentratio of the company for the past five years is showing is good since the ratio has been 18
  19. 19. increasing. The company during the past two years has a good current ratio so it couldpayoff current liabilities using current assets. Which shows their ability to pay off thecurrent obligation is good.Quick Ratio:The term quick assets refer to current assets, which can be converted into, cashimmediately or as a short notice without diminution of value.The quick ratio is the ratio between quick assets and current liabilities and iscalculating by dividing the quick assets by the current liabilities. Quick Ratio= total current assets- inventory/ total current liabilityyear Quick asserts Quick liability Quick ratio2010 698.38 373.01 1.872009 509.75 246.25 2.072008 329.10 253.1 1.302007 282.96 219.26 1.292006 212.8 169.77 1.25Interpretation:We can see hare that the quick ratio for the 2010 is not good though the current ratiois high, this shows high inventory holding during the year. This is not very good forthe company when there is any claim of liabilities because there is high inventorywhich cannot be used to pay off the current liabilities. 19
  20. 20. Debt ratio;Debt Ratio= total debt/total assetsyear Total debt Total asserts Debt ratio2010 671.33 1831.10 0.372009 616.36 1697.90 0.362008 525.22 1136.48 0.462007 476.17 1033.81 0.462006 253.41 760.63 0.33This shows the total assets available to pay off the debts; here the debt ratio is thehighest in the year 2007 and 2008 that is 0.46. this says 0.46 is the debt for every 1Rupee of assets owned by the company. And in the year 2006 and 2009 is the leastwhich shows less debts on the assets owned by the company.Net Profit Ratio:The net profit margin is indicative of management‟s ability to operate the businesswith sufficient success not only to recover from revenues of the period but also toleave a margin of compensation to the owners for providing their capital high netprofit margin would ensure adequate return to the owners as well as to enable a firmto withstand adverse economic conditions when selling price is declining, cost ofproduction is rising and demand for the product is falling. A firm with a low profitmargin can earn a high rate of return on investment if it has a higher inventoryturnover. Net Profit Ratio = net profit/ net sales 20
  21. 21. Table Showing Net Profit Ratio Year Net profit Sales Ratio 2010 96.97 1986.28 0.049 2009 62.49 1691.75 0.037 2008 62.47 1370.47 0.046 2007 65.09 1046.24 0.062 2006 19.41 679.41 0.029InterpretationFrom the above the net profit ratio during the year 2010 is increasing compared to theto the net profit ratio of 2009. Net profit ratio in the year 2007 was at the peak with0.062 because of the efficiency of the company and due to the cost effectiveness.United breweries has been maintaining good profit margin and it is a stable company. 21
  22. 22. MARKETING STRATEGY OF UNITED BREWERIESProductUnited Breweries is the no 1 selling product in its segment. It is produced out ofgood quality of raw material is used to maintain the quality of the product. It isused maintain the standard of a product in the long run. Consistency of theproduct quality is high it is mainly due to technologies used by the unitedbreweries and their uniformity in production and its emphasis on qualityproduct. United Breweries always tastes fresh due to the raw material used bythe company in its production activities. United breweries have well developedtransportation so it helps the company to maintain its quality and tastes.United Breweries not look into short term but also looks into the long term objectiveof the organization. For UB brand image is most important for the people related withit. They want to retain the customer for the long run to help in stable growth. Unitedbreweries do not compromise production with quality. Through the quality ofproducts it is able to withstand the competition and maintain its share in the market. Ithas production unit centered in 20 different location of the country it helps them tocope up with existing demand.PricingUnited Breweries have different beers for different segments in the industry. Theyknew that they could not concentrate on similar type of product so they went forexpansion of their business. In order attract people of different segments of themarket. United Breweries produce different priced beers to attract the middle incomegroup as well as the high income group. United breweries group produce UB (unitedbeer), which is available in 2 types UB strong, and UB light, which are low pricedgoods ranging from 58 to 65. This beer is produced keeping in mind the rural areapeople, middle income group and also for wedding and other functions. It hassegmented its market according to their income group high income and low incomegroup. For high income group they concentrate on kingfisher, kingfisher blue, therates range from 80 to 115. UB beer has no competitors in its segment so it maintainsmonopoly in its rate segment. UB beer has very good feedback from the customers.It has very ideal pricing strategy, which will help the group in the long run. It alsohelps them in reaching the customers throughout the market. 22
  23. 23. PlaceUnited Breweries is dominant throughout the country it has about 48% share in thebeer market in the country. United Breweries has 16 companies owned breweries andit also has nine contracts breweries in 20 different locations of India. And it has itspresence in 60 countries over the world. So it has a very good distribution network sothe supplies will be served fresh. It helps them in supply of the demand for itsproducts. helps them in transferring without any physical damage while supplying. Italso helps that have production centered in 20 different locations through out thecountry. And it also has online marketing to helps them to reach the customers in themost effective and efficient manner.PromotionIt has tagline called „king of good times‟ which is very popular through out thecountry. Although beer advertisement is banned in the country it uses adds of mineralwater to create demand for its beverages. It has continued its advertisement throughpubs very aggressively. Kingfisher calendar every year also helps in its promotionalactivities it helps them in attracting youth and also creates brand image. It alsosponsors live concert and rock bands, it helps them to create brand image and givesthem demand for their product. They also sponsor football team named east Bengal.This will help them in creating brand image and helps them in attracting youthcustomers. It also promotes its product in rural areas by various promotionalstrategies. It is tied up with NDTV good times, which is a lifestyle channel it helpsthem to reach out to the various segments of market. Although the competition is highit is still able to maintain its market share. 23
  24. 24. Analysis of the survey:The survey was done with an objective to find the marketing and promotionalactivity of some of the randomly selected dealers in kinnigoli, mundkur.The questionnaire prepared for the survey mainly was with a primary objective offinding the importance of promotional and market analysis, the various aspect relatingto the United breweries product and its market in these areas. and to know theconsumer buying behavior.Questionnaire is the list of questions prepared by an enumerator to collect the primarydata from the field. During my survey I have contacted 5 respondents (dealers).Through an ideal number of questions, sincere attempt is made to collect as much asInformation possible. The respondents were selected on the basis of convenience andjudgment sampling method.According to the survey all the 5 dealers were unhappy that no incentive was given ifthey exceed the expected sales it was surprise to know that all the dealers wanted tosell slok breweries because incentive given was high. Incentive was not only given toowners but vendors also. From the survey the dealers said the sales will be at the peakapril to july because it is a wedding season. As my research was on rural area theremight be another possibility for increase in sale from april to july people will havecash in their hand due to agriculture season. Supply of UB products to distillers isgood except for the months there was no supply of UB products. from the dealers itwas found customers are satisfied with the UB then any other brands. In remotedemand for UB is more then kingfisher.From the observations one can say that the brand UB enjoys high brand equity and thecompany is in the growth path. 24
  25. 25. Surveyor’s input:After the survey it can be analysed or it can be recommend for the growth of UnitedBreweries There should be should be sales incentive for the dealers those who exceed the sales targets. The company should appoint more sales representative to improve the Relationship between dealers and company. Advertisement materials should be given to the dealer It should provide good amount of benefits to the retailer so that they get motivated and also influence the consumer to buy UB products. The company should introduce 250ml pet bottles so that they could increase their sales in rural areas. 25
  26. 26. ConclusionAfter the survey, It can be concluded that the sale of united breweries is growing.Apart from hitting the right price points, UB has been continuously innovating in linewith what is required in India. From the pricing point of UB has both low priced andhigh priced beers, so it covers both the segment of the society. UB has succeeded inIndia because of its quick decision-making, quality and regular supply of itsproduct.And its promotional strategy “king of good times” created ever lasting imageof the company.United Breweries has assumed undisputed market leadership with a national marketshare in excess of 50% through a process of aggressive acquisition and marketpenetration, the United Breweries group today controls 60% of the totalmanufacturing capacity for beer in India. The flagship brand Kingfisher, is now soldin over 52 countries worldwide, having received many accolades for its quality. 26
  27. 27. groupwww.ubgroup.comthe ub history of 27
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