2. Colonial era in India saw a number of British and French Breweries.
Alcohol was locally produced by the Indian brewers and it was called as
‘Taadi’. It was not manufactured for selling purpose globally or in whole
India. Local alcohol was developed for specific villages or group of
villages and it used to be consumed there itself.
Manufacturing of glass bottles was a popular factory set up idea In that
era but it was not produced for alcohol till late 1820s.
3. In 1830, Edward Abraham Dyer, father of Colonel Reginald Edward Harry
Dyer of Jallianwala Bagh massacre, travelled to India and set up India's
first brewery in Kasauli. It produced the beer brand Lion.
United Spirit was founded in the year 1826 by Angus McDowell. It is
Indian alcoholic beverage company and started as a winery thus making it
the first winery of India in colonial era.
Mohan Meakin Ltd was another company founded in the year 1855. It had
headquartered in Ghaziabad, United Province. It was offering a wide
range of products including alcoholic beverages, vinegar, malt extract,
cereals, glass bottles, non-alcoholic beverages etc.
5. United Breweries is the unrivalled market leader of the
Indian beer market with market share of 52% which is
almost 3 times the nearest competitor. It has an extensive
production footprint with 21 own breweries and 10 contract
units providing Pan-India coverage.
International beer brands Heineken and Amstel and import
portfolio complement United Breweries' Kingfisher
franchise.
The UB Group was founded by a Scotsman, Thomas
Leishman, in 1915, when he brought together Castle
Brewery and Nilgiris Breweries (1857), Bangalore Brewing
Co. (1885), British Brewing Corp. (1903) and BBB Brewery
Co. Ltd. (1913).
6. United Breweries made its initial impact by manufacturing
bulk beer for the British troops before independence, which
was transported in huge barrels or "Hogsheads".
The Group took its initial lessons in manufacturing
beer from South India based British Breweries. At the age
of 22, Vittal Malya was elected as the company's first Indian
director in 1947. After a year, he replaced R. G. N. Price as
the chairman of the company.
During the 1950s and 60s, the company expanded greatly
by acquiring other breweries. First was the addition of
McDowell as one of the Group subsidiaries, a move which
helped United Breweries to extend its portfolio to wines and
spirits business.
8. United Breweries (the original name of the group) have a
history dating back to 1857. The company came into
existence as UB in 1915 with the merger of five small
breweries . The Kingfisher brand was launched in the year
1980 ( the exact year of the birth of Kingfisher is not
known,80's marked the real life of this brand).
The brand was the brain child of the Ex Chairman of UB
group Mr. Vijay Mallya. Reports says that Mr. Mallya went
to work in Calcutta as a part of mentoring program under
Mr. HP Bhagat. At that time the brands that were popular
from UB stable was Kalyani Black label, Doctor's Brandy
etc.
9. Mr. Mallya wanted to create an exciting brand and none of
the existing brands did not impress him. He went back to
Bangalore, searched archives and stumbled upon an old
label with a Kingfisher in it. That marked the birth of the
Iconic Kingfisher brand.
And now, Kingfisher is a classic case of branding success.
This brand can even be termed as an iconic brand. The
brand is synonym with Beer in India. It is the largest selling
beer brand in India commanding a market share of over
28% in the Rs 5000 crore Indian Beer market.
11. After the grand launching of Kingfisher Premium, kingfisher
Lager and the canned beer, Vijay Mallya decided to create
an amalgamation of the breweries namely Punjab
Breweries, Kalyani Breweries, Kesarval Beverages and
High Range Breweries to integrate them into United
Breweries.
After acquiring Premier Breweries in 1994, Bombay
Breweries was acquired in 1996. The all-time sensational
Kingfisher Strong was launched in 1999 and supposedly
this was the foundation of rave success of Kingfisher.
12. In the following year, Kingfisher acquired Mangalore
Breweries and Associated Breweries. After acquiring Inertia
Industries in 2001, Kingfisher changed its name to
Millennium Beer.
By this time, Kingfisher had schemed to separate its
brewery business into a new entity completely and hence, it
started a partnership with McDowell Alcobev Ltd and
Scottish & Newcastle UK and changed the name to MAPL
–Millennium Alcobev Pvt. Ltd. Empee Breweries and GMR
Breweries after being acquired by Kingfisher, became
MAPL’s subsidiaries.
13. A strategic alliance was set up with Scottish & Newcastle
where it acquired equity shares and became equal
promoter of UB. In 2005, Mangalore Breweries was
partnered with UB and once Karnataka Breweries was
acquired and amalgamated along with London Draft Pubs
and London Pilsner Breweries.
Full-fledged brewing under Greenfield Breweries helped in
experimentation with new products like Kingfisher Blue
(2008), Kingfisher Ultra (2009), Kingfisher Ultra Max (2015),
Kingfisher Buzz (2016) and Kingfisher Storm (2017). Since
2007, the Greenfield Breweries had been in fully
operational state in Khurda (Odisha), Chopanki
(Rajasthan), Nanjungud in Karnataka, Naubatpur in Bihar
and Sangareddy District in Andhra Pradesh.
14. Heineken as promoter of the United Breweries since 2009,
started operation in India under UB management. By 2011,
MAPL along with its 4 breweries, Nizam Breweries,
Associated Breweries, Ajanta Breweries, Chennai
Breweries were amalgamated into United Breweries and
Heineken Beer was also manufactured under its
management.
16. Kingfisher brand is a unique marketing success story
because it thrived in an environment where liquor/ beer
advertising was banned in India.
The brand directly talks to people who are easy going,
chilled out person who's always willing to take a break and
party with the friend but they are very professional and
successful. During 1997 , the brand roped in Ajay Jadeja
and Sourav to feature in the campaigns. In 1996 the brand
become the worldwide sponsors of the West Indies cricket
team. But the brand was conscious to keep Kingfisher the
star . The West Indies team personified the brand values of
fun loving but successful team.
17. The brand also have a 360 degree approach to promotions
taping all possible ways to communicate with its target
audience. The brand sponsors lifestyle events and the
Kingfisher calendar has attained a cult status with in 4
years of launch.
During early 2000s the brand logo got a make over and the
Kingfisher started flying rather than sitting. The new logo
signals the brand's vision to get to new heights. The new
logo designed by Claassen was backed with lot of noise in
the media. There were a few more changes to the logo
which always was introduced with lot of market promotion.
Logos itself became a marketing strategy for Kingfisher.
19. To circumvent the regulatory ban on surrogate advertising,
the brand has launched into different categories like Mineral
water and even into ready made taking a lesson from Wills.
2005 saw the UB group getting into the Airline business
with its Kingfisher Airlines. The airlines became a brand to
reckon with in a year because the brand lived to its
expectation and promise. Positioned as a fun liner, the
brand equity of the mother brand has been enhanced by
this extension.
21. In International market, under the manufacturer United
Breweries, Kingfisher also has its European branch named
as Kingfisher Beer Europe Ltd or KBE which has its
headquarters in Maidstone in Kent.
Under the tagline of “The Real Taste Of India” this company
pays tribute to its rich heritage and highlights the Indian
signature recipe of brewing. Initially KBE sold only
Kingfisher Premium but in 2016-17, its campaign led it to
launch products like Peacock Cider (apple cider with Asian
flavors), Pearl River Beer and Bintang Beer.
22. The campaigning for each product by Kingfisher have made
it listed among the top brewing companies in India and the
products thus campaigned over the years are –
• Kingfisher Strong brewed with authentic malted hops
• Kingfisher Ultra campaigned for Indian Derby 2015-2016
• Kingfisher Ultra Max in golden and black hues made from
authentic Pilsen, campaigned for Dart Championship
• Kingfisher Storm with tagline of Live The Swag Life
• Kingfisher Buzz, malt-based beverage
• Kingfisher Blue campaigned in 2008 for adventures like
Rishikesh-Chopta rafting, Delhi-Leh bike trip, Mt Everest
Basecamp trekking and Watersports in Andaman-Nicobar
Islands.
23. Since 2003, with the support from ace model-photographer
Atul Kasbekar, Kingfisher has been publishing its annual
calendar featuring newcomer and renowned models in
swimsuits and that too in exotic locations from Mauritius to
French Riviera, Thailand to Australia, Andamans to
Maldives and so on.
The 2018 calendar shoot was done in Croatia and it
features models like Ishika Sharma, Priyanka Moodley,
Mitali Rannorey and Priyanka Kasrunakaran. The
Kingfisher Supermodels, annual model hunt had started in
2010 and the calendar campaigning has been significant
force in advancing modeling and acting careers of artists
like Deepika Padukone, Katrina Kaif, Yana Gupta, Nargis
Fakhri, Lisa Haydon, Bruna Abdullah and Karishma Kotak.
25. 1). BOTTLE PROBLEM
Apart from all the other things that go into making beer,
there is one other element without which selling beer
becomes virtually impossible and it’s the all important
‘Glass Bottle’. The glass bottle is an essential feature of
most beer brands. Unfortunately though, they don’t come
cheap.
Bottles could form as much as 40% of the total raw material
cost and companies spend considerable time and effort in
trying to bring down this expense. Now, unlike most things,
glass bottles can be reused.
26. Its much cheaper to reuse bottles than to make new ones.
On average it costs about Rs. 10 to buy a new bottle
whereas you could get a used one for as little as Rs. 3. The
only catch — you need to convince the retailers to sell used
bottles back to you.
For United Breweries (UB) however, this turned out to be
quite a challenge. Most retailers sold back used bottles to
the highest bidder, not to the original manufacturer and
competitors often bought UB’s used bottles by paying a
premium (it was still cheaper to pay a premium for a used
Kingfisher bottle than spend money making new ones).
27. This meant that the company lost significant sums trying to
outbid competition in an attempt to buy back their own
bottles, a rather frustrating endeavor. And that’s when they
started patenting their bottles with embossments, which
effectively meant competitors could no longer use them.
This helped the company bring down manufacturing costs
considerably. On top of it, UB has also taken initiatives to
introduce rain water harvesting and the likes to decrease
consumption of water, in a bid to boost profit margins.
28.
29. 2). NO POWER ON RAISING PRICES
Multiple states have laws that prohibit beer manufacturers
from raising prices unilaterally, which means any time there
is an increase in input cost, the beer manufacturer has to
bear the full brunt, until the state government finally decides
to proactively negotiate or allow for price hikes.
This isn't limited to input costs alone, instead it extends to
excise duties as well. Excise is a duty charged on every
case of beer the moment it leaves the brewery.
On average, the company’s excise duty amounts to about
50% of its sales and this number has been constantly on
the rise. But despite rising excise duties, state governments
have been reluctant to let beer manufacturers increase
prices
30. Take for example the case in Maharashtra. Despite
increasing excise duty on beer last year, the state
government did not allow for a commensurate increase in
price. And then there are states that allow for price
increases but charge excise duties so high that even the
most hardened alcoholics move away from beer for a short
while.
In West Bengal this year, the company increased its price
from Rs. 110 to Rs. 145 per bottle on the back of rising
duties and the consumers promptly moved away, in some
cases to country liquor. Each of the 29 states of India is a
unique market with its own set of rules and regulations that
keep changing with time.
31. 3). ALCOHOL PROHIBITION IN INDIAN STATES
Prohibition is the act of banning the manufacture, sale, and
transportation of alcoholic drinks within a particular location.
Gujarat is a state that has had prohibition in place for a
good number of years.
In Bihar, the chief minister enforced a state wide ban on
alcohol. United breweries had little choice but to abandon
production of alcohol and instead switch to non alcoholic
beverages.
When prohibition (outside of 5 star hotels) hit Kerala, the
move sent shock-waves. Before the ban, the state had
India’s highest per-capita alcohol consumption, at more
than eight liters per person per year.
32. 4). BLANKET BAN DURING ELECTIONS
Election season means a blanket ban on selling alcohol for
designated periods as mandated by the election
commission. There could also be a limit on the amount of
alcohol a person can buy during this time.
Sales are almost always affected. But what is particularly
disconcerting for beer manufacturers is that a total of 10
states are poised to head to elections next year with the
additional caveat of the General Elections.
33. Outside of the blanket bans, elections are also periods of
extreme uncertainty. An opposition party might make
prohibition its prime agenda while contesting an election,
negatively impacting sales, while another party might offer
massive incentives to the working class through subsidies
and loan waivers, both of which could aid beer
consumption.
Its extremely difficult to forecast the real effect of state
elections on beer production in the country except make an
observation that the immediate future harbors extreme
uncertainties.
34. 5). TRIPPLE TROUBLE OF 2017
In 2017, the country saw something spectacular — a rather
strange sequence of events, all combine together to render
a death blow to beer manufacturers — Demonetization, GST
and The Supreme court highway ban.
Both sales and Profits immediately took a nose dive. First, it
was demonetization. Most people bought alcohol with cash
and when cash was hard to come by, they simply stopped
visiting their favorite bars.
Then, GST. We won’t take you through the whole dynamics
of GST and how it impacts beer prices. But let it be known
that as things stand, beer is more expensive than it used to
be.
35. The supreme court highway ban while in force prevented
the sale of liquor within 500 meters of a highway and
suddenly hundreds of outlets closed overnight.
Fortunately for United Breweries things changed rather
quickly. The effects of demonetization waned. The supreme
court highway ban was restricted to only some highways
and sales rebounded.
While effects of GST still linger, it wasn’t enough to prevent
a spectacular rebound and in 2018, UB was back. But the
uncertainty involved in all of this left a bad taste.
39. India is a hot country during the summers. The first quarter
of the financial year begins in April and continues through
to June and a chilled beer provides the perfect respite from
the scorching summer heat.
This is true for months January, February and March -3
months that form the 4th quarter as well. During these
months, breweries across India run at capacities close to a
100%. But then monsoon sets in.
Monsoons and winters (Q2 and Q3) are particularly
damaging to beer sales. Sales almost always declines and
most breweries are left with excess capacity that they
simply can’t put to any good use which is why most
breweries show capacity utilization between 60–70% —
because business is seasonal.
42. Despite being the dominant player in the market, United
Breweries is up against some stiff competition from the
likes of Carlsberg and the Joint Venture of SAB Miller
(Makers of Haywards &Royal Challenge) and AB Inbev
(Makers of Budweiser and Corona).
By now, almost all beer manufacturers are talking about
premiumization — A phenomenon where an ever increasing
portion of beer enthusiasts are shifting to more expensive
beer.
While UB has traditionally owned the markets for cheaper
variants, its ability to hold sway in the premium sector is still
suspect. Then there is the whole phenomenon of Craft Beer
i.e. Bira 91 and although the definition of what constitutes
craft beer is still up for debate, growth in the craft beer
industry is expected to reach double digits soon.
45. United Breweries holds 52 % of the market share and
happens to be one of the few beer manufacturers to be
profitable.
It must also be noted that consumption of beer is
perpetually on the rise and the hope is that this trend
continues. India provides a market opportunity like no other.
While in most countries the proportion of beer sales as a
percentage of total alcohol sales stands at 87%, in India, it
stands at a measly 20%.
Indians are more inclined to consume spirits i.e. whisky,
rum, which form 78% of total alcohol sales.
46. Heineken who currently own ~44% of United Breweries.
When Heineken was plotting to increase their stake in the
company back in 2012, they had a rather interesting set of
numbers to present whilst elaborating on the Indian Beer
Market.
The bottom line is that Beer is expensive and not enough
outlets sell them. The hope is that if government policies
and tax structures are favorable, India could prove to be a
valuable market for future expansion and thus Kingfisher is
still the ‘King of Indian Market’. The brand has maintained
international quality but made sure that it is with in the
reach of the Indian consumer.
47. SOURCES
1). MOTILAL OSWAL’s ANALYST REPORT FOR DATA
2). WIKIPEDIA FOR UB HISTORY
3). MULTIPLE WEBSITES FOR REST OF THE PART
