The Hindu Business Line : UB working on developing new brands

Bangalore, March 20 United Breweries is putting together a roadmap for the next fiscal which includes three new brand launches, even as the company said that its expansion plans and setting up of greenfield breweries were on track.

The United Breweries Deputy President, Mr Shekhar Ramamurthy, told Business Line that the beer major is working on developing new brands and may launch between two and three of these brands next fiscal.

He added that the retail price of its popular UB Export is being reduced by Rs 5. He said during 2008-09, the company’s capex was about Rs 200 crore but did not disclose the capex for the next fiscal.

Beer Sales

Mr Ramamurthy said its top beer brand, Kingfisher Strong, may end the current fiscal with sales of about 40 million cases, nearly 25 per cent more than the last year while Kingfisher Premium expects to cross the 25-million-mark, a rise of 7-8 per cent over last year.

The total beer sales for United Breweries is expected to be about 85 million cases, an increase of 10-12 per cent slightly more than the industry average of 8-10 per cent.

Greenfield breweries

Mr Ramamurthy said that the Rs 425-crore funds raised by the company through a rights issue are being utilised for setting up two new greenfield breweries, one each in Karnataka and Andhra Pradesh, and for capacity additions in its breweries spread across the country.

“The work on setting up greenfield breweries in Karnataka and Andhra Pradesh is on,” he said.

The total capacity of all its breweries is about 100 million cases. United Breweries has about 15 breweries of its own and has eight more contract breweries.

Pricing

The UB official said the company has reduced the retail price of UB Export. This has been made possible because of the new policy of the Karnataka Government which levies lesser taxes on lesser priced brands. UB has also made some price adjustments as well leading to the brand being retailed at a lesser price. He said the initial response for the newly launched Kingfisher Blue, which is priced slightly higher than Kingfisher Strong, was extremely encouraging. UB has about 16 brands in its portfolio.

UB had to face some pressure on its brands because of increase in energy costs during the current fiscal leading to increase in the prices of bottles as well as a 25 per cent increase in malt prices.

However, it has been able to control costs to some extent because of decrease in water usage and through cost management measures.

Related Stories:
UB finds Cobra Beer ‘over-valued’
UB Group looking to spin off subsidiaries
UB Group promoting Baramati winery as lifestyle destination

More Stories on : Outlook | Brands | Breweries

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