Foster''s India looks out for brewery buys in South

In its bid to increase its presence in the southern markets, Foster's India Ltd, the 74:26 liquor joint venture between Foster's Brewing Group, Australia, and the Chennai-based Kothari group, is on the look out for a brewery unit for outright purchase. The company is talking to a couple of southern breweries in this regard.

"Alternatively, we are also open for a joint venture or an alliance with local brewers. If that doesn't work out, we will go in for a greenfield plant," says Mr. Pradeep Gidwani, managing director, Foster's India.

After focussing on the markets in Maharashtra and Goa for the past two years and clocking a turnover of Rs. 25 crore (net of excise), Foster's India has stepped into the south, entering Pondicherry with its 330 ml and 650 ml bottles.

For any beer manufacturer, south is an attractive market as drinkers of this region guzzle nearly 40 per cent of the country's production. The western, northern and eastern regions account for 35, 20 and 5 per cent of the total Indian beer market respectively.

Given this situation, a production base in the south makes a lot of economic sense for Foster's India. The high import duty rules out beer imports, even in the post-WTO regime. The company imports the labels and hops (that gives beer the bitter taste). Currently, Foster's India caters to the southern market from its Rs. 60-crore plant at Aurangabad in Maharashtra.

"Investment or capacity is not a constraint for us," says Mr. Gidwani. According to him, in case of a production alliance or a joint venture with an existing brewery, the investment of Foster's India will be anything between Rs. 5 crore to Rs. 20 crore. "A greenfield project would cost us around Rs. 60 crore," he adds.

However, what surprised many is the company's studied neglect of the lucrative southern market all these years. Another fact that has intrigued many is the company's focus on lager beer at a time when strong beer market is registering robust 10 per cent growth.

Industry majors like United Breweries and Shah Wallace are now focussing on strong beer as it constitutes 60 per cent of the total beer market. United Breweries' 'KingFisher' brand enjoys around 25 per cent of the beer market. The company also plans to leverage group company brands like 'McDowell' in the beer segment.

Says Mr. Gidwani, "We are a long-term player with a clear focus. Building the brand and capturing the market in Maharashtra and Goa and later expanding to other markets is our strategy."

Our focus on market depth rather than on the width did pay dividends as we ranked third in Maharashtra. "With the launching our brand in the northern markets, the next eight months will be hectic," he adds. After this, the company will introduce other brands in its product portfolio.

When asked about its brand-building expenditure, all Mr. Gidwani would say was Foster's India was in line with its Australian parent and will promote its products by sponsoring sport events like cricket.