Scottish to pep up UB Breweries spirits

Bangalore: Some of the leading brands of Scottish & NewCastle are likely to be brewed in India by United Breweries, while the Indian beer Kingfisher may be brewed in one of the breweries of the UK-based beer company.

Scottish & NewCastle, the UK-based beer company, has offered its Kronenbourg lager beer and NewCastle ale to be produced and marketed in India by the UB group. The marriage between the Indian and British liquor companies is likely to lead to a divorce between the UB group and San Miguel Corporation.

San Miguel had already warned the UB group that it will end its licensing agreement if the latter tied up with another beer company. The Presitge group will be developing the real estate in Bangalore on which the UB headquarters and a brewery are located. The UB group will have 55 per cent of the 800,000 sq ft floor area while the rest will be given to the Prestige group.

As per the arrangement between the UB group and Scottish & NewCastle, the Indian beer company does not have to pay any cash upfront, but gets to use Rs 250 crore to wipe off most of its debt at a nominal interest of 5 per cent annually.

In case it does not want to give away its stake to Scottish and NewCastle, UB can give back the cash which it can do so through the sale of its non-core assets and internal accruals. The UB group has the right to exercise its option in five years.

Both UB and the British company have a 40-per cent stake in the company, while Ravi Jain’s Millennium Alcobev holds a 20-per cent stake.