Sri Lanka & Singapore: Asia Pacific Breweries has acquired 60% in United Brewery Lanka

Singapore's Asia Pacific Breweries Ltd (APB) announced on September 23 it has acquired a 60% equity stake in United Brewery Lanka Limited (UBL) as a part of its strategy for extending its presence to South Asia. APB will inject up to USD 5 million (S$8.25 million) in fresh shareholders funds to be funded from internal resources.

Partnering Sri Lankan-based Anandappa family group and associates and MBL Offshore Limited, a wholly-owned subsidiary of Phoenix Beverages Limited which is a leading beverage group from Mauritius, the investment marks APB's maiden entry into Sri Lanka. "APB's stake in UBL is consistent with our regional expansion strategy to acquire strategic interests in domestic breweries within selected markets to create defendable and profitable businesses. South Asia is amongst the emerging markets which APB has identified for growth and our interest in UBL will give APB access to the growing Sri Lanka beer market," said Mr Koh Poh Tiong, Chief Executive Officer, APB.

Sri Lanka is one of the most liberal and foreign investor friendly economies in South Asia. With a population of approximately 19.3 million, the country's GDP is expected to grow between 5% and 6% per annum. In line with its economic growth, the Sri Lanka beer market is expected to grow at a rate of 6% per annum. "In view of such economic conditions that are supportive of and conducive to a rapid growth in the Sri Lanka beer industry, we believe that the Sri Lanka market offers good potential for APB's on-going expansion," continued Mr Koh.

UBL operates a brewery with a designed annual production capacity of 120,000 hectolitres. The brewery which is located in Mawathagama, in central Sri Lanka, produces and markets local beer brands including Bison XXtra, Kings Lager, Kings Pilsner and Kings Stout.

UBL offers potential for further upside from leveraging on its local beer brands and distribution system. By leveraging on the strength of UBL's distribution with trade channels, there will be an opportunity for APB's beer brands to cross sell into the various segments of the Sri Lanka market. APB expects that the sharing of knowledge, processes and systems, particularly in marketing, distribution and procurement, will further enhance UBL's competitive position.

Mr Koh added, "UBL's existing operations and beer brands which are available in the local marketplace will enable APB to jump-start the business in the country. We believe that there are opportunities for us to enhance the value of UBL through the application of operational and brand expertise. The investment also creates opportunities for us to bring APB's beer brands into the growing Sri Lanka beer market which I believe will offer good growth prospects. At the same time, we will be able to draw on the experience of our established local partners and management of UBL to ensure the greater success and goodwill of the company."

Moving forward, APB will team up with the management of UBL to intensify UBL's marketing efforts and centre its activities round enhancing brand equity and strengthening its brand portfolio. Operations at the production front and distribution points will be fortified to compete more effectively, extend distribution network and increase efficiencies.

Adding UBL to APB's list of regional ventures, Mr Koh said, "APB's entry into Sri Lanka through its stake in UBL has added one more piece to the Asian map for the growth of the Group. Including UBL, APB now has interests in 22 brewery operations in nine countries including Singapore, Malaysia, Thailand, Vietnam, Cambodia, China, New Zealand, Papua New Guinea and Sri Lanka. This investment is in line with our regionalisation strategy to address the next wave of growth for APB."

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