India: Australian Foster's is planning brewing expansion

Australian beer giant, Foster's Group, is planning expansion of manufacturing footprint in India through bottling alliances, The Indian Ecomonic Times posted January 24. Foster's, which first entered the Indian market in 1998, has initiated talks with Crown Breweries, an upcoming greenfield project in Andhra Pradesh, for an exclusive bottling arrangement, according to informed sources.

The move, if it fructifies, would give Foster's a tremendous advantage in the country's largest beer market. Currently, Foster's, supplies beer across the country, including Andhra Pradesh, from its single owned brewery located at Aurangabad in Maharashtra. Foster's brand, selling about 2m cases here annually, is limited by capacity constraints and inter-state levies (resulting in higher retail price) as it moves beer from one manufacturing unit to consumers across the country.

Sources said the potential alliance with Crown Breweries would involve Foster's lifting beer on a cash and carry basis. It is also learnt that the promoters of the new plant, who were also behind the setting up of Charminar Breweries, one of the country's largest breweries, have offered to take up the distribution of the brand in the State. ET could not reach Foster's India MD Pradeep Gidwani despite repeated attempts.

Crown Breweries, the first new brewery allowed by the State Government in many years, is expected to have an initial annual capacity of 3m cases, scaleable up to 5m subsequently.

In recent months, Foster's has been making fresh efforts to spread its brewing presence after remaining coy for many years since its India foray in 1998. It entered into a limited bottling alliance with Cool Breweries in Haryana to test market its India-specific brand Amberro in that State. Analysts tracking the sector said Foster's renewed push for bottling alliances was driven by the strong double-digit growth in the domestic market.

Foster's invested over Rs 50 crore to set up a new brewery in Aurangabad when it became the first MNC brewer to tap the Indian market in the late '90s. However, it has remained shy of fresh capital investments in the country as the domestic market's growth proved to be erratic in the intervening years. Moreover, the global strategy of Foster's Group, also witnessed a significant skew towards promoting its wine interests.

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