NEW PRODUCT LAUNCH:
UB GROUP – SOFT DRINK “MIST”
United Breweries Limited (UBL) - has assumed undisputed market leadership with a national market share in excess of 50%. Through a process of aggressive acquisition and market penetration, The UB Group today controls 60% of the total manufacturing capacity for Beer in India. The flagship brand, Kingfisher is now sold in over 52 countries worldwide having received many accolades for its quality.
The political forces affect the beer industry to a large extent. The rates of the beer in various parts of the country are affected by the taxes and duties applied by the Govt. The political forces also affect the pricing of the beer by lowering the duties or deregulating the distribution channel. This leads to lower margins for the distribution channel partners. But, as 75% of the Indian market is covered by two players, there hasn’t been a reduction in the margins of the manufacturers. The taxation policies also affect the consumption patterns.
India is home to nearly one-sixth of the global population and is one of the most attractive consumer markets in the world today. The total worth of Indian Beer Market is Rs 750 crore. This market is expected to expand by 39% by 2010. The beer consumption has been growing at a CAGR of 7% over last nine years. India provides attractive profit margins due to the consolidated nature of the industry. Various research studies have shown that a rise in the income levels has a direct positive effect on beer consumption. The National Council for Applied Economic Research (NCAER) projects India's 'very rich', 'consuming' and 'climbers' classes to grow at a CAGR of 15 per cent, 10 per cent and 2 per cent respectively. Thus, India gives ample opportunities for the UB Group to grow.
A deep-seated traditional social aversion to alcohol consumption has been a traditional feature of the Indian society. However, as urban consumers become more exposed to western lifestyles, through overseas travel and the media, their attitude towards alcohol is relaxing. Social habits are undergoing a transformation as mixed drinks are becoming more popular. The greatest evidence of this trend is the increase in beer consumption among women. More and more women are consuming beer – the penetration in metropolitan areas is almost twice as high as the penetration in other large cities – implying that the greater tolerance towards alcohol consumption in metropolitan areas facilitates the consumption of beer. With increasing urbanisation, this acceptance is only going to rise. As a consequence of the high birth rates prevalent until the 1990s, a large proportion of the Indian population is in the age group of 20-34 years. This age group is the most appropriate target for beer marketers. This population trend will give a further boost to the growth of beer consumption in India.
Beer industry is not technology specific. As the UB group is one of the oldest players in the market, they have achieved economies of scale. Thus, technological factor is not of great importance for the beer market.
PORTER’S FIVE FORCES MODEL
Threat of new Entrants - Low
In India, beer industry is growing with 11% CAGR making it attractive for new players. Strong brands like Kingfisher and Hayward’s which are already established and have strong brand recall will make it tough for new entrants and they are expected to struggle to expand their consumer base as they try to penetrate the beer market in India. Foreign brewers have been eyeing the Indian market for some years now since India is widely acknowledged to be the last untapped big growth market. Several international brewers have built brand associations and are marketing their brands aggressively through various point-of- sale promotions throughout their distribution networks. But...
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