Financial Daily from THE HINDU group of publications
Thursday, Jul 29, 2004
Financial Daily from THE HINDU group of publications Thursday, Jul 29, 2004 |
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Marketing
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Strategy Corporate - Mergers & Acquisitions Pepsi bottler Jaipuria to cut exposure in soft drinks — To foray into beer market; snaps up brewery in Mauritius Boby Kurian
Bangalore , July 28
THE country's largest Pepsi bottler, Mr Ravi Jaipuria, is foraying into the beer business as he seeks to pare his exposure in the soft drinks market. Mr Jaipuria, a bottling tycoon with eight soft drink plants sending millions of Pepsi bottles into the market, has snapped up Continental Breweries Ltd in Mauritius in a deal estimated at Rs 25 crore. His interest in the brewing sector could provide a strategic opportunity for global brewers seeking partners to enter the Indian market. Speaking to Business Line, Mr Jaipuria, who manages a business empire worth over Rs 1,200 crore, said he has acquired a brewery in Mauritius and was gearing up to manage the plant as he envisages a role for beer in his fast-expanding portfolio. "I am now focused on running the acquired plant," Mr Jaipuria said, while adding that he has no imminent plans to enter the Indian beer market. Mr Jaipuria's disclosure about his beer interests comes at a time when speculation is rife that the Jaipuria family has sent an expression of interest to buy into Mount Everest Brewery in Nepal, which is seeking a partner following the exit of Philippines brewer, San Miguel. However, Mr Jaipuria denied any plans to step into the Nepal beer market. The Delhi-based Jaipuria has been entering new areas by tapping into ice cream, hospitality and real estate sectors in recent times. Sources close to Mr Jaipuria said he wanted to limit his exposure to soft drink bottling operations that currently make up about 70 per cent of his business. "He would like to trim his dependence on soft drinks to about 30 per cent," they said, explaining that the pesticide controversy that led to a dramatic fall in soft drink sales last year has accelerated his diversification plans. Meanwhile, analysts tracking the brewing sector said Mr Jaipuria's plans could enthuse global brewers such as Heineken and Carlsberg as they would fancy entering the domestic market through greenfield projects. In fact, players such as Heineken, which opened talks with ITC some years ago, have demonstrated their interest to partner with groups outside the domestic brewing sector. The Indian beer market, estimated at 83 million cases annually, is polarised between the UB group and Shaw Wallace Breweries Ltd, which have already finalised foreign partners in Scottish & Newcastle (S&N) and SABMiller respectively. The other top international brewers have been evincing interest in India as its current per capita consumption of 0.6 litre holds out potential for the future. But the domestic beer business has been in some turmoil of late with sluggish growth on account of high retail price, and dismal margins as the brewer's share of the pie falls behind tax component and trade margins. The beer depletions registered 3 per cent growth during last financial year and the first quarter of the ongoing year has indicated a similar trend. "The sombre scene could keep global giants such as Heineken and their potential partners such as Jaipurias on the fringes for some more time," the industry observers said.
More Stories on : Strategy | Mergers & Acquisitions | Breweries | Beverages
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