United Breweries Limited to expand craft & variety beer category by launching new products

The beer manufacturer United Breweries Ltd announced a consolidated net profit of Rs 85.80 crore for the third quarter ending in December 2023.

United Breweries Ltd (UBL), which is owned by the Dutch multinational brewing company Heineken NV, reported a net loss of Rs 1.81 crore in the October-December quarter of the previous year, as stated in a regulatory filing.

During the quarter under review, United Breweries Ltd (UBL) witnessed a 12.28 percent increase in revenue from operations, reaching Rs 4,154.98 crore compared to Rs 3,700.49 crore in the corresponding period of FY23.

UBL stated in its earnings statement that in Q3, volumes rose by 8 percent, propelled by robust underlying demand, with the premium segment outpacing the rest of the portfolio, growing by 14 percent.

UBL's volume growth was primarily fueled by Tamil Nadu, Telangana, Orissa, Maharashtra, and Rajasthan, although this was partially offset by decreases in Delhi and Kerala.

Additionally, the company implemented price increases in key markets such as Rajasthan, Uttar Pradesh, and Karnataka.

In the December quarter of FY24, UBL experienced a 10.54 percent increase in total expenses, amounting to Rs 4,062.87 crore, while total income rose by 12.55 percent to Rs 4,179.75 crore.

Regarding the outlook, UBL noted that despite observing some easing of inflationary pressures compared to Q2, volatility is expected to persist.

The company expressed its ongoing commitment to enhancing margins through revenue management and cost-saving measures, alongside increasing investments in its brands and capabilities.

On Thursday, United Breweries Ltd's shares closed at Rs 1,757.75 on the BSE, marking a 1.78 percent decrease from the previous closing price.

Alcoholic beverage maker United Breweries Ltd on Thursday stated  that it suffered a consolidated net loss of Rs 1.81 crore in the third quarter of the fiscal year ending December 31, 2022.

The loss was due to the impairment of assets in the states of Tamil Nadu and Andhra Pradesh, along with increased expenses.

In comparison, the company had recorded a consolidated net profit of Rs 91.02 crore in the same quarter of the previous fiscal year, according to a filing with regulatory authorities.

During the quarter that was being analyzed, the consolidated total income was recorded at Rs 3,713.54 crore, compared to the previous year's figure of Rs 3,517.98 crore, the company stated.

According to the company, the total expenses for the quarter were higher at Rs 3,675.28 crore as compared to the previous year's expenses of Rs 3,394.4 crore during the same quarter.

The company reported that it experienced ongoing inflationary pressures on its costs, particularly in the prices of barley and packaging materials.

During the quarter, it faced an exceptional expense of Rs 33.12 crore, which was recorded as impairment on property, plant and equipment in Tamil Nadu and Andhra Pradesh.

According to UBL, the change in operating models in Tamil Nadu and Andhra Pradesh led to lower cash inflows and reduced revenue, causing a decline in the company's financial performance.

UBL also stated that this change resulted in a review of the impairment across property, plant and equipment of the breweries in Tamil Nadu and Andhra Pradesh.

Brand's inflationary pressure on costs is expected to persist in the near future, and the company intends to take appropriate measures to minimize its impact as much as feasible.

Bengaluru-based United Breweries Ltd (UBL) witnessed a "high-single-digit" volume growth in the domestic market during January-March 2022 quarter, according to its largest stakeholder Heineken.

Moreover, the consolidation of UBL in India has "positively impacted net revenue” by Euro 200 million, Dutch brewing major Heineken said on Wednesday in its earnings statement for the first quarter of 2022, reported PTI.

In India, beer volume grew by a high-single-digit, outperforming the market. UBL experienced progressive growth during the quarter with the declining impact of the COVID omicron variant," it said.

The Asia Pacific region, under which India falls, has returned to growth following the lockdown in the second part of last year, Heineken added.

Heineken's Asia Pacific net revenue grew 9.2 per cent organically, with total total consolidated volume rising by 2.8 per cent.

"The consolidation of UBL in India positively impacted net revenue by Euro 200 million or 4.6 per cent," it said.

Its beer volume increased organically by 2.8 per cent over the last year, led by the strong recovery of Cambodia and Malaysia.

"The premium portfolio declined by a low-single-digit, driven by Vietnam while staying ahead of 2019 by a high-single-digit," it said.

United Breweries Ltd (UBL) posted an all-round performance with double-digit volume growth, higher realizations and increased gross contribution of 60bps along with better managed fixed costs, to deliver a significant increase in profits for the fourth quarter ended March 2019.

All key markets, except for West Bengal, witnessed growth. In West Bengal, there was a large drop in consumption on account of a steep duty hike in January 2018.

Regional performances for the year ended March 2019:

In the North, UBL saw significant volume growth in Rajasthan and Haryana. Delhi volumes were flat and there was a decline in volumes in U.P primarily because of capacity constraints.

In the South, UBL registered double-digit volume growth in all the markets with the exception of Karnataka, where growth was restricted to high single digits.

Growth in the East was driven by Odisha and Jharkhand.

In the West, all the key markets grew in single digits while Rest of Maharashtra grew in double digits on account of the base effect.

In the fourth quarter, volume grew in all markets except West Bengal, Uttar Pradesh and Maharashtra.

UBL’s growth continues to lead the industry, strengthening its market position.

The good performance generated healthy operating cash flows, which along with better working capital management helped internal funding of Rs 430 crores investments in the business. Lower gross debt helped to reduce interest costs by 34%.

Unibev is looking to raise Rs 100 crore to fund an expansion drive planned by the premium alcohol startup, founded by former United Spirits managing director Vijay Rekhi in collaboration with bulk alcohol producer Globus Spirits.

“The fundraising will be completed before March 2019 to help us spread to the top 17 markets in the country and enable us garner around a tenth of India’s premium alcohol market, which is currently growing at 9% a year,” Rekhi told ET.

He said the company has launched the Governor’s Reserve whisky using 12-year-old scotch, Oakton Barrel Aged whisky with 18-year-old scotch and a brandy brand, L’Affaire, using three-year-old grape spirit in the southern states.

Unibev’s offerings compete with the premium brands of French giant Pernod Ricard and British company Diageo, which now controls United Spirits.

“In a price-sensitive market, our premium brands are priced very competitively to deliver to consumer aspiration for scotch like smooth and premium blends,” said Rekhi, adding that this was part of a strategy to disrupt India’s premium alcohol market.

The firm is now eyeing to sell 100,000 cases in the first year that could fetch it a 5-7% market share in Karnataka, Andhra Pradesh, Telangana and Puducherry where it currently sells products. While the semi-premium and premium whisky segments were growing at 7% and 9% a year, respectively, in India, the premium brandy market is growing at 15%.

Rekhi said Unibev’s partner Globus Spirits owns the largest grain-based distillery in India that offered a distinct advantage for the startup’s premium portfolio.

The company is looking at launching whiskies of higher vintage shortly, he said.

Viewing that the Indian market had not seen any innovation in brandy flavours for more than three decades, Rekhi said Unibev’s L’Affaire was a runaway success in the pilot market of Puducherry. “Here again, we plan to launch brandies with higher vintages, shortly,” he said.

Rekhi said Unibev would ramp up its portfolio also with premium differentiated rum, vodka, beer and imported brands. “This is the beginning of a long drawn out disruption by Unibev in all flavours and profitable price points in the Indian beverage alcohol market,” he said.

World’s largest beer maker Heineken NV, the majority partner of United Breweries with Vijay Mallya, is understood to have sought legal opinion over its right to appoint a chairman at the Indian company, top officials close to the development said.

Heineken and some of its advisers believe that the shareholder agreement between Mallya and the beer giant has become null and void after India’s Enforcement Directorate attached his shares as part of its legal action against the liquor baron.

Heineken is also believed to have begun discussions with Mallya on his role as chairman in UBL. The original shareholder agreement between the two allowed Mallya to be chairman for life and a non-retiring director. This status can change only if he steps down on his own or nominates someone to replace him.

The board of UBL, India’s biggest beer company, had asked Mallya to either step down or appoint a nominee after the Securities and Exchange Board of India barred wilful defaulters from holding key board positions last year.

Mallya promised to do something by December 2017 while emphasising his opposition to an outside nominee.

The board officials are believed to be upset by the long delay and by Mallya’s opposition to a nominee. An acting chairman has been presiding over board meetings at UBL for nearly a year now and Heineken and UBL officials say that this situation cannot continue for long.

“This issue has not affected our business operations in any way and we are in fact recording good growth…we are hoping that it will be resolved soon,” he said.

Company officials are hoping the next annual general meeting would be the last to be chaired by an acting chairman after which the board will find a new chairman.

“The company is functioning well and operations are in good shape…but it is not good corporate governance to have an acting chairman for so long,” a company board member said seeking anonymity.

Mallya last chaired a UBL board meeting in November 2016 through a video conference from London. UBL has stopped sharing confidential information with Mallya and has said that he is no longer privy to any strategic developments.

Mallya fled to London in 2016 soon after lenders to his defunct airline Kingfisher Airlines declared him a wilful defaulter.

The banks want to recover an estimated Rs 9,000 crore from him in repayments of loans to Kingfisher Airline.

United Breweries in a regulatory filing in May 2018 said the Enforcement Directorate attached over 4.13 crore equity shares aggregating 15.63% stake held by eight promoter firms of the company and transferred to the agency.

With this transfer, the Enforcement Directorate (ED) now holds 4,27,04,758 equity shares (16.15% stake) in the company, said United Breweries.

The promoter companies, whose shares have been transferred to ED include United Breweries (Holdings) Ltd (1.95 crore shares aggregating to 7.39% stake) and McDowell Holdings Ltd (18.59 lakh shares, or 0.7%.

United Breweries Limited has announced the launch of the iconic Dutch beer brand AMSTEL, a new International super premium strong beer in the Indian market. AMSTEL is a slow-brewed and extra matured lager, internationally appreciated for its quality and enjoyed in over 100 countries across the globe.

Named after the AMSTEL River in Amsterdam, the water of which was used in the production at the first AMSTEL brewery, AMSTEL is a light-bodied, easy to drink smooth beer, which has delighted consumers across the world and now it is set to cater to beer lovers in India.

The introduction of AMSTEL comes as an answer to the growing demand for a premium, strong quality beer in the Indian market. This launch brings another major imported brand into the UBL product portfolio, after the recent launch of Desperados, Dos Equis, Affligem, Edelweiss and Sol, increasing its brand touch points through an amazing collection of quality crafted international premium beers.

Speaking at the launch event in Bangalore, Mr. Samar Singh Sheikhawat, Chief Marketing Officer, United Breweries Limited said “AMSTEL is one of Amsterdam’s oldest beers, sold globally in over a 100 countries. We see the brand has great potential in the premium strong segment that currently lacks options and we hope to fill the gap with AMSTEL. For over a century, AMSTEL has been synonymous with quality and enjoyment and we are sure that this latest addition to UBL’s product portfolio will excite our target consumers and give them a sense of ‘Beer Nirvana’.” 

AMSTEL will be available in 650ml bottles and 500ml cans in the brand’s iconic green, red and gold colors. The unique packaging design incorporates and enhances its exemplary brand appeal, reinforcing the premium positioning of the brand. The labeling will clearly display the promise of a bold, full-bodied taste.

Currently launched in Karnataka, AMSTEL will be available pan-India over the next couple of months. AMSTEL Beer, with its very distinctive and distinctive smooth taste, has over the years become well known beyond the borders of its native country. A unique beer proposition for consumers, it offers a premium alternative to the domestic strong beer selection. AMSTEL ambitiously aims to become the most admired strong beer in the premium.

McDowell Holdings', promoter firm pledged stake in United Breweries Ltd (UBL) has come down to 3.02 per cent, after lender Yes Bank invoked the pledge on part of the shares encumbered with it, reported PTI.

Yes Bank sold 4.15 lakh shares or 0.157 per cent stake of UBL, India's largest brewer that makes Kingfisher beer for Rs 39.48 crore through an open market transaction on Friday.

These shares were purchased by Heineken International BV, the maker of Heineken beer which already holds a significant stake in UBL.

Earlier to this transaction, McDowell's holdings encumbered with the lender stood at 3.18 per cent. Yes Bank has invoked the stake "to secure loans given to group companies."

For all promoters put together, including McDowell, over 15 per cent stake is pledged with various financial institutions. Heineken is the largest shareholder of United Breweries with 42.22 per cent stake.

State Bank of India (SBI) earlier had declared Vijay Mallya, Kingfisher Airlines and its holding company United Breweries Holdings, as wilful defaulters for defaults on nearly Rs 7,000-crore loans to the long-grounded carrier.

Meanwhile, the 17 lenders to the airline had said they will e-auction the assets of the grounded airline, in their latest bid to part recover their dues of around Rs 7,000 crore and accrued interest on the principal that has not been serviced since January 2013.

The airline, owned by Mallya, had taken Rs 6,900 crore from a consortium of 17 lenders, led by SBI, in early 2010 after a second debt restructuring for the airline.