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Business News/ Companies / UB strengthens hold over the beer market
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UB strengthens hold over the beer market

UB strengthens hold over the beer market

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United Breweries Ltd (UBL) has gained from the settlement between the UB Group and Heineken NV. It will now become the main vehicle for Heineken’s plans in India and also market Heineken beer

Graphics by Ahmed Raza Khan / Mint

The issue has been settled with Heineken continuing to have the rights to nominate three directors on UBL’s board, but no details have been mentioned about the other rights under the shareholders agreement. The main news of interest for UBL’s shareholders is that Heineken will transfer its existing operations, run through Asia Pacific Breweries, to UBL in 2010. Heineken’s 50% stake in Millennium Alcobev will also be merged into UBL, leading to UBL owning 100% of this company. Though not explicitly mentioned, this transaction is likely to be done through a scheme of arrangement.

These transactions are significant as Heineken would have been a competitor to UB in the Indian market, even as it held a 37.5% stake in the firm. The market for premium beer is expected to increase in India from the current level of 6% of the 14.4 million hectolitre beer market. UB will now brew and sell Heineken in India, too, giving it a very strong position in the premium end of the market. UB has been growing at above market rates in the current year, with beer volume growth of about 16% compared with the market growth of 8%. Its share price rose by 4.7% on a day when the market was weak—evidently, investors liked what they heard.

The stock has been rising recently, also an indication that the street was expecting an announcement on these lines.

Write to us at marktomarket@livemint.com

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Published: 08 Dec 2009, 12:12 AM IST
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