Mumbai: Chief executive officer and president of Asia Pacific operations of the world’s leading beer company Anheuser-Busch International Inc,Stephen J. Burrows is brewing a long-term strategy for India. In an exclusive interview with Mint, Burrows, who was in Mumbai last week to launch the Budweiser brand in the domestic market through a joint venture with the Hyderabad-based Crown Beers Group, said India is strategically an important market for the company in Asia. Burrows says the company will invest enough money in India to replicate the success of its China foray. Edited excerpts:
Why did Anheuser-Busch, which operates through subsidiaries in most markets around the world, opt for a joint venture in India?
Every country has its own business characteristics in terms of regulations, market conditions, consumer attitude, etc. Considering the unique nature of Indian regulations and market culture, we realized that a local business group, which has a rich brewery business experience, would be of tremendous help for us to establish business here. The local partnership in fact helped us enter the market in less than year since our initial proposal. Had we decided to come to the market on our own, it would have taken us at least three years to set shop in India.
We have adopted a similar model in China where we have tied up with the local government and a few other investment partners. Currently, we have over 5% share in the 230 million hectolitre Chinese beer market and it is one of our largest markets in the Asia Pacific region with 13 breweries.
Since Indian drinking culture is changing with the rise in income level of younger population, we hope there is scope for enough market expansion here too.
How are you going to position your brands in India, where a wide range of local beer brands are already available at prices that are lower than yours?
As the Indian beer market continues to experience tremendous growth, our goal is to best position Budweiser as a leading brand in the premium category. Brewed locally, Budweiser will distinguish itself with Indian consumers as a great-tasting beer with unmatched quality and freshness. Budweiser is currently sold in hotels, retail outlets and bars in Andhra Pradesh and Mumbai. Crown Beers plans to expand Budweiser’s distribution across southern and western India throughout the summer.
We target to capture at least 5% market share in the currently estimated 8 million hectolitre Indian beer market with a 25-30% annual growth in the next five years.
Since you brew these brands locally, will it be different in quality and flavour from your international brands?
As far as the brewing standards and the quality of raw material are concerned, there is absolutely no difference. Budweiser, which is sold in India, will be identical to the brand sold elsewhere in the world.
We will import the barley malt from Canada for the Indian production. We hope to make the malt locally possibly from next year but will continue importing barley from Canada to maintain the global quality standard.
What is the current brewing capacity at the Hyderabad brewery?
Currently, we have a brewing capacity of five-lakh hectolitre per annum at the new brewery in Hyderabad. An additional capacity can be built at the same facility.
However, since the state-to-state export duty structure existing in India significantly adds up the cost, we may look at another brewery in Maharashtra later. After Andhra Pradesh, Maharashtra can be our next big market.
Will you be looking at local acquisitions for additional capacity as well as an expansion of your brand portfolio?
At the moment, there is no such plan. But we may look at these options as well when we need more facilities, geographical spread and more region specific brands.
For instance, Armstrong (one of the company’s brands) is specifically for Indian market. Our immediate plan is to concentrate in the southern and western markets in the country. As we grow to the other markets, there will be need of additional brewing capacity.