Home / Industry / SABMiller to launch premium strong beer

Bangalore: India’s second-largest brewer, SABMiller India Ltd, plans to launch a new strong beer called Miller Ace this year, as it looks to tap rising demand for higher-priced strong beer, a product category in which the company has lagged rivals such as Carlsberg Group and Anheuser-Busch InBev, three people familiar with the matter said.

Strong beer, which refers to brews with alcohol content of 5-8%, accounts for 85% of all beer sales in India.

Miller Ace would be an extension of the company’s mild beer Miller High Life, and it will compete directly with Carlsberg Elephant beer and Budweiser Magnum, the people cited above said, on condition of anonymity.

Miller Ace, expected to be launched before the end of this financial year, would be SABMiller’s priciest strong beer. A 650ml bottle of Budweiser Magnum costs Rs140 in Karnataka.

SABMiller India, which also owns brands such as Foster’s, Haywards and Royal Challenge beer, declined to comment on Miller Ace.

The proposed launch of Miller Ace is part of the new management’s plan to rev up growth by increasing sales of high-margin brews and revive its fortunes in India where it has lost market share to newer entrants Carlsberg and Anheuser-Busch InBev, as well as market leader United Breweries Ltd (UBL).

Though the company’s losses have narrowed in some of the past few years—for the year ended 31 March 2013, net loss dropped to Rs88.3 crore from Rs119.4 crore the previous year—rivals have quickly moved to take up the space vacated by SABMiller. Anheuser-Busch’s Budweiser, UBL’s Kingfisher and especially, Carlsberg’s Tuborg, have all gained sales at the expense of SABMiller brands.

Budweiser Magnum and Carlsberg Elephant currently dominate sales of premium or higher-priced strong beer in India.

SABMiller, which typically rotates its executives in various markets around the world, changed its senior management team in India over the past 18 months. Grant Liversage replaced Paolo Lanzarotti as managing director last June while Darioush Afzali took over as marketing head in October 2012 from Derek Jones.

Under the new management, SABMiller has expanded distribution of Peroni, the priciest beer in the company’s portfolio, and re-launched Foster’s last month. Mint reported on 8 May that the company was planning to re-launch Foster’s, positioning the Australian-origin beer as a refreshment drink, and re-name Foster’s Strong as Foster’s Gold.

“We’ve been conducting extensive consumer research over the past 18 months and what we saw is that the single biggest need that consumers expressed was refreshment," marketing director Darioush Afzali said in an interview. “No brand has so far addressed this need in alcohol. So over the past year-and-a-half we’ve done work on finding out how do we make the brew of both Foster’s lager and the new Foster’s Gold more refreshing."

Afzali said that SABMiller would install ‘sub-zero’ fridges in more than 1,000 liquor stores this year to ensure Foster’s was sold chilled. The company has also started installing “extra-cold" draught beer taps in bars and restaurants and it plans to cover more than 400 outlets this year.

Over the last four years or so, SABMiller has pursued a strategy of improving margins rather than gaining market share at any cost, so it restricts its presence to states where profits are relatively higher and offers lower discounts to retailers and distributors compared with rivals.

Afzali, however, rejected criticism of the company’s strategy and said that it is growing sales and profits in states such as Maharashtra, Punjab and Haryana, where margins are relatively higher.

“The business is geared to deliver a more profitable revenue growth. Whether that in the short term implies national market share decline, it’s not really a problem. Our strategy is to build scale and share in the markets which are profitable," he said.

SABMiller will launch more brands in India and significantly expand distribution of its higher priced beers.

“We’ve identified 50 smaller cities and towns (Chandigarh, Lucknow, Mangalore, etc) that are very similar to the likes of Delhi and Mumbai in terms of consumer behaviour. You can expect in the next five years they will become the next metros. All our marketing and distribution strategies are geared for that," Afzali said.

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