France’s Soufflet taps growing Indian beer market with Alwar buyout
- Farm distress is now haunting us: NITI Aayog’s Rajiv Kumar
- Uttam Galva gets nod for change in ArcelorMittal Netherlands’s profile
- Ujjawala scheme: Indian Oil, others defer loan recovery up to 6 refills
- Lingayats and Veershaiva one and the same, says All India Veershaiva Mahasabha
- Raghuram Rajan, corporate leaders to set up Rs750 crore university
London: French agribusiness Groupe Soufflet is taking advantage of India’s growing beer market with the acquisition of a malt house.
Soufflet, Europe’s top private buyer of grain, acquired the Alwar malt house in Rajasthan, India’s biggest state, said Christophe Passelande, director of the company’s malting unit. The buyout made Soufflet the first foreign maltster in India. He declined to discuss financial terms of the deal.
India’s growing population and higher incomes are helping boost beer consumption, with sales forecast to rise more than 5% a year through 2020, according to Euromonitor International Ltd. Drinking with friends is becoming more socially acceptable in India, where alcohol is still controlled by state laws, the London-based consumer researcher said in a report.
“The middle class is growing fast, and that’s very important for our customers in the beer and whisky industries,” Passelande said in a telephone interview on Tuesday. “If the middle class is growing, they have new potential customers.”
Malt houses are used to soak barley and produce malt, a fermented starch that’s one of the main ingredients in beer.
Soufflet is actively looking for new malt houses to buy in India and would consider building a new plant if it can’t find suitable takeover targets.
Alwar Malt House
The Alwar plant, built in 2012, has capacity to produce 18,000 metric tons of malt a year and employs 65 people, according to Soufflet, which owns 28 malt houses in 13 countries. Soufflet has been making malt at Alwar for the past two years under a contract with the plant’s owner, Passelande said.
Soufflet is investing in the Indian malting industry because the nation can grow barley and there will be more beer drinkers in the future. The group, which produces about 2.3 million tonnes of malt a year, has been working with farmers in India to improve the quality of their barley.
“We look at our business as a malting barley supply-chain manager and not only as a processor, so we are interested to develop where we see a potential to grow barley locally,” he said. “India shows that potential.”
Varying policies on alcohol from state to state are a challenge for brewers, which can also impact sales of malt, Passelande said. Beer sales growth in India slowed to 2% in 2015 after annually expanding at an average rate of almost 10% in the previous four years partly as higher taxes in some states hurt demand, Euromonitor said.
Sales are still expected to rise faster than the global average, which is forecasted at about 1.5% a year on average through 2020, Euromonitor data showed.
There’s a lot of potential for the industry to expand in India. Average consumption is only 2 liters per person, compared to 30 liters in France and 35 in China, Passelande said.
The whisky market is another opportunity. India imports very little malt and is a big producer of whisky, according to Soufflet.
“Growth is there, maybe not as fast as everybody was expecting,” Passelande said. “The potential is still huge.” Bloomberg