Description
This is document about company analysis of United breweries.
Company Analysis of ‘United Breweries Holding Ltd. (UBHL)’
Industry Analysis-Brewing: Brewing is the production of beer by fermentation of starches, mainly derived from cereals the most common of which being barley. Beer is the world's oldest beverage and the third most popular drink overall after water and tea. Today, the brewing industry is a global business, consisting of several dominant multinational companies and many thousands of smaller producers ranging from brewpubs to regional breweries. Anheuser-Busch InBev N.V. is the world's largest brewing company with nearly 25% global market share. The Indian beer industry has been witnessing steady growth of 10 - 17% per year over the last ten years. Due to the increasing flow of western culture through media and workforce, the cultural intolerance towards alcohol has relaxed significantly and popularity of beer is increasing amongst the new generation in the age group of 18-35, which is around 65% of the population. Rising income levels in this group has also boosted the growth of the industry. Per capita beer consumption in India is only 2 liters per year. Also unlike global market, Indian market for alcoholic beverages is more dominated by hard drinks with beer forming merely 4% of share. Also amongst the beer consumption, almost 85% of the beer consumed is strong with the alcohol content as high as 8%. PEST Analysis: Political Factors: Beer industry is highly regulated and controlled by the government in India. Moreover, there are many social and cultural barriers. Advertising alcoholic beverages is banned in India as per the Cable Television Network (Regulation) Amendment Bill, which came into effect on September 8, 2000. The government is very particular against broadcasting such advertisements on its channel, Doordarshan, whereas most of the private channels still broadcast surrogate alcohol advertisements. Also, government has been campaigning strongly against drinking and driving to decrease the road injuries caused by driving under the influence of alcohol. Brands are always blamed indirectly for making alcohol easily available. Also because of high custom duties, the market has not very much opened for the imported beers. Economical Factors: Beer is taxed higher by most states compared to Spirits on absolute alcohol basis. This is primarily because taxes on beer in India tend to be relatively higher than spirits whereas in most parts of the
world, in fact, the reverse is true. Globally, on a per alcohol basis beer is taxed at 50% of hard liquor whereas in India, beer is actually taxed 60% more than hard liquor. Moreover, taxes on beer in India vary from state to state. For the movement of beer from one state to another, an export license and an import license is required. Export fee is imposed in the state where beer is manufactured and import fees on the State where it is sold. In some states only beer manufactured in that state can be sold. Social Factors: Beer consumption in India in increasing due to increase in the income levels of the middle class and decline in the average age of population in India. Urban consumers become more exposed to western lifestyles, through overseas travel and the media, and opening up for alcoholic beverages. Social habits are undergoing a transformation as mixed drinks are becoming more popular. The greatest evidence of this trend is the increase in beer consumption among women. With increasing urbanization this lifestyle change will only increase the alcoholic consumption. Technological Factors: In accordance with the world, the Indian breweries are keeping up their pace with state of the art technology. Craft brewers such as International Breweries P. Ltd., have entered the market with a focus on high quality brewing. As a result, the quality of Indian beer has improved dramatically over the past decade. Competitor Analysis: Due to very less per capita beer consumption, many foreign players are entering the market to win their share in the untapped Indian market. The global brewers are forming partnerships, introducing new products and marketing milder, pricier brews to consumers. United Breweries Ltd. (UBBL), owner of top local brand Kingfisher, remains the market leader with almost 57% market share in 2011. It has 28 breweries in the 28 states. Kingfisher, the leading brand under UB, introduced new milder and higher priced product like Kingfisher Ultra. The second largest player SABMiller is losing out as its share dropped to 24% in 2011 from 37% in 2006. SABMiller owns 13 breweries in the India. SABMiller also added brands, such as Miller High Life, to reach young, urban consumers. Carlsberg, which entered India in 2007, had a 4.4 percent share in 2011. It has 5 breweries. Carlsberg has introduced stronger brews, including Carlsberg Elephant and Tuborg Strong. Anheuser-Busch InBev, the Leuven, Belgium-based company that sells its Budweiser beer, held 1.1 percent. Many microbreweries are coming up in the urban cities such as Gurgaon, Bangalore and Pune. In addition, with the increase in taxes on imported beers, companies are now starting these microbreweries where beers can be brewed fresh using a variety of ingredients to create a diverse selection of beers. Howzatt, Biere Club and Doolally are a few of the microbreweries started in India.
SWOT Analysis: Strengths: - Increasing acceptance towards alcoholic beverages with the changing lifestyle, exposure to western culture and urbanization. - Strong beer (with alcohol content higher than 5%) dominates consumption with almost 85% consumption. - High quality brewing with the craft brewers. Weakness: - Higher taxes (state subject) on beer - Restriction on movement of beer from state to state - Difficult access to raw materials like bottles, barley - Advertisement barrier - Consumer preference towards hard spirits Opportunity: - Fast growth potential due to very low per capita consumption. - Strong potential for growth for premium and handcrafted beer. - Beer clubs and microbreweries are expected to expand their reach and even target secondand third-tier cities all over India. Threat: - Rising cost of raw materials such as bottles and barley. - Increasing wine consumption - Threat of substitute goods
Company Analysis
Description: United Breweries Holding Ltd. (UBHL) is the holding Company of the UB (United Breweries) Group. The company operates majorly in the brewing through its holding in the United Breweries Ltd.The. The Company’s core business is in manufacture, marketing and distribution of beer since the transfer and vesting of the brewing business in terms of the Scheme of Arrangement. UBL is a top player in the beer industry owning a number of popular beer brands. Company markets most of its beer under the Kingfisher brand Through its holdings in Kingfisher Airlines Limited and United Spirits Limited company also operates in the aviation, spirits and fertilizers industries. UBL has a network of 23 distilleries across the country to meet the requirements at the regional level giving it an unparalleled distribution reach within India.
Information about Company:
Date of Establishment Revenue Market Cap Corporate Address
1999 1022.01 ( USD in Millions ) 132982.56968955 ( Rs. in Millions ) U B Tower U B City No 24 ,Vittal Mallya Road, Bengaluru560001, Karnataka
Management Details
Business Operation Financials
Chairperson - Vijay Mallya MD - Kalyan Ganguly Directors - A K Ravi Nedungadi, Chhaganlal Jain, Chugh Yoginder Pal, Ernst Willem Arnod Van De Weert, Govind Iyengar, Guido De Boer, John Hunt, John Nicolson, John Simon Hunt, Kalyan Ganguly, Kennth Choo Tey Siam, Kiran Mazumdar Shaw, Lesley Jackson, Madhav Bhatkuly, Rene Hooft Graafland, Stephan Gerlich, Sunil Alagh, Theodorus Antonius Fredericus de Rond, Vijay Mallya Breweries & Distilleries Total Income - Rs. 30959.908 Million ( year ending Mar 2011) Net Profit - Rs. 1472.865 Million ( year ending Mar 2011) Total shareholding of Promoter and Promoter Group = 74.82% Total Public shareholding = 25.18%
Shareholding Pattern:
Financial performance of the company: UBL captured the majority market share as 57% in highly competitive beer market in India. Majority of the market share was won by the leading brand Kingfisher. With the strong beer generating most of the revenues, the launch of the super premium Kingfisher Ultra has met with unprecedented success in each of the markets that it has been launched. Balance Sheet as of 31st Mar`11
There is growth in the net asset by almost Rs. 5 mio.
Consolidated Profit and Loss Account for the year ended March 31, 2011
As seen, total income has increased due to increase in the revenue. The total loss compared to the previous year has also reduced by 50%. Performance in FY12: - The stock of United Breweries has substantially risen by over 40% from its 52-week low of 355 in last November. - Dominance in domestic beer market and strong brand recognition have played major roll to bring the investors back.
-
In FY12, the company reported an 18.5% growth in revenue at Rs 3,625.2 crore. However due to increase in raw material cost and higher expenses in distribution resulted in the lower margin at the earning before tax. Non-current borrowings shot up 50% to Rs 465.2 crore in FY12 from FY11. The faster increase in debt relative to equity growth has resulted in higher debt-equity ratio.
SWOT Analysis: Strength: - Knowledge transfer with the partnership with Heineken. - Majority market share of 57% - Well acceptance of new products like Kingfisher Ultra and Kingfisher Blue. - Largest network of 23 breweries. Presence in most of the state markets. - Successful surrogate marketing has made Kingfisher most visible brand in India. Weakness: - High taxes on the beer in country - Huge debt on the books of Kingfisher Airlines, a subsidiary of the UB Group. Opportunity: - New brewing facility for Heineken. - Penetration into tier2 and tier3 cities. Threats: - Increasing D/E ratio - Potential increase in agro products in near future because of weak monsoon. - Increasing competition from rival brands
Strategies by Company
ALLIANCE WITH HEINEKEN N.V. Heineken Group (Heineken) holds 37.5% equity shares in United Breweries Ltd. The alliance will offer consumers the best portfolio of national and international brands in India, including Kingfisher, the number one Indian brand, and Heineken, the largest global beer brand.
-
-
UBL has commenced brewing Heineken Lager at its brewery in Taloja, Maharashtra. Heineken will be positioned as a ultra premium lager targeted at the affluent and discerning consumer. The Company has initiated a number of corporate reorganizations to integrate the acquired breweries in different states. Introducing the Kingfisher Ultra and Kingfisher Blue at the price of premium brands and features innovations in packaging.
-
UBL has also entered into mutli-faceted strategic alliance with Scottish & NewCastle Plc (S&N), an international brewery major, with $6 billion in revenue and a market capitalization of $5.4 billion. This alliance, has allowed S&N to market it International brands like Kronenbourg in India, while allowing UBL to use S&N's global network to further globalize the Kingfisher brand.
doc_237487713.docx
This is document about company analysis of United breweries.
Company Analysis of ‘United Breweries Holding Ltd. (UBHL)’
Industry Analysis-Brewing: Brewing is the production of beer by fermentation of starches, mainly derived from cereals the most common of which being barley. Beer is the world's oldest beverage and the third most popular drink overall after water and tea. Today, the brewing industry is a global business, consisting of several dominant multinational companies and many thousands of smaller producers ranging from brewpubs to regional breweries. Anheuser-Busch InBev N.V. is the world's largest brewing company with nearly 25% global market share. The Indian beer industry has been witnessing steady growth of 10 - 17% per year over the last ten years. Due to the increasing flow of western culture through media and workforce, the cultural intolerance towards alcohol has relaxed significantly and popularity of beer is increasing amongst the new generation in the age group of 18-35, which is around 65% of the population. Rising income levels in this group has also boosted the growth of the industry. Per capita beer consumption in India is only 2 liters per year. Also unlike global market, Indian market for alcoholic beverages is more dominated by hard drinks with beer forming merely 4% of share. Also amongst the beer consumption, almost 85% of the beer consumed is strong with the alcohol content as high as 8%. PEST Analysis: Political Factors: Beer industry is highly regulated and controlled by the government in India. Moreover, there are many social and cultural barriers. Advertising alcoholic beverages is banned in India as per the Cable Television Network (Regulation) Amendment Bill, which came into effect on September 8, 2000. The government is very particular against broadcasting such advertisements on its channel, Doordarshan, whereas most of the private channels still broadcast surrogate alcohol advertisements. Also, government has been campaigning strongly against drinking and driving to decrease the road injuries caused by driving under the influence of alcohol. Brands are always blamed indirectly for making alcohol easily available. Also because of high custom duties, the market has not very much opened for the imported beers. Economical Factors: Beer is taxed higher by most states compared to Spirits on absolute alcohol basis. This is primarily because taxes on beer in India tend to be relatively higher than spirits whereas in most parts of the
world, in fact, the reverse is true. Globally, on a per alcohol basis beer is taxed at 50% of hard liquor whereas in India, beer is actually taxed 60% more than hard liquor. Moreover, taxes on beer in India vary from state to state. For the movement of beer from one state to another, an export license and an import license is required. Export fee is imposed in the state where beer is manufactured and import fees on the State where it is sold. In some states only beer manufactured in that state can be sold. Social Factors: Beer consumption in India in increasing due to increase in the income levels of the middle class and decline in the average age of population in India. Urban consumers become more exposed to western lifestyles, through overseas travel and the media, and opening up for alcoholic beverages. Social habits are undergoing a transformation as mixed drinks are becoming more popular. The greatest evidence of this trend is the increase in beer consumption among women. With increasing urbanization this lifestyle change will only increase the alcoholic consumption. Technological Factors: In accordance with the world, the Indian breweries are keeping up their pace with state of the art technology. Craft brewers such as International Breweries P. Ltd., have entered the market with a focus on high quality brewing. As a result, the quality of Indian beer has improved dramatically over the past decade. Competitor Analysis: Due to very less per capita beer consumption, many foreign players are entering the market to win their share in the untapped Indian market. The global brewers are forming partnerships, introducing new products and marketing milder, pricier brews to consumers. United Breweries Ltd. (UBBL), owner of top local brand Kingfisher, remains the market leader with almost 57% market share in 2011. It has 28 breweries in the 28 states. Kingfisher, the leading brand under UB, introduced new milder and higher priced product like Kingfisher Ultra. The second largest player SABMiller is losing out as its share dropped to 24% in 2011 from 37% in 2006. SABMiller owns 13 breweries in the India. SABMiller also added brands, such as Miller High Life, to reach young, urban consumers. Carlsberg, which entered India in 2007, had a 4.4 percent share in 2011. It has 5 breweries. Carlsberg has introduced stronger brews, including Carlsberg Elephant and Tuborg Strong. Anheuser-Busch InBev, the Leuven, Belgium-based company that sells its Budweiser beer, held 1.1 percent. Many microbreweries are coming up in the urban cities such as Gurgaon, Bangalore and Pune. In addition, with the increase in taxes on imported beers, companies are now starting these microbreweries where beers can be brewed fresh using a variety of ingredients to create a diverse selection of beers. Howzatt, Biere Club and Doolally are a few of the microbreweries started in India.
SWOT Analysis: Strengths: - Increasing acceptance towards alcoholic beverages with the changing lifestyle, exposure to western culture and urbanization. - Strong beer (with alcohol content higher than 5%) dominates consumption with almost 85% consumption. - High quality brewing with the craft brewers. Weakness: - Higher taxes (state subject) on beer - Restriction on movement of beer from state to state - Difficult access to raw materials like bottles, barley - Advertisement barrier - Consumer preference towards hard spirits Opportunity: - Fast growth potential due to very low per capita consumption. - Strong potential for growth for premium and handcrafted beer. - Beer clubs and microbreweries are expected to expand their reach and even target secondand third-tier cities all over India. Threat: - Rising cost of raw materials such as bottles and barley. - Increasing wine consumption - Threat of substitute goods
Company Analysis
Description: United Breweries Holding Ltd. (UBHL) is the holding Company of the UB (United Breweries) Group. The company operates majorly in the brewing through its holding in the United Breweries Ltd.The. The Company’s core business is in manufacture, marketing and distribution of beer since the transfer and vesting of the brewing business in terms of the Scheme of Arrangement. UBL is a top player in the beer industry owning a number of popular beer brands. Company markets most of its beer under the Kingfisher brand Through its holdings in Kingfisher Airlines Limited and United Spirits Limited company also operates in the aviation, spirits and fertilizers industries. UBL has a network of 23 distilleries across the country to meet the requirements at the regional level giving it an unparalleled distribution reach within India.
Information about Company:
Date of Establishment Revenue Market Cap Corporate Address
1999 1022.01 ( USD in Millions ) 132982.56968955 ( Rs. in Millions ) U B Tower U B City No 24 ,Vittal Mallya Road, Bengaluru560001, Karnataka
Management Details
Business Operation Financials
Chairperson - Vijay Mallya MD - Kalyan Ganguly Directors - A K Ravi Nedungadi, Chhaganlal Jain, Chugh Yoginder Pal, Ernst Willem Arnod Van De Weert, Govind Iyengar, Guido De Boer, John Hunt, John Nicolson, John Simon Hunt, Kalyan Ganguly, Kennth Choo Tey Siam, Kiran Mazumdar Shaw, Lesley Jackson, Madhav Bhatkuly, Rene Hooft Graafland, Stephan Gerlich, Sunil Alagh, Theodorus Antonius Fredericus de Rond, Vijay Mallya Breweries & Distilleries Total Income - Rs. 30959.908 Million ( year ending Mar 2011) Net Profit - Rs. 1472.865 Million ( year ending Mar 2011) Total shareholding of Promoter and Promoter Group = 74.82% Total Public shareholding = 25.18%
Shareholding Pattern:
Financial performance of the company: UBL captured the majority market share as 57% in highly competitive beer market in India. Majority of the market share was won by the leading brand Kingfisher. With the strong beer generating most of the revenues, the launch of the super premium Kingfisher Ultra has met with unprecedented success in each of the markets that it has been launched. Balance Sheet as of 31st Mar`11
There is growth in the net asset by almost Rs. 5 mio.
Consolidated Profit and Loss Account for the year ended March 31, 2011
As seen, total income has increased due to increase in the revenue. The total loss compared to the previous year has also reduced by 50%. Performance in FY12: - The stock of United Breweries has substantially risen by over 40% from its 52-week low of 355 in last November. - Dominance in domestic beer market and strong brand recognition have played major roll to bring the investors back.
-
In FY12, the company reported an 18.5% growth in revenue at Rs 3,625.2 crore. However due to increase in raw material cost and higher expenses in distribution resulted in the lower margin at the earning before tax. Non-current borrowings shot up 50% to Rs 465.2 crore in FY12 from FY11. The faster increase in debt relative to equity growth has resulted in higher debt-equity ratio.
SWOT Analysis: Strength: - Knowledge transfer with the partnership with Heineken. - Majority market share of 57% - Well acceptance of new products like Kingfisher Ultra and Kingfisher Blue. - Largest network of 23 breweries. Presence in most of the state markets. - Successful surrogate marketing has made Kingfisher most visible brand in India. Weakness: - High taxes on the beer in country - Huge debt on the books of Kingfisher Airlines, a subsidiary of the UB Group. Opportunity: - New brewing facility for Heineken. - Penetration into tier2 and tier3 cities. Threats: - Increasing D/E ratio - Potential increase in agro products in near future because of weak monsoon. - Increasing competition from rival brands
Strategies by Company
ALLIANCE WITH HEINEKEN N.V. Heineken Group (Heineken) holds 37.5% equity shares in United Breweries Ltd. The alliance will offer consumers the best portfolio of national and international brands in India, including Kingfisher, the number one Indian brand, and Heineken, the largest global beer brand.
-
-
UBL has commenced brewing Heineken Lager at its brewery in Taloja, Maharashtra. Heineken will be positioned as a ultra premium lager targeted at the affluent and discerning consumer. The Company has initiated a number of corporate reorganizations to integrate the acquired breweries in different states. Introducing the Kingfisher Ultra and Kingfisher Blue at the price of premium brands and features innovations in packaging.
-
UBL has also entered into mutli-faceted strategic alliance with Scottish & NewCastle Plc (S&N), an international brewery major, with $6 billion in revenue and a market capitalization of $5.4 billion. This alliance, has allowed S&N to market it International brands like Kronenbourg in India, while allowing UBL to use S&N's global network to further globalize the Kingfisher brand.
doc_237487713.docx