Bangalore, Dec 7 (Inditop.com) Liquor baron and chairman of UB Group Vijay Mallya Monday entered into a strategic alliance with leading Dutch brewer Heineken NV to distribute its beer in India.
As per the agreement, the UB Group, including United Breweries Ltd (UBL) and United Breweries Holdings Ltd (UBHL), and the $14.32-billion Heineken group have resolved their differences and decided to withdraw litigations between them.
“The new alliance will offer consumers a portfolio of national and international brands in India, including UBL’s Kingfisher and Heineken, the largest global beer brand,” the company said in a statement here.
Around 25 million glasses of Heineken are consumed the world over every day.
The partners have also agreed to produce and market Heineken brand in India to consolidate UB’s dominance in the premium beer segment in the country.
“UBL will work with Heineken to expand the international presence of its Kingfisher brand through the former’s global footprint,” the statement said.
Heineken also holds 37.5 percent stake in UBL, with Mallya and associates owning another 37.5 percent and the remaining 25 percent being held by the public.
“The Indian beer market has seen a strong and exciting growth over the last several years. Given the young demographics of the country, I foresee many decades of strong and profitable growth,” Mallya said after a UBL board meeting in Mumbai.
The groups were locked in a legal tussle over Heineken’s holdings in Mallya’s Singapore-based competitor Asia Pacific Breweries (APB).
To expand its business in South Asia, APB had in 2006 acquired 76 percent stake in Aurangabad Breweries Ltd (ABL) from the Goa-based shipping and mining organisation Chowgule group.
As part of the agreement, Heineken will acquire ABL for Rs.174 crore (Rs.1.74 billion/$37.3 million).
“Post-acquisition of ABL in the first quarter of 2010, Heineken will transfer these businesses to UBL next year,” the statement added.
APB’s portfolio of brands includes Tiger beer, Heineken, Anchor and ABC Stout. It operates breweries in 12 Asian countries and exports to more than 60.
Heineken, which also holds 50 percent equity in Millennium Alcobev, a joint venture of UBL and British beer giant Scottish and Newcastle, will merge its interest into UBL.
Following the agreement, three members of Heineken joined the UBL board, two as non-executive directors and the third as chief financial officer.
“A strong Indian presence is important for us to increase our exposure to and growth from developing markets,” said Heineken chief executive Jean-Francois Boxmeer in the statement.
“Our partnership with UB and the combination of Kingfisher and Heineken brands will transform our ability to unlock the market’s potential and shape the premium segment,” he added.
Heineken remains Asia’s number one international premium beer, with 25 percent market share in the Asia-Pacific international premium beer segment.
