SABMiller acquires 100% stake in Foster’s India

The world’s largest brewer by volume, SABMiller plc will acquire the Indian assets of Australia's biggest alcohol drinks company, Foster's Group Ltd., in an all-cash agreement worth about Rs. 540 crore ($120 million).

SABMiller plc, the company formed by the merger of South African Breweries and Miller Brewing and headquartered in London, has acquired 100% stake in Foster’s India, including its assets and brand in the territory for $ 120 million on a cash-free debt-free basis.

Currently, Foster's India operates a brewery in Aurangabad, Maharashtra, with an annual capacity of 3.50 lakh hectolitres. And presently, SABMiller India with a market share of around 35% is India’s second-largest brewer and sells 34.2 million beer cases in India a year. The Vijay Mallya-owned United Breweries, through its widely known beer Kingfisher, is India’s largest beer company with 46% share.

"This transaction enhances our existing portfolio in India and provides us with an opportunity to further increase our premium brand offering. With SABMiller's extensive footprint throughout the subcontinent, complemented by Foster's share of Maharashtra and the Mumbai market, India remains a principal growth market for SABMiller,'' South Africa’s $ 15.3-billion SABMiller’s Africa and Asia Managing Director Andre Parker said.

The acquisition may still not help SABMiller achieve the number one position in the Rs. 3,000-crore beer segment in India since Foster’s has a market share of only 6% in the beer segment. However, the deal would enable SABMiller India, with brands like Royal Challenge and Haywards, to capitalize on Foster’s network of ten breweries and grew its capacity by 10%.

India is the third largest market for the Foster's brand worldwide and the company has attained a compounded annual growth rate (CAGR) of 13% since it commenced operations.

SABMiller’s Indian unit makes Royal Challenge, Haywards 5000, Castle and stout beer Haywards Black.

"This is an outstanding deal for the Foster's group, struck with one of our most important long-term partners. While the Foster's brand has enjoyed great success in India, the opportunity for us to continue to grow the brand profitably from a small production and distribution base in a challenging market structure was limited,'' Foster's Group President and Chief Executive Officer Trevor O'Hoy said.

SABMiller has nine breweries in India while Foster’s India has an existence in 19 states, and produces and distributes Foster’s Lager, Amberro beer brands. SAB India will look to extend Foster’s Lager nationally through its network of 10 breweries and seek significant cost benefits from brewing and distributing the brand domestically.