United Breweries Limited
Investors Meeting August 2007
1
The Indian Beer Industry
2
Alcohol Consumption
<0.5%
Wine
5%
78%
Spirits/
Liquor
8%
Beer is under
represented in
India
21.5%
India
Beer
87%
Emerging
Markets
3
Consumption Per Capita
83 litres
1 litre per capita is a major milestone
achieved in India in the last 12 months,
BUT ………
23 litres
24 litres
12 litres
1 litre
India
Indonesia
China
World Average
USA
4
Industry Growth
30%
25%
Future:
strong double
digit growth
20%
15%
10%
5%
5 Year
CAGR
2005
2006
2007
2008 +
5
Opportunity for Growth
• Current population 1.1 billion
• Over 50% of the population is below the age of
25 years, demographics remain until 2020
•Increasing personal GDP
•The emerging young population hold more
liberal views on alcohol, than earlier generations
Higher penetration
Sustainable profit growth
6
UBL’s Capability
• Iconic brand – KINGFISHER
• Balanced portfolio of supporting brands
• Manufacturing network across all major
states
• Leadership in cold chain management,
and point of sale visibility
• Established trade relationships
7
UBL’s Competitive AdvantageThrough our Promoters
Equal to competition
S&N
• Brewing
Competitive Advantage
UBL
processes
• Procurement synergies
• International best practice
• Experience in capacity
investment
• People resource
UB Group
• Strength
in distribution
• Enhanced recognition through
KFA
• Relationship with USL
• Buying influence
• Route to market influence
• One stop portfolio of leading
brands for modern trade
8
Competitor Positions
• SABM
– Established in India as the No 2 player
– Investment in capacity
– Brand launches eg Peroni, Castle
• International brands have not worked
– Castle launched over 2 years ago > No market share
– Peroni launched over 6 months ago > No market share
– Fosters launched over 5 years ago, pre advertising ban >
2% market share
9
Competitor Positions
• Carlsberg
– Acquired Himneel brewery early 2007, new greenfield breweries
in Rajasthan & Maharashtra. Plans to launch a Polish beer.
• A–B
– JV brewery with Crown in AP, plans to build more greenfield
units. Recent launch of Budweiser & Armstrong beer brands
• APB
– 2007 acquisition of Aurangabad brewery, greenfield construction
in progress in AP.
• Coors
– Announced plan to build a greenfield unit in Maharashtra
• Inbev
– Recently announced JV entry into India.
10
Impact of Competitors
•
•
•
•
Invest in the market
Invest in capacity
Provide consumers with more choice
Drive improvement through the upstream
supply chain
BENEFIT ALL PLAYERS IN THE INDUSTRY
11
Environment for New Competitors
• Excessive State regulation and intervention
–
–
–
–
Route to market
Economics, need to have a brewery in each state
Pricing
Licensing
• Driver of growth is Strong beer,
– all new International entrants brands are leaders in
Mild beer not Strong
• Ban on advertising alcohol
12
UBL Reaction to Competition
Maintain profitable Industry leadership
• Aggressively invest in new capacity, and
upgrade process technology
– Lower cost of investment:
• Europe $100 per HL
• Russia $55 per HL
• India $35 per HL
• Develop and launch exciting new products
– Kingfisher Ultra, Kingfisher wine
13
FULL YEAR FY’07
14
Performance Highlights – FY’07
• KF Strong overtakes KF premium to become
India’s biggest selling beer, sales of over
26m cases
• Invested around Rs200Cr in new capacity, to
increase own brewery capacity by 20%, and 2
new greenfield breweries with over 8.5m
cases of capacity pa
• Completed acquisition of KBDL, and now
fully merged into UBL
• Market capitalisation exceeds $1bn
• Total annual dividend of 25%
15
Market Share
48%
33%
9%
6%
UBL
SABM
MM
4%
Mt Shiv
Others
16
Profit Performance – FY’07
Rs172 Cr
+24%
Rs162 Cr
+18%
Rs65 Cr
+350%
EBITDA
UBL
Net Profit
Rs55 Cr
+550%
EBITDA
Net Profit
Consolidated
17
Q1’08
18
Performance Highlights Q1’08
• KF Strong and KF premium outgrow
the industry
• New greenfield breweries
commissioned and in operation
• Capacity investment for 2008-09 on
track
• Market capitalisation exceeds $1.7bn
19
Kingfisher Performance – Q1’ 08
9.3m
7.7m
+7.6%
+28.5%
7.2m
7.15m
June 06
June 07
Industry Growth +7.2%
Premium
June 06
June 07
Industry Growth +19.5%
Strong
20
Profit Performance Q1’ 08
• Price increases achieved on around 55% of
volume
• Results impacted by:
– Capped capacity of Hyderabad brewery impacts UBL
standalone results by Rs6Cr, profit of Rs6Cr recorded
in UMBL
– Continuing impacts of prices increases on barley and
hops affects margins
• UBL stand alone now includes KBDL, MBDL &
ABDL, not included in last years numbers
21
Profit Performance – Q1’08
Rs105 Cr
+18%
Rs79 Cr
+54%
Rs71 Cr
+5%
Rs65 Cr
+57%
EBITDA
UBL
PBT
EBITDA
PBT
Combined
22
THANK YOU
23