Foster's India eyes beer bellies in south and north  ( February '12,2001, ET)

PONDICHERRY EVEN as the Australian cricket team is to land in India shortly for a tough series, Foster’s, the Australian beer company, is gearing itself up for a larger market penetration in the Indian market. And, in order to meet the increased demand, the company is in talks with some Indian breweries for tying up capacities. Outright acquisitions or entering into long-term contracts are a couple of options before the company, in addition to establishing more greenfield facilities on its own.

The launching of Foster’s beer in Pondicherry yesterday marked the entry of the brand in south India. Though the company has been in India for more than two years, the brand was available only in Maharashtra, Goa, Daman & Diu. "Pondicherry is our entry vehicle in South. We are exploring all options to expand both in South and North, and will launch Foster’s in Delhi this month," Pradeep Gidwani, managing director, Foster’s India, said.

While Foster’s Brewing Group, Australia, has a 74 per cent stake in Foster’s India, the rest is with the DC Kothari Group. Foster’s became the first major international brewer to invest in India when it invested Rs 60 crore in a greenfield brewery facility, with a capacity to bottle two lakh cases per month, in Aurangabad, Maharashtra. Having garnered one-third share of the lager beer market in the states where it is already available, Foster’s has now set its sights on South.

Starting with Karnataka and followed by Andhra Pradesh, it should be entering all southern states in the next few months. South accounts for 40 per cent of the 70 million cases per annum Indian beer market, which is growing at 10-12 per cent every year. “Our entry in some of the markets in South will be faster, while in others like Tamil Nadu it will take time because of the state policies,” Gidwani said. Nevertheless, the company has started discussions with Tamil Nadu government agencies. “In India, we have been creating a new segment for ourselves by positioning Foster’s as a top-quality premium international beer, and available at extremely attractive prices for the Indian consumers,” Mr Gidwani said. In Pondicherry, the brand is available at Rs 35 for a 650-ml bottle and Rs 23 for a 330-ml bottle. In Maharashtra and Goa too, Foster’s is priced around the same range.

“We need capacities in order to serve the new markets and are in talks with breweries. The idea is to have two breweries in South, besides one in the North,” Gidwani said. While not ruling out acquisitions, he said Foster’s will manage the breweries with which it may enter into contract to sustain quality. Internationally, Foster’s Brewing Group has been focusing on beer and wine segments. Besides Foster’s lager, it owns beer brands like Foster’s Ice and Light Ice, Carlton Cold and Victoria Bitter. In the wine segment, it has brands including Mildara Blass, Wolf Blass and Wolf Opang.

“Once we finish our current task of taking Foster’s lager to more markets, we will start bringing in other brands into India,” Gidwani said. And by the end of the year, the company plans to launch Foster’s lager beer in cans. According to him, the per capita consumption of beer in India is just half a litre per annum due to extremely high level of taxes. Compare this with China which has a per capita consumption of 16 litres per annum. “While a bottle of beer in some Indian states is priced at Rs 50 and more, it costs just Rs 8 in China. As a result, China has emerged as the world’s second-largest beer market after the US,” Gidwani said.