UB GROUP - UNITED BREWERIES LIMITED (Kingfisher beer)

Presented by Raul Braganza - 09 Jai Desai - 19 Rohit Khemani - 43 Viral Maniar - 51 Sanket Medhekar - 53

Industry Overview

Globally, over 133 billion litres of beer is sold each year. In comparison, the Indian beer Industry contributes a meager 2% of the global sales.

UB Group
The UB GROUP was founded by Scottish gentleman Thomas Leishman in 1915. The group started manufacturing beer from south Indian based British breweries and elected its first Indian Director, Mr. Vittal Mallya in 1947. Kingfisher the most visible and modest brand made its entry in 1960. Later on Mr. Vijay Mallya became the chairman of UB GROUP.

Capacity and Sales Turnover

Capacity: 60,25,000 hecto litre/annum.

Produce: 31,33,684 hecto litre/annum.

Sales revenue increased: Rs.452 million to Rs.17,475 million (from 2004-2009). Net profit grew from Rs.2.77 crore to Rs.62.47 crore (from 20042009).
Performance from 2005 to 2009 (Rupees In million)
Mar ' 09 1,747.50 Mar ' 08 1,370.47 Mar ' 07 1,046.24 Mar ' 06 679.72 Mar ' 05 515.76

Major Products of Kingfisher Beer

Kingfisher Premium Lager beer.

Pack size: 650ml; Load ability: 24*650 ml

Kingfisher Strong beer.

Pack size: 650 ml; Load ability: 24*650 ml

Kingfisher Taj mahal beer.

Pack size: 330ml; Load ability: 12*330 ml

Maharaja Premium Pilsner beer.

Pack size: 330ml; Load ability: 12*330 ml

Kingfisher Horse Royal Lager beer.

Pack size: 650ml; Load ability: 12*650ml.

Kalyani Black Label Strong Premium beer.

Pack size: 650ml; Load ability: 12*650ml.

SWOT analysis of Kingfisher Beer

Strengths Strong brand image Global presence Aggressive advertising Market leader Quality & innovation Demographic changes Changing societal behavior Attitude Consumer brand

Weaknesses Expensive brand Maintenance Relatively static market Long development

New competitors Economic downturn Growth in substitutes Increasing buyer power

Opportunities

Threats

Beer Industry in Germany

Current Condition of Beer Market

Germany is the largest beer market in Europe. While, annual beer consumption in Germany is estimated at 100,850,000 hectoliters (2,664,174,620 gallons), annual beer consumption per capita is 115.8 liters (30.6 gallons). In per capita consumption, Germans take the third place after Czechs and Irish. Around 1,300 breweries exist today in the country. The industry in the northern part of Germany is weaker but more centralized in comparison with the southern part of country.

Moreover, there is a huge variety in beer types and beer brands all over the country due to an old, well established beer culture. It is estimated that there are over 5,000 different brands on the market shelves, bars, and pubs of Germany.

Current Condition of Beer Market

German beer production is regulated by a law which is called Reinheitsgebot (order of purity). This law regulates ingredient requirements of beer which has resulted in international fame of German been for its high quality due to these ingredient requirements. An aging population is avoiding consuming as much beer as they used to. Younger populations prefer to drink mixed beverages. German beer companies are direct their strategies to new product lines including beer-mixed cocktails and beverages like lemon beer. One success story is that of Bionade, an organic soft drink fermented with natural ingredients like beer. This new product was introduced by the owners of a small brewery with declining sales and is now an international success

Styles of Beers
Pils Light wheat beer Beer cellar Dark Bright Dark Wheat Old Bock beer Dark beer Crystal Wheat Klsch Doppelbock

Top 5 Beer Brands in Germany

Brand 2010 2009 2006 1998

Oettinger

6.34 million 6.59 million 6.65 million 2.38 million

Krombacher 5.41 million 5.38 million 5.16 million 4.48 million

Bitburger

3.92 million 3.85 million 4.16 million 3.95 million

Warsteiner 2.8 million

2.85 million 3.33 million 4.67 million

Veltins

2.58 million 2.47 million 2.63 million 2.21 million

Commercial Segmentation of the German Beer Market

Group Low Beers (low cost, low price, No Name (Contract Brewing) Division Examples Grafensteiner, Felskrone, Ratskrone, names Distribution Supermarkets stores only

Bergadler, Falkenfelser and other fantasy and discount

low taste?)
About 25% of the market, growing Branded low beers

Oettinger (the only national

, Paderborner

Supermarkets and
(GAMs)

brand),Sternburg (East), Hansa,Grnfelder Getrnkemrkte

Top 10 national Pils brands: Krombacher, Bitburger, Warsteiner, Beck's, Jever, Hasserder, Veltins, Knig, Radeberger, Holsten. National brands These Top 10 brands stand for about 30% of the German beer market Others: Erdinger, Paulaner(Weizen), Augu stiner (Helles),Flensburger (Pils), Kstritze r(Schwarzbier), Major Beers Strong regional brands, partly national distribution All types of outlets and on tap in many

Examples: Reissdorf (Kln), Licher(Hesse pubs

), Rothaus (Badenia),Andechser (Bavaria), Wernesgrner (East), Lbzer(North) About 300 to 400 regional brands, mostly from mid-size breweries, starting from the

Other regional brands

North Sea (Dithmarscher) to Bavaria(Ayinger) and the Black Forest(Waldhaus)

Special styles: Rauchbier

Supermarkets

(likeSchlenkerla) and Doppelbock and GAMs in (likeAventinus); and special brands the region of the Special Beers likeDuckstein and Uerige brewery Direct sales at Handcrafted beers with short shelf life the brewery and local grocery stores Brewpubs Handcrafted beers, mostly not bottled Syphons to take out

Breweries Estimated market share

1% (by volume) to 2% (by value)

Porters 5 Force model To Introduce Kingfisher Beer in Germany

Barriers to entry High set up cost, Customer loyalty, Govt rules & regulations

Power of Supplier Low power

Industry competitors Huge industry competition due to presence of local brands

Power of Buyers Power of buyers will be high.

Substitutes Changing preferences of youth

Political Factors

The German government has supported the beer industry with funding for industrial training programs and low excise tax for beer which keeps consumer prices inexpensive domestically. In 2002, the German government stated that "There will be no increase in beer tax, in response to proposed EU tax on beer. Beer prices are a very emotional issue in Germany people expect it to be as inexpensive as other basic staples like eggs, bread and milk,"

Demand Condition
Germany has one of the world's highest per-capita consumption rates of beer (123 liters per person in 2003) and is the home to the beer purity law Reinheitsgebot. Germany has one of the most sophisticated and informed beer consumers in the world. Consumers are consequently very knowledgeable and discerning about beer taste and quality, therefore will not tolerated bad quality beer.

Currently demand is changing as consumers are looking for beer alternatives including alcopops or alcoholic soda popa kind of mixed drink.

Strategy, Structure, and Rivalry

There are more breweries per capita in Germany than in any other country approx 1300. The industry is highly fragmented and has a history of collaborating when in their collective best interests, which includes mergers and acquisitions. German breweries, are strategically positioned in the center of the EU with the worlds greatest beer-consuming market.

Socio Factors
Beer has had an important role in German history for almost 1,000 years. The character of the drink reflects the character of the people of that country. Beer has become, through the years, a symbol of German culture and economic, social, and political life has been affected by the industry that makes this popular drink It is consider as good as staple food. Save Water Drink Beer the slogan applies for People in Germany The Famous Beer Festival of Germany is known worldwide

Brewing Styles & Beer Regions

Germans are very conscious of distinct beer styles. When they order a beer, they rarely ask for it by its brand name. Rather they order beer by its style designation, asking for a Pils, an Alt, a Klsch, a Weissbier, a Helles or a Dunkel, for instance.
German beer making has taken different paths in different parts of the country. Broadly speaking, beers become maltier as you travel from north to south and hoppier as you travel in the reverse direction. Among all the German regions, the southern-most state, Bavaria, clearly has spawned the greatest variety of beer styles. They vary in shades of color and strength. Some brews, like the Helles, are quaffing, or easy-drinking, beers, while others, like the Eisbock, are sipping beers.

Neighbouring Bohemia to the east of Bavaria has produced, under Bavarian influence, the world's most popular style, the Pilsner, which is the mother of all modern lagers, including the popular German Pils, the Dortmunder Export, and the Bavarian Helles.
The northern regions, until the late Middle Ages hot-beds of ale brewing, have given us the dry, assertively hoppy Pils, the original Bock from Einbeck (which was an ale in the Middle Ages), and a light, acidic wheat beer called Berliner Weisse.

German Beer Labels

German breweries often use prefixes or adjectives in conjunction with their style names to highlight a particular characteristic of their beer.
For instance, ungespundet means a low-effervescence beer that was fermented to the finish in an unpressurized fermenter. The carbon dioxide in the solution, therefore, is minimal and the beer tastes only gently ptillant and very smooth. The word hell or helles means "light," but, unlike in North America, this designation refers to color only, not to the beer's calories or alcoholic strength. If a beer features the prefix ur or urtyp, which mean "original" or "original type," the brewery tries to emphasize the authenticity of its beverage.

Government Taxation
German breweries pay taxes by the "heaviness" of their sweet wort (which is the run-off from the malted grain in the mash tun, i.e., unfermented beer). Wort heaviness is measured as the percentage of non-water substancesmostly fermentable malt sugarsdissolved in the wort. Most German beers contain around 88% water and 12% extract. As a rough rule, depending on the fermentation method used, one extract point contributes about 0.3 to 0.4% alcohol by volume to the finished beer. The higher the extract level of the unfermented beer, the more tax the government collects on the brew, regardless of the final alcohol content of the beer that results.

Government Taxation
By law, a Vollbier (literally "full" or "entire" beer) contains 11 to 14% extract. This category holds about 99% market share in Germany.

A completely fermented Vollbier usually has between 3 and 5.3% alcohol by volume. Pils, Helles and Weissbier (Hefeweizen) belong in this category.
Three other beer categories occupy the remaining 1% of the market: Einfachbier (literally "simple" or "plain" beer) has about 0.1% market share. It is defined by a taxable extract value of 2 to 5.5% and generally has no more than 0.5 to 1.5% alcohol by volume. Schankbier (literally "tap" or "draft" beer) has a 0.2% market share. Its extract value is 7 to 8%, and its alcohol by volume level tends to be between 0.5 and 2.6%. Berliner Weisse, for instance, falls into this category. Finally, Starkbier (literally "strong" beer) has a 0.7% market share. All beers with an extract value exceeding 16% are Starkbiers. Their alcohol level is invariable above 5% and usually no more than 10%. All Bockbiers, Doppelbocks, and Eisbocks belong in this category.

From Brewery to Consumers

Germany lacks the stringent alcoholic beverage regulations.

There are no state-run or province-run beverage stores, nor is there a three-tier system that rigidly separates licensed producers from licensed distributors, and both from on- and off-premise retailers.
Instead, anybody in the beer trading chain including breweries and wholesalerscan sell beer directly to the public and many beer distributors make "house calls." In Germany, beer is just another food commodity. It is readily available just about anywhere, any time, including on Sundays, at convenience stores, supermarkets, department stores, newspaper kiosks, gas stations, company cafeterias, and even vending machines.

From Brewery to Consumers

Every brewerynational or localmakes several beer styles, and a brand is a brewery's particular interpretation of a style. Stores carry more than one brewery's brands, pubs and restaurants tend to be tied to just one, often local, brewery and serve only that supplier's brands. The brewery, in turn, supplies all the establishment's glasses, taps, trays, and neons, and often even the pub's or restaurant's entire furnishings.

Entering German Markets

Entering market with a local Name of Eisvogel(Kingfisher in German) to connect with local people Tagline for Advertising- Aus Knig zu Fischer alle whlen zu trinken Eisvogel (From King to Fisherman all choose to drink Kingfisher) Adhere to Local Requirements to meet Order of Purity Acquisition / Merger of Local Breweries for entry in Local Market and Save Distribution Cost Acquisition / Merger with a intent to utilize Strategic Value of Brewery

Entering German Markets

Launch to time with Beer Fest so that Maximum Attention can be sought Use the existing relationship with Scottish & Newcastle to have an effective Distribution Network in Germany Leverage our present style of Pilsner to target the market for pils in Germany which has market share of 67 %

Entering German Markets

Market different styles of beer in different parts of the country Use prefixes or adjectives in conjunction with their style names to highlight a particular characteristic of their beer. Kingfisher Blue will be called Eisvogel ungespundet, as ungespundet tastes only gently ptillant and is very smooth. Kingfisher Premium will be called Eisvogel helles, as helles means light Likewise Strong beer will be called Strak Prefix ur Original while Advertising and also in brand name- Ur Eisvogel Strak Focus on Innovation on Mixed Brands to meet the expectation and target the Youth Population of Germany

Promotional Activities
Promotional offers Free beers Sponsor Famous Pubs in all Major Cities making them exclusive outlets to sell our beer Freebies such as Music CDs with a Carton of beer Tie Ups with Local Football Clubs for sales promotion To make house calls for the population to sample Eisvogel