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Final Report on kingfisher beer

Final Report on kingfisher beer



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Published by jitendrag90

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Published by: jitendrag90 on Sep 10, 2009
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Praveen Kumar(035)Gagan Kasliwal(078)Sneha Keshan(084)Ashmita Goyal(089)Abhijeet Akash(092)Jitendra KumarGupta(116)
The present report is a unique effort to highlight the exuberance and achievements of the UnitedBreweries Ltd., a inimitable company, and the report, in a nutshell, has tried to give glimpse on thecompany position, the industry analysis, comparative status, portfolio of its productsIts corecompetency, value chainetc.The UB Group was founded by a Scotsman, Thomas Leishmanin 1857. The Group took its initiallessons in manufacturing beerfrom South Indianbased Britishbreweries. United Breweries made itsinitial impact by manufacturing bulk beer for the British troops, which was transported in huge barrelsor "Hogsheads". At the age of 22, Vittal Mallyawas elected as the company's first Indian director in1947. After a year, he replaced R G N Priceas the chairman of the company. Kingfisher, the Group'smost visible and profitable brand, made a modest entry in the sixties.With currentlyinto business of Spirits (United Spirits Ltd.), Wine, Beer (United breweries Ltd.),Engineering (UB Engineering Limited), Fertilizers (Mangalore Chemicals and Fertilizers) company hasmade its markand presence in each sector it is in.United Breweries Limited (UBL) -has assumed undisputed market leadership with a nationalmarket share in excess of 50%. Through a process of aggressive acquisition and market penetration, TheUB Group today controls 60% of the total manufacturing capacity for Beer in India. The flagship brand,Kingfisher is now sold in over 52 countries worldwide having received many accolades for its quality.As an economic force, India is believed to hold the potential to grow faster than any other BRIC countryover the next thirty to fifty years. The sub-continent’s Beer market has been equally dynamic, growingby almost 90% since the turn of the Century. Exceptionally high growth was generated in the northernstates of Punjab, Haryana and Rajasthan which took full advantage of reduced taxes and improvementsin the distribution policy.In contrast to Russia, consumers are displaying a distinct preference for StrongBeer which has gained market share steadily in recent years and now accounts for almost 70% of totalvolume. Kingfisher Strong replaced Kingfisher Premium as the leading Beer and the Kingfisher brandoverall now holds a commanding position.
It is Narrow-minded approach to a marketing situation where only short-range goals are consideredorwhere the marketing focuses on only one aspect out of many possible marketing attributes. Because of its shortsightedness, marketing myopia is an inefficient marketing approach. According to TheodoreLevitt company should have a radar view rather than tunnel view to its business and when we talk of UBL it is not at all myopic because it has foot falls not just in breweries industry by products likedistilleries, beer , wines, but hasalso entered into airlines, footwear, fashion, apparels, sports.Company’s brand
isnot new to any one and has showed its presence in every sector it is in.Company has also gone for backward integration and has various collaborations and JV’s with suppliers.
One of the most and well reckoned stepthat UBL has taken in order to reduce the rising cost anddecreasing prodution(Appendix)of raw material barley over the year. Higher prices and short supply of key raw materials like malt, hops and barleycan reduce the profit marginand affect Any price increasein this two commoditieshave a direct bearing in reducing the overall operating margin. Due to priceincrease of barley by over 33% and increase in bottling cost, during FY2008 the net profit marginfell by26%.
In states like Uttar Pradesh, Rajasthan and Madhya Pradeshwhich, account for 80.34% of barleyproduction in India, the area under cultivation is shifting to other crops like sugarcane. As can be seen inthe adjoining diagram, the barley production has declined by over 60% from 3135 KMT to 1220KMTfrom 1975 to 2005. To hedge the risk on rising raw material prices, UBL has entered into long termarrangements for sourcing of the vital inputs. In addition it has extended its own contract farminginitiatives in the state of Punjab. The 51% Equity stake in Maltex Malsters Limited, a manufacturer of malt, is also an initiative for vertical integration.
The Indian beer industry has been witnessing steady growth of 10 -17% per year over the last ten years.The rate of growth has increased in recent years, with volumes passing 170m cases during the 2008-2009 financial year. With the average age of the population on the decrease and income levels on theincrease, the popularity of beer in the country continues to rise.In modern times, beerbegan to be exported to Indiain the early days of the BritishEmpirethe early 1700s. The first modern brewery in India was set up in Kasauli, in the Himalayamountains, near Shimla, in the late 1820s by the Englishman Edward Dyer . The Indian beer industry haswitnessed a big change during the last five years. The industry was previously dominated by competitionbetween the Vijay Mallya-controlled United BreweriesGroup and the Manu Chabbria-controlled ShawWallace. The scenario changed, however, with the entry of SABMillerin India. The international beergiant started by acquiring small breweries in the south but then completely changed the landscape with

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