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UB Group
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UB - Group
The UB Group was founded by Scottish gentlemannamed Thomas Leishman in 1857.
The Group is professionally managed and is headed byDr Vijay Mallya, the Group Chairman
The UB Group, is the market leader in both Spirits & Beerbusiness in the country
The Group has a turnover of Rs 3700 crores
The core Beverage Alcohol business account for 80% ofthe group turnover
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UB Group - DIVERSIFICATION
Spirits
59%
Beer
17%
Fertilizer
14%
Engineering
3%
Airlines
6%
Pharma
1%
Year : 2010
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UB Group : BEER
50% market share nationally.
Sold in over 52 countries and also on
international flights. Every third beer sold in India is
Kingfisher.
Indias 1st global consumer brand
Kingfisher.
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MarketShare &Growth
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0
0.5
1
1.5
2
2.5
3
1985 1990 1995 1997 1999 2000 2001 2003 2005 2006
HECTO
LITRES(INM
ILLIONS)
KINGFISHERBRANDGROWTH(BEER)
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Making A Mark
strategies.
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MarkofabrandnameKingfisher
Tying up with large department stores like Food world for retailing
its Beers.
In association with number of Very Classy, Up market & Stylish
bars & lounges.
Aggressive Advertising at Outlets & Pubs.
Better Retailing outlets to be opened under Kingfisher Brand.
Venturing into other Business with same Brand name, hence
increasing Brand Name & Publicity.
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MarketCharacteristics
Market Share
United Breweries
Limited 42.4%SABMiller 22.8%
Mohan Meakin
Limited 5.3%Others 29.4%
Data source: Datamonitor
United Breweries Limited is the leading having a 42.4%share of the market's volume.
SABMiller comes second and accounts for 22.8% of the
market.
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Industryanalysis
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Industry Structure
AlcoholicBeverages
IMFL
BrownSpirits
WhiteSpirits
CountryLiquor
Licensed Illicit
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IndianBeerIndustry
Hugegrowthsincetheliberalizationandopeningupofeconomyin1991.
IntolerancetowardsalcoholinIndiahasdecreasedthrough
globalizationandculturalinfluenceofwesterncountries.
MajorityofIndianpopulationfallsintheagegroupof18-35years,whichisthetargetedsegmentforbeersellers.
So,Indiahasbecometheidealmarketfortheindustry.
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Marketoverview
Indianbeermarketgrewby17.1%in2010toreachavalueof$5,022.8million.
UnitedBreweriesLimitedistheleadingplayer
having42.4%shareofthemarket'svolume.
Indianbeermarketishighlyconcentrated,withthetopthreeplayersholding70.6%ofthetotalmarketvolume.
In2015,forecastedtohaveavalueof$9,639million,anincreaseof91.9%since2010.
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Driversandchallenges
Drivers
Indiahasanemergingmiddleclass-Indiahasahealthyurbanworkforce.
63%ofthecountrypopulationisbetweentheagesof15-24.
Favorableregulatory
environment.
Challenges
Brewersmustmakeinnovativeandreadilyavailableproductstoremaincompetitive
Brewersmustcreateasenseofbrandloyalty
Utilizationofbrewing
capacitytokeepmanufacturingcostslow. Cleveradvertisingtoinducebeerdrinkerstobuyaparticularbrand
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FightingCompetitions
PresentlydistributingbrandsofBeerinIndia.1. SABMiller:Haywards,RoyalChallenge,KnockOut,Foster
2. Anheuser-Busch:Budweiser
3. Carlsberg(SouthAsianBreweries)4. Heineken(AsiaPacificBreweries)5. CastleLager6. Cobra
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Prohibition in India
Soon after independence, prohibition was imposed in
the erstwhile state of Bombay.
The first large-scale movement against alcohol began
in the 1970s, when rural women in various parts of the
country protested against the sale of liquor in theirvillages.
Information and Broadcasting ministry of India banned
the ads.
Even after the ban, liquor companies continued toadvertise their drinks in the form of surrogate
advertisements.
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Legitimate business & their surrogate advertisements
Brands Surrogate advertisementsMcDowellsmaltwhisky McDowellsSoda/water
RadicoKhaitans8pmwhisky RadicoKhaitanswater
Haywards5000Beer Haywardswater/soda
DerbySpecial Derbyspecialsoda
BacardiLiquor BacardiBlastCDs&Cassettes
Bagpiperliquor Bagpiperssodaandcassettes
KingfisherBeer Kingfisherbottleddrinkingwater
RoyalChallengerwhisky RoyalChallengergolfaccessories&
mineralwater&cricketteamWhiteMischiefLiquor WhiteMischiefholidays
SmirnoffVodka Smirnoffcassettes&CDs.SponsorsofManchesterUnited
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Competitoranalysis
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SAB Miller
Strong Branding Strategy
Broader Geographical Presence
Affordable Beer
Larger Coverage
Local value Creation
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Public Image
Vast Product Line
Commercial Tie up
Strong Brand Presence
Availability
BACARDI
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BEER Market Share in INDIA
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EnvironmentAnalysis
Political
InadequateMarketInfrastructure
StringentLegalPolicies GovernmentRegulations
Economical
PriceFluctuations PriceRestrictions(GovtdecidestheECP)
Social
Changeinconsumptionpattern(adaptionofwesternculture) Riseintheincomelevels,whichhasadirectpositiveeffectonbeerconsumption
Riseinmiddleclassandincreaseofurbanization
Technological
InnovationandDevelopmentofnewproducts Stateoftheartofbrewerytechnique
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Opportunities & Threats
OPPORTUNITIES
Market conditions very attractive for growth
Create credible alternatives in the premium and high endsegment.
Facilitate entry into new segments, such as wines, Aviation
etc.
Provide access to non traditional global markets, particularly
Russia and China.
Incorporate B2C e-commerce portal.
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THREATS
Government regulations
Stiff competition from other brands & local
products
Consumer preferences
Alternative drinks and health conscious customer.
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Porters 5forcemodel
Overall industry rating: high Moderate low
Entry BarrierX
Bargaining power of buyers.X
Threat of substitutes.X
Bargaining power of suppliers. X
Intensity of rivalry amongcompetitors.
X
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ThreatofNewEntrants
Entry and exit of the new competitor is not easy in this sector. Economies of scale are needed in manufacturing, distributing,and marketing to create barriers to the national and globalmarkets.
The market entrant needs to build manufacturing facilities,
distilleries etc and the cost associated with this highlycontroversial industry seek high level of sales, thus making theindustry more and more prohibitive for new comers .
There are strict rules and regulation from the government tocontrol this sector which makes this industry quiteunattractive.
Tax rate is high in this industry.
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Bargaining powerofbuyers
Buyers switching cost of the brand is very low.
A decline in disposable income shifts the consumer
preferences away from premium priced brand name products
in favor of lower priced brands i.e. switching cost is low.
The quantity of alcoholic beverages that a nation consumes
tends to be unaffected through recession and prosperity while
the quality of the products purchased is directly related to the
disposable income.
Buyers are in an advantage position when they are buying inbulk especially in peak season and time of celebration and
occasions.
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Bargaining powerofsuppliers
Weak bargaining power of suppliers
Products used to brew beer are inexpensive and suppliers
are numerous. Because of this suppliers are in a disadvantage
position in terms of bargaining power.
If there is no scope of backward integration or forward
integration from the manufacturer, the bargaining power of
the supplier increases. But in the beer industry manufacturesmay opt for the backward integration as manufacturing their
own facility for packaging.
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Government market(65%)State government is the sole
distributor
Auction market(16%) State government auctions geographicalterritories which has led to monopolies / cartels
Free market(19%) Through trade licenses
Bargaining power in the distribution network is commanded by
players with premium brands, large volume base and product range
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AstrongforcefromtheintensityofrivalryamongstcompetitorsThereisslightlyhigherthanmoderatekindofcompetition
becauseindustryisrefrainedfromadvertisingtheirproductpublicly.Becauseofthehighlegalandregulatoryburdens,
manufacturerstendtomergeinordertolowerthecompetition.Asthereismuchcompetitionamongthecompetitorsand
highintensityofthesubstituteproduct,thelevelofcompetitionandsurvivalofthecompanyistough.
TherearefewbigbrandslikeKingfisher,Budweiser,Hayward,Tuborgetcthatcontrolthemarketandenjoylargermarketshare.Thoughthecompetitionistough,theKingfisherbrandistheoneofthelargestsupplierofbeer,
Intensity ofrivalry among competitors
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Strongest brands Significant
upgradation
Least vulnerableto policy volatility
due to largespreadBranding
LocalSourcing
Value Chainownership
Segment-Market
Presence
ManufacturingTechnology
UB Group
Optimal, asalmost completelylocally sourced
Largest manufacturing base
Maximum capacity utilisation
Initiatives planned forintegration intoretailing
TheUBGroupscompetitiveadvantage
ManagementTeam
Professionally managed Seasoned professionals with
significant industry experience
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InternalAnalysis
United Breweries Limited Flagship
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Businessdescription
Geographicsegments
Qualityandhygienearethekeyelements
UnitedBreweriesLimitedFlagshipbusinessofUBgroup
R
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1. Alarge-scaledistributionnetworkforefficientsupplychainmanagementwithinIndiaandoverseas
- Globalfootprintwithexportstoover37countries,80
manufacturingandbottlingplants.
- Indian law prohibits the movement of alcoholic
beveragesacrossdifferentstates,sodistilleriesandbreweriesestablishedineachstate.
- LaunchedmultibrandretailstoreSpiritz&more
Resources
2 Excellent manufacturing processes
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- The proof thatUBLs breweries have notonly been approved for local brewing of
HeinekenbutalsothattheproductbrewedinIndiahasbeenacknowledgedtobeoneof the finest when compared with globalbeers.
2.Excellentmanufacturingprocesses
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Capabilit
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- ExpandingMarkets
Heinekenisrolledoutandwellreceivedin
Delhi, Bangalore, Kolkata, Goa andMaharashtra. It can expand into othermarketsaroundthecountry
Capability
C bili
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Capability
- Boost in demand and changing attitudes
Continuously invest in capacity
enhancement because of underlyingdemand boosted by the demographics ofthe country as well as changing attitudestowards the consumption of alcoholic
beverages, particularly beer, among ouryoungpopulation.
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Weakness:
Volumegrowthisnotreflectedintheprofitfigures.
Threats:
Intensecompetition. The alcohol bill in Scotland could erodemargins or indirectly diminish the customerbase.
Theboomingtradeincounterfeitalcohol
S i
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Strategies
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Primaryactivities
Bigscalesectorandenjoycostadvantageinformofloweroverhead.
Supplyfrommanufacturersiscomparativelyatcompetitiveprices.
Inboundlogistics
Savecostthroughhigherproductivitywhichisgeneratedthroughenthusiasticandloyalworkers.
Operations
Just-in-timefinishedproduct Productsaretransportedwithintheweekoftheirmanufacturing
Outboundlogistics
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Reducedthenumberofintermediariesinitsdistributionchannel
Manufacturertostockisttocustomer
Marketingandsales
NonerequiredService
B i t t i
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Businessstrategies Focus on Value to Consumer.
Dominance at point of purchase /
consumption through tie ups with retailers
and restaurants.
Innovation in product packing and new
product development.
Acquisition of BOUVET-LADUBAY in July 2006,
the UB Group has made a strategic entry into
the wines category.
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Excellent distribution system helps in pushing
of a few brands.
Investment in capacity expansion proving
fruitful as demand increases.
Low manufacturing overheads and large
volume manufacturing guarantees economies
of scale.
Consumer loyalty to the company preserved
through variety of offerings.
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Diversification into pharmaceuticals, airlines,engineering etc.
Diversification of risk and attractive prospect forinvestors.
Change in perception about the company.
Brand building which in turn helps for surrogateadvertising of the primary products
Sports teams like Force India and Royal challengersBangalore have helped appeal to masses.
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Thesalesinvolumesarenotwellreflectedintermsofprofits.
Newproductsrequiredinthebeersegment.
AdvertiseandpromotebrandslikeWhyte&Mackay
Tapuntappedforeignmarketsthroughstrategicalliances.
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