Beer makers compete for Kingfisher

Kingfishers' owner has a 40% share of the Indian market

Four of the world's top breweries are expected to compete to buy a stake in India's United Breweries.

Belgium's Interbrew, Holland's Heineken, South African Breweries (SAB) and Denmark's Carlsberg are all expected to try to buy a 26% stake in India's top brewery, which markets the well-known Kingfisher brand.

Breweries are looking to developing countries to boost their profits, and some see the Indian market trebling in the next 10 years.

Already SAB has bought three breweries in India and confirmed on Wednesday it is to buy Rochees Brewery, a small Indian brewery.

It bought a controlling stake in the brewery for $2m.

Beer state

Rochees Brewery is based in Rajasthan, India's fifth largest beer consuming state.

Not only will SAB gain access to Rajasthan through this purchase but it will also have access to other northern states, such as Delhi. Many of these do not have their own brewery.

"This opens up one of the largest beer consuming states in India," Nick Challoner, SAB told the BBC's World Business Report.

The company plans to invest $100m (£70m) in the Indian beer market in the next five years.

India consumes 72 million cases of beer annually, but its per capita consumption is only half a litre each year.

A shift in drinking preferences from spirits to beer, and also some relaxation in terms of government restrictions will bring about an increase in consumption.

Kingfisher?

However, United Breweries is the prime target for those intending to conquer the Indian beer market.

The maker of Kingfisher has nearly a 40% share of the domestic beer market and 50% of the brewing capacity.

United Breweries wants a partner that will help it market Kingfisher abroad and international brands locally.

Crucially, it wants a partner that will not threaten Kingfisher in its domestic market and some say Interbrew, which is reported to be in talks with the Indian brewery at present, is the prime candidate.

"Choosing Carlsberg or Heineken would mean bringing in global brands that could swamp Kingfisher, and SAB has started establishing a presence in India, which could at some point threaten United Breweries," one banker said.