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Executive Summary
UB is the market leader in the Indian beer market. The company has however (as
mentioned above) been focusing on strong beer, which has driven growth. The
company introduced its strong beer, Kingfisher Strong during the year 2000 in the
selected market of Maharashtra and Karnataka. The move came as a reactive move
following increasing shift of consumers towards strong beer, a trend started by
Shaw Wallace. While the overall market grew marginally by 2%, the strong beer
market grew at 8-10% during the year at the expense of lager beer. The market is
now skewed towards strong beer with more than 60% of the market being strong
beer market.
The UB group has chalked out a major restructuring plan under which it has merged
all its spirits companies under the McDowell umbrella. The company has also
decided to split its operations into beer business and investments business. The
company would also be productively utilizing its real estate in the city of Bangalore
to set up a Software Technology park. The UB Group has also announced its
intention to extend its well-known spirit brands McDowell and Bagpiper to beer to
leverage on the strong brand equity.
The UB management has gone on record saying they will actively look at trifurcation
of the company into the real estate portion, the investments and the breweries, with
proportionate share holdings, in order to ensure that there's no shareholder value
damage.
On the core beer business, UB claims to make a return on capital employed
exceeding 20 percent and may be closer to 25 percent. But figures are not available
to really back this up given that all the numbers are consolidated.

Background
The UB Group commenced its brewing operations as early as the 19th Century
(1857) with five small breweries in South India. In 1951, a Scotsman named Thomas
Leishman combined the five breweries to form United Breweries. The company was
taken over by Vijay Mallya in 1947. In 1952 the Company shifted its registered office
from Madras to Bangalore. In 1988 the name of the Company was changed from
United Breweries Ltd. to UB Ltd. In 1989 as a measure of diversification, the
Company started manufacture of bulk drug, and pharmaceuticals on a priority basis.
In 1992, 11 different breweries were amalgamated with the parent company. In
1994 the company launched its `Kalyani Premium Strong' and started exporting
`Kalyani Export Special' to UK. The company presently has 21 breweries under its
direct or indirect control. Recently the company has started implementing
restructuring exercise under which it has decided to split its businesses into two –
the core beer business and the group investment business. The company has
decided to focus on core businesses and to hive off non-core businesses.
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Detailed business plan:

The detailed business plan for the intended product being planned are outlined as
follows:

The product:

It is by definition a flavored beer preferably in two variants as amber and aqua blue,
low on alcohol

( between 1 and 3 %) , light and good to taste. Shifting the focus from our detailed
synopsis our product in the fray is a flavored beverage valued on the lines of a
flavored beer but to be launched as a lifestyle product mainly keeping in mind the
premium-ness of king fisher brand. Augmenting the huge gap between the ordinary
beer and the hard drinks we would like to plug the hole in that segment keeping in
mind the target consumers price sensitivity.

Since none of the other major international and domestic players are not launching
any of their products in India in their near future this is probably (situational
variables at stake) to launch the product and are keen to capitalize on first mover
advantage.
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Field survey report

Questionnaire :

1) Where do you mostly drink beer?

1]at home 2]at bar/club 3]at restaurant

2) How much are you willing to pay for a bottle of beer at a bar/club/restaurant?

3) Please rank the following beer companies/brands in terms of your preference.

(1= first choice,
5= last choice)

1]Fosters

2]Heinikenen

3]Knock out

4]Haywards

5]Thunderbolt

4) How important were the following attributes when choosing a beer?

5) Taste

6) Price

7) Alcohol Content

8) Quality

9) Ambiance/Place

10) Promotions

11) Colour

12) Package/Bottle

13) Image of beer

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Please rate your level of agreement on the following statements:

Not Less Neutra Some Very
Import Import l what Import
ant ant Import ant
ant

Strongl Somew Neutral Somew Strongl

y hat hat y agree
disagre disagre agree
e ed

14) I love Kingfisher

15) The beer I drink must have a good reputation

16) The appearance of the bottle must appeal to me

17) A Kingfisher flavoured beer is a beer targeted to women

18) I am loyal to a brand of beer

19) A kingfisher has a light taste

20) A Kingfisher is a cheap beer

Please complete the following sentence:

21) What I don't like about domestic beer i

22) What I don't like about imported beer is

23) Flavour and Aftertaste is important because

24) Please associate the beer brand with each of the following words:

Beach Hot girls BBQ Hangover Bar Park Cheap Classy

25) Age:

1) under18 2) 18 to 2 3) 24 to 29 4) 30 to 39 5) 40 and over

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26) Gender:

1) Female 2) Male

27) Monthly Personal Disposable Income:

28) Did you have to quit drinking due to: obese, diabetics yes
no

29) Are you ready to experiment with your brand of drinking? yes
no

30) Did your health problems restrict you from socialising? yes
no

Questionnaire Analysis

We prepared a questionnaire consisting of 30 questions and took sample size of 200

people by method of convenience sampling. We divided ourselves into two groups
and visited Noida and Delhi. The group which went to Noida consisted of 4 people
they went to great India place; central stage mall. They collected a
total sample of 120 people from there. The other group which consisted of 3 people
went to Delhi’s Connaught Place and Saket. They collected a sample size of 80
people from there.

Our questionnaire directed in such a way so that we could find the answers to the
following relevant question
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• Our closest competitors

• How important are the attributes like taste ,quality, price ,color etc are
important in beer consumption
• The Brand image kingfisher holds among beer drinker
• The age of people signifies interest of the people i.e. whether they are first
timers, established drinkers or brand loyal.
• We also wanted to determine the ratio of male: female drinkers.
• The disposal income of people would help us in brand positioning of the
product.
• We also tried to find the health issues of people i.e. obesity and diabetes and
they had reason if any due to which they left drinking.
Next we put forth our relative weighing method in which the choice of the
people closest to our version of target segment has been allocated.
Henceforth we allocated highest point (5) respectively and graduality of
allocating points decreased as we moved away of our target segment. We
calculated mean of the points for each question to find out the variation in
their marking .it was found that most of the people that were in the sample
space wanted something trendy and the lighter version of the beer that
tasted good and had low alcohol content. Though the sample space
contained only a small representation of youth in the age group between 18
-22 most of them would like to be beer loyalist and rated high on the
experience factor than on drinking factor.

MARKET SEGMENTATION

Market segment :

Delhi & Noida

These figures include both genders and all age groups. The figures are taken from
UB Group report 2007.

2001 Per capita Total beer No. of

populat 2007 consumption of consumptio bottle No. of
ion population beer n (l) s cases
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11697
137829 14037 987.1
76 18470506.05 5.7 105281884.5 5846 7

Where
are
they? Who are they? What they want? Our Brand
College going
students (18- light alcohol content
Delhi 24) with pleasant taste Flavored beer
style statement
price sensitive
Socializing
Young corporate
Delhi (21-28) Showoff bizz Flavored beer
pleasant taste
Socializing
alternative drink in
parties for those
who don’t prefer
hard drinks
especially ladies
Middle level
corporate (28 - Health conscious Low diet
Delhi 35) but prefer to drink whisky
Socializing
Top level
corporate (35- Diabetic people at Low diet
Delhi 59) top mgt level whisky
Socializing

Target market segment:

Fortunately India has the youngest beer drinking population in the whole
world.

The target market segment is the youth urbanized liberalized Indian

consumers (21-34)(yulics). Yulics are mainly the Indian junta that are fresh out of
graduation or into their first few days of their corporate lives, by providing them
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with a drink that will find favor with their taste and lifestyle including the metro
sexual man and woman. We would like to concentrate on the thin line of
demarcation between those who go in to start their first beer , the one’s who have
just got into it and the young women crowd. by 2010 the young people population
set to be around 35 % of the total population and the target segment set to gain
about 115 million more and the demand for premium beverage drinks will always
rise. with the beer culture gaining fast ,more young population exhibiting
unprecedented spending patterns and an enormous boost given by the women beer
population, it makes sense to go in for a premium flavored beer. The market size
has been calculated for the city of Delhi keeping in mind the highest growth rate of
our target segment in the national capital region on which we are focusing on. Apart
from this our focus will also be on:

1) Affluent married women of the city

2) Health conscious people who have stopped drinking due to the high level of
alcohol content in Indian beer.

One of the factors that has limited our scope to this premium segment is because of
the macro environmental policy still prevalent in India and the taxes levied on it
.beer in India is still associated with the tagline of liquor and hence taxed similarly
.once the de-regulation is in place for the beer industry it can always scale down to
the lower segments too.

TARGET POPULATION SIZE

According to the Indian population statistics it is estimated that by 2008 , 1 out of

every 20 Indians will drink beer based on a nation wide data analysis. If we
juxtapose such a data and co relate it to fairly young and more volatile segment
with a major share of the population in the Delhi metro we could estimate it to 1 out
of every 8 yulics (young urbanized liberalized Indianconsumers). In addition to this
data the pool will also constitute the socialite affluent lady drinkers who would like
to take into this segment and the young corporate in a very minute measure who
would also like to have a seat at the table.

Also we may mention that any of the first time drinkers at any point of
time would like to switch onto stronger versions of the same product it
would have created a niche brand space within them and they would stick
onto that and we may favourably assume that we maybegetting totally
new set of fresh brewed target audience to carry on our sales. It thus
moves away from the traditional psychographics of the sector and toward the more
up-market, college/office going youth, male or female, with aspirations,
who sees himself as both physically and mentally fit, has an attitude of
self-confidence and nurtures the belief that ‘he/she can change the world’
.

COMPETITOR OVERVIEW:
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Who do we regard as our immediate competition?

In a period of consolidation of beer industry through mergers and acquisitions in a

global scenario, UB Group has to be bold and financially strong in addition to
expanding product portfolio through continuous innovation. As a small step,
Company is introducing new variants to tap the huge potential Indian market and in
a way further consolidate its leadership to ward off any global competitors.
India’s beer industry posted 20 percent annual growth for the past two years, up
from 10 percent per year over the past decade. The growth has been fueled by
huge population of young people. Roughly 60 percent of the nation’s 1.2
billion are people under the age of 30

India’s alcoholic beverage is still very small, hence the market has a huge potential
for growth in the next few years. India’s beer market of 8 million hectoliter is
dwarfed in comparison to other Asian markets like China, whose markets are 150
times bigger. Today, the per capita intake of beer in India is still less than a liter in
comparison to the US or Europe, where it is 80-90 litres and 100 litres, respectively

Owing to this huge market potential, a number of international players firmed up

their plans to enter the domestic beer market. The noticeable new entrants included
Carlsberg, through South Asia Breweries, and Anheuser-Busch, which launched
locally made Budweiser . Other top global beer manufacturers are keen on entering
the domestic beer market and players such InBev and Asia-Pacific Breweries, Cobra
of UK along with diageo have found Indian partners and are setting up domestic
production facilities

The major brands which belong to large groups in the industry apart from
UB are :-
SABMILLER India Ltd. –Knock-Out, Royal Challenge Premium Lager, Haywards
2000 Premium Lager, Haywards 5000 Super Strong Continental ,Castle & Lager,
Fosters and Peroni.
Anheuser-Busch – Budweiser - Budweiser, Becks
Cobra beer & Diageo
Asia pacific breweries (Heineken & Tiger)- Heineken ,tiger, Barons strong brew
Carlsberg(South Asian breweries)- Carlsberg, Okacim palone
* (south American based inbev has acquired ANHEUSER-BUSCH and became the world’s
largest beer brewer).
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Production Facilities and New Plants :

Company Existing plant New Greenfield Plant

Name Number State Number State

Asia pacific one Aurangabad One Andhra

breweries Pradesh
South Asian Two Rajasthan, Two Maharashtra,
breweries Himachal West Bengal
Pradesh
Cobra one Bihar One Andhra
Pradesh
Sabmiller Ten Spread across Two
Budweiser One Andhra Pradesh
The domestic production of beer is on the rise, with official statistics reporting a
12% increase in domestic beer production in 2006, which was in tandem with
relatively strong sales growth during the year. Domestic beer manufacturers have
actively pursued the establishment of breweries in as many states as possible in
order to achieve market leadership.
All the companies are expanding their production facilities in leaps and bounds amid
overriding concerns about rising costs of raw materials such as barley and hops.
Imports and exports both registered declines in 2006, with domestic production
increasing significantly in 2006. Major imported brands include Heineken. In 2007,
imports are expected to show strong growth as a number of international labels
have introduced their products in India. With the dissolution of additional customs
duty, imported brands are expected to increase their volume sales. Domestically
produced beer is mainly produced with the intention of local consumption and a
negligible amount is exported
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Domestically produced beer is the dominant force in the Indian beer market, with a
volume share of more than 99% in 2007. Restricted advertising, high prices and the
limited distribution reach of beer make it difficult for foreign players with an
imported brand to create brand awareness and loyalty. Moreover, archaic legislation
and high import duties lend a helping hand to domestic manufacturers. Domestic
brands also tend to have a higher alcohol content compared to imports, and
consumers prefer strong beer due to its faster intoxication effect

Value proposition: USP of the product. The beer-drinkers in the country are much
younger than the average beer-drinker elsewhere in the world. This makes them
more likely to carry the brand with them for a lifetime. Also, as the target audience
becomes younger, a light beer like this is expected to attract first-time drinkers,
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since it is much milder than any of the other beers in the country.
Even if one accounts for the fact that the strong beer market is
growing fast in India, we expect that at times when consumers of
our product shift to stronger beers, they will restrict themselves to
the kingfisher’s brand because of the association they have with it
and the positive connotations from the kingfisher’s name. A lot of
new variants promise to gain prominence, but mainly in niche
urban segments.
Substantiating the target market the value we would like to add to our
product basically entails the following:
Health Benefits : with changing lifestyles and rising incomes the urban junta have
become aware of the “FEEL GOOD LOOK GOOD CONCEPT” that is exactly what we
bring out in our product with calorie content as low as 26 calories per 100 ml
similar to the light beer market and the diet beverage market booming in the west .
Compare that with red wine - 75 calories per 100ml, champagne - 70 calories
per 100ml, full cream milk - 67 calories per 100ml, Coca Cola - 41 calories per
100ml or even skim milk - 46 calories per 100ml. the trend is catching up fast
mainly to the socialite women urban population and the yulics segment we focused
on. In terms of nutrition, beer is a source of vitamins as well as proteins. It is rich
in vitamins B6 and B12 and essential amino acids. It's produced by natural
fermentation and contains all natural ingredients.

Dining table: on a dining table for 4, three people (socialites) drink whisky and the
fourth wouldn’t be so very eager to drink cheap beer. Elevating him to the same
level keeping in mind his place at the dining table as well as the society the
beverage should have the premium -ness within it. it also complements our ub
group motive of providing generic adult beverages to lifestyle products within the
same class. As in west south American countries beer is also associated with spicy
Mexican food likewise it may also follow at blistering pace.

Lifestyle: INDIA is changing and so is the way the people live their lives with
more people taking to socializing ,urban youth partying and celebrations during
festivities no longer in black and white, all the people have taken to a more vibrant
ambience be it their car ,their attire, their eating habits and they way they
socialize.

Production line
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– First 25,000 BPH line in India at UB Rajasthan

– 36,000 BPH line being installed at UB Bombay
– New Products being developed in-house at CTC
– Innovative Brewing Technology Development in process

The UB group already has a very expansive production facility with new ones as
mentioned tailored to meet product capacity expansion portfolios. at the initial
stages of production (keeping in mind the targeted population of Delhicity the in
house facility are more than enough to cope up with the demand .as a matter of
fact it can be run on the same production line with low variable costs except for the
brewing area where the beer is given an entirely new dimension by flavoring it with
the amber and cool blue ingredients .phase -1 objective of the production will be to
roll out 75% of the whole demand within the Delhi city so as to create an initial urge
and test marketing objectives.
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FINANCIAL ASPECTS:

FUNDING:
The initial funding for the proposed launch of premium products would be
elaborated as follows :

I. Premium products
a. Distillery and bottling facility(four locations)= 4x70
= I NR 280 crore

b. Advertisement and brand endorsement = INR 50 crore

c. new product line development in similar category

= I NR 30
crore

The entire funding process can be funded through a mixture of debt and equity .an
ideal debt to equity ratio of 3:1 is recommended .so the required INR 270 CRORE
can be funded by low cost borrowing from ECB’s (EXTERNAL COMMERCIAL
BORROWINGS),sovereign funds, financial institutes and banks .The rest equity
portion of INR 90 CRORE COULD BE FUNDED THROUGH A MIX OF PROMOTERS
CONTRIBUITION ( 60% OR 54 CRORES ) and dilution of promoters equity to various
venture capitalists and hedge funds .After stabilizing of operations company can
speen of the division to make an IPO to unlock original share holder value .
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Brand positioning and differentiation

Our only suggestion with regard to the brand name is that it should capitalise on the
brand heritage which king fisher enjoys, and in its association with kingfisher s
Lager which is already established in the market as one of the leading beers. .
In India, pint-sized bottles have been an exception rather than the rule. In fact, 99%
of beer consumed is from 650 ml bottles. This was in tune with the trend in other
developing countries.
Initially, we plan to launch our product only in Delhi. Then we will move onto
Goa and subsequently into Andhra Pradesh and Pondicherry. Plans to venture
into Himachal Pradesh, Punjab, Haryana and Uttar Pradesh can then
commence.
For United Breweries, its online facility is making a huge difference. All consumers
need to do is log on to www.kingfishernetshop.com and get their beer - a minimum
of six bottles - home-delivered, the move has been a big draw with info-tech
professionals and "discreet" women drinkers. The online outlet apart, much of the
beer boom has been through sales from some 1,600 shops, and not pubs and bars.
We think a similar online facility for promoting and facilitating the sale of
our product will help not only in the advancement of the product itself but will also
go very well with the image of the product, while cutting into UB’s ‘virtual
monopoly’ as the target audience of such a feature is more in tune with the
kingfisher’s brand image.
Promotion and branding:

Our company has decided to stay off the surrogate-advertising route (which is
necessitated by restrictive advertising laws) and concentrate on sponsorships
and other promotional activities. In a cricket-crazy nation, the alternatives are
not too hard to find; cricket and Formula One racing are the two chosen vehicles
for brand endorsement. The main objective of UB group in this regard will be to
focus more on the brand identity “kingfisher “ as a premium brand than be more
product specific.

The new trend will also be to promote “responsible drinking” campaigns for the
young brand loyalists of our product since we cater to the YULICS segment.

Product launch:

A low profile launch in all the three star hotels, pubs, liquor retailing outlets and
being made available through its online shop is being planned. Following a soft
launch and once the festive season kicks in subsequent high decibel launches can
be done from other parts of the country as outlined below.

The UB group is renowned for its signature night life and with other new ventures
such as UB city coming up in Bangalore it would provide the much needed hype if
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we can launch a high decibel party week in connection with the Christmas and the
New Year just like other brands that associate itself with young metro sexual do.

How should it be in terms of colors and graphics?

The product should retain the kingfisher bird and the king of good time’s tagline it is
associated with and it should signify something that has arrived with a bang. Each
beer will carry the color of its respective flavor and the feel of young urbanized
liberalized Indian beer lovers.

The product is a variant of the international brand king fisher, and we are not averse
to retaining the name here. Naming it something like simply ‘kingfisher amber’ and
‘kingfisher blue’ allows us to experiment with the brand while retaining the heritage
and association of the kingfisher’s label
Causes for optimism -
However, we are very optimistic about our future in India because:
1. India has predominantly a warm/hot climate
2. The beer-drinkers in the country are much younger than the average beer-drinker
elsewhere in the world. This makes them more likely to carry the brand with them
for a lifetime.
3. Increasing exposure to beer and wine drinking, mainly due to media and
consumer mobility.
All these factors combined make the scenario very promising for KINGFISHER and
are 'in sync' with our strategy for India

“he was a wise man who invented beer”- PLATO