project on ub

1. Introduction
It is the conceptual structure within which the research is conducted. It constitutes the
blue print for the collection, measurement and analysis of data. The design includes
an outline of what the researcher will do from writing the hypothesis and its
operational implication to the final analysis of data. It constitutes the steps taken
beginning with the collection of data, classifying, analyzing and interpretation,
processing and finally putting in textual form. This is one important chapter of project
and can be considered as skeletal of project.
Objective of the study:
To understand the importance of promotional and market analysis.
To study how the growth is maintained over the years by the company.
To study the various aspect relating to the marketing of UB products.
To study the influencing factor for the retailer to sell a particular breweries.
Scope of the study:
The scope of the study is limited to marketing activity of United Breweries in
mundkur and kinnigoli. It will give an in depth theoretical and practical knowledge
about the marketing aspects. This study also covers ratio analysis, of the balance sheet
of the united breweries and also analyses the marketing activity of the united
breweries. The study offers an insight into the cell breweries industry.
Methodology and limitation:
Methodology of Data Collection
The data collection is done using both primary and secondary sources.
The primary sources used are
Discussions with the dealers
Questionnaire was prepared for survey
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2. The secondary sources includes
Articles on websites, research reports, the reports from various
Limitation of the study
Visiting official website of the company and other related websites.
Referring to newspapers and various business magazines.
There are some factors which, if present would have resulted in a more detailed study.
Still proper measures are taken in maintaining the quality of the study. Those
limitations are-
The study is limited to the marketing activities of UB only in mundkur and
kinnigoli.
The data recorded was presumed to be authentic
The study is designed in such a way that proper research is done in the
selected area within the given time.
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3. Industry Overview
Globally, over 133 billion litres of beer is sold each year. In comparison, the Indian
beer Industry contributes a meagre 1.28% of the global sales. The industry has been
witnessing on an average, a steady growth of about 10% per year over the last ten
years with volumes crossing 172 million cases in 2008-2009 from 70 million cases in
2002. With a relatively younger population and income levels on the rise, India is
seeing an increase in the popularity of beer.
Consumption of beer in India is also constrained by lack of adequate market
infrastructure. In China for instance, there is one outlet for every 300 persons. In
contrast, India has one outlet for every 21,000 persons hampering free availability of
beer. Total consumption of beer in China grew by 33.56% between the years 2000
and 2006 to reach a total market volume of 30.47 billion litres. With a per capita
11consumption of 22 litres, China is one of the largest beer consuming nations in the
world.
Though beer is a milder form of alcohol, it is taxed by most states on the same basis
as Spirits. The charge is on absolute alcohol basis. Globally on a per unit of alcohol
basis, beer bears approximately 50% of levies imposed on Spirits whereas in India
taxation is regressive on beer.
India is predominantly a hard liquor market and beer has a minority preference
amongst those who consume alcohol. The per capita consumption of beer constitutes
a meagre 3% of global average. Typically the size of beer volumes in most countries
is 7 to 10 times larger than spirits, whereas in India, spirits is larger.
The alcoholic beverage industry in India operates under a very complex regulatory
environment, which is the biggest challenge. In addition to restrictions on advertising,
distribution infrastructure and retailing, varied tax structures, controlled pricing and
licensing make operations more complex, consequently leading to higher costs,
though providing entry barriers for new entrants as well.
The Indian beer market is dominated by strong beer, which accounts for 74% of the
total beer sale.
The market for alcoholic beverages has been growing consistently. 'The Future of
Wine', a report on the state of the wine industry over 50 years, suggests that the
market for wine in India was growing at over 25 per cent per year
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4. Company Profile
United Breweries (UNITEDBREW), incorporated on May 13, 1999, is engaged in
manufacture, purchase and sale of beer including licensing of brands which
constitutes a single business segment. Earlier known as UB Beer, it got its present
name on Aug. 7, 2002. The company forms the beer division of the UB group, a
diverse company with business interests in beverage alcohol, aviation, fertilizers,
international trading and infrastructure. Aventis Pharma, Herbertsons, Mangalore
Chemicals & Fertilizers, UB Engineering, United Breweries (Holdings), Mangalore
Breweries and Distilleries, United Racing & Bloodstock Breeders, and UB Electronic
Instruments are some of the other group companies.
The company offers leading brands such as Kingfisher, UB Export, London Pilsner,
Premium Ice and Kalyani Black Label. Innovation with the introduction of 5-liter
kegs of Kingfisher draught beer and a four-pack of London Pilsner has already gained
the company a domestic market share of over 50%. With 11 own and more than 15
contract manufacturing facilities, the company has no capacity constraints for
increasing production. A joint venture company Millennium Alcobev (MABL) with
Scottish & Newcastle Plc. (S&N) having manufacturing locations in critical markets,
the company has increased capacity considerably. In August 2007, the UB group
planned to pump in INR 12 billion in capacity expansion of its breweries across the
country, which will consist of setting up Greenfield projects in Andhra Pradesh, Uttar
Pradesh, Madhya Pradesh and Tamil Nadu. After expansion, the group`s beer
manufacturing capacity will increase to 130 million cases from the current 100
million by 2010.
Subsidiaries
Associated Breweries & Distilleries Limited (ABDL)
Maltex Malsters Limited (MML)
Associate:
United East Bengal Football Team Private Limited (UEBFTPL)
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5. Joint Venture:
Millennium Alcobev Private Limited (MAPL)
Subsidiaries of the Joint Venture:
Empee Breweries Limited (EBL)
United Millennium Breweries Limited (UMBL) 
Millennium Beer Industries Limited (MBIL)
The company‟s leading brands
Kingfisher
UB Export
London Pilsner
Premium Ice
Kalyani Black Label
Business Strategy:
UBL has a manufacturing network of 22 breweries across India. The company enjoys
a market share of 48% in the industry and plans to expand its share further. Kingfisher
Strong is the single largest selling beer brand in India, while Kingfisher Premium
continued to outperform in its category.UBL plans to set-up two new green field
breweries at Mallepally in Andhra Pradesh and Nanjangud in Karnataka in order to
support the revenue growth. UB Group firm United Breweries Ltd today said it is
planning to locally produce Dutch beer brand ''Heineken'' by next fiscal besides
launching a refurbished ''Tiger'' brand in India this year
The group Mission Statement embodies these objectives:
To be the recognized leader in our target markets.
To be the preferred employer wherever we operate.
To recognize the value of our human assets.
To be the partner of choice for customers, suppliers, and other creators of
innovative concepts.
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6. Board Of Directors
Dr. Vijay Mallya - chairman
Dr. Vijay Mallya, a well known industrialist, is the Chairman of the United Breweries
Group. The Group today has an annual turnover of U.S. $ 1.2 billion.
Mr. Ravi Nedungadi – Director
Mr. A.K. Ravi Nedungadi is a Chartered Accountant and a Cost Accountant. Having
qualified in 1978, he started his career at Macneill & Magor Ltd.,
Mr. Chugh Yoginder Pal - Director
Mr. Pal completed his Graduation in Engineering with First Class (Distinction) in
1958. He then started his career at TELCO & was trained in Industrial Engineering,
Mr. Sunil Kumar Alagh - Director
Mr. Sunil Kumar Alagh is a graduate in Economics (Hons.) and MBA from IIM,
Calcutta in the year 1968. He worked with ITC Limited, Jagatjit Industries Limited
Mr. Chhagan Lal Jain - Director
Mr. Jain has more than 40 years of work experience with various organizations
including ICI, Hindustan Lever Limited, Hoechst India Limited, etc.
Mr. Rene Hooft Graafland - Director
Rene Hooft Graafland studied Business Administration at the Erasmus University in
Rotterdam and finished the Post-Graduate study for Chartered Accountancy.
Ms. Kiran Mazumdar Shaw - Director
As Chairperson and Mission Leader of CII's National Task Force – Biotechnology,
she has led several delegations to USA, Canada, etc., to propel India
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7. Mr. Madhav Bhatkuly – Director
Mr. Madhav Bhatkuly is a recipient of the Foreign and Commonwealth Scholarship
from the British Government. Mr Bhatkuly was a country partner of Arisaig Partners
Mr. Siep Hiemstra - Director
Mr. Siep Hiemstra joined Heineken in 1978. The first six years, he worked with
Gedistilleerd en Wijngroep Netherlands. He started various commercial
Executive Directors
Mr. Kalyan Ganguly- Managing Director
Mr. Ganguly is an Alumni of Harvard Business School, having done his Advance
Management Programme.
Mr. Guido De Boer - Director, CFO
Mr. Guido De Boer completed M Sc. in Economics & Business from Erasmus
University, Rotterdam. He has completed various Executive Development
Programmes.
Awards
1. Won the Bronze Award at the 'Australian International Beer Awards' in the
"International Packaged Beer Section for the year 2000."
2. First Prize in the International Beer Awards organised by the New Zealand
Hop Marketing Board.
3. First Prize for the label work category at the Asian Grand Prix Cyrel 2000
Label award.
4. Gold Medal at the World Beer Championship held in Chicago in 1997
5. World's Best Lite Lager Award at the Stockholm Beer Festival in 1995.
6. World's Best Lite Lager Award at the Stockholm Beer Festival in 1994.
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8. History
The UB Group was founded by a Scotsman, Thomas Leishman, in 1857. The Group
took initial lesson from manufacturing beer from SouthIndian based British breweries.
At the age of 22, Vittal Mallya was elected as the company's first Indian director in
1947. After a year, he replaced R G N Price as the chairman of the company.
United Breweries made its initial impact by manufacturing bulk beer for the British
troops, which was transported in huge barrels or "Hogsheads". Kingfisher, the group's
most visible and profitable brand, made a modest entry in the sixties. During the
1950s and 60s, the company expanded greatly by acquiring other breweries. First was
the addition of McDowell as one of the Group subsidiaries, a move which helped
United Breweries to extend its portfolio to wines and spirits business. Strategically,
the Group moved into agro-based industries and medicines when Mallya
acquired Kissan Products and formed a long-term relationship with Hoechst
AG of Germany to create the Indian pharmaceutical company now known as Aventis
Pharma, the Indian subsidiary of the global pharma major Sanofi-Aventis.
The Pegasus, which is the symbol of the United Breweries, first found its place as the
Group logo in 1940. Then, the Helladic horse – associated with beer and nectar in
Greek mythology – carried a beer cask between the wings, ostensibly because beer
formed the core operations of the Group. Later, the beer cask was removed to
represent the Group's multifaceted operations. Now, it is just the horse.
Present history
Sales of United Spirits Ltd products are expected to exceed 60 million cases during
the fiscal year 2005–06, making the Group the third-largest manufacturer
of spirits products in the world only after Diageo PLC and Pernod Ricard. In addition,
USL is one of only three in the world to own seven millionaire brands and at least five
brands rated by Drinks International, UK, to be amongst the ten fastest growing
brands in the world in their respective categories. The market share of the Spirits
Division in India is currently 60% and exports to the Middle East, Africa and Asian
countries are growing rapidly.
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9. The UB Group's brewing entity – called United Breweries Limited (UBL) - has also
assumed undisputed market leadership with a national market share in excess of 50%.
Through a process of aggressive acquisition and market penetration, The UB 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.
With plans to become a global player, United Spirits Ltd. (USL), the flagship of the
UB group, purchased the Scottish distiller Whyte and Mackay in May 2007 for £595
million (Rs. 4,800 crore).This would bring the brands of W&M like The Dalmore,
Isle of Jura, Glayva, Fettercairn, Vladivar Vodka, and Whyte & Mackay Scotch under
its portfolio.
The UB group is also into manufacture of fertilizers. The group company Mangalore
Chemicals and Fertilizers has a factory at Panambur in Dakshina Kannada district of
Karnataka.
UB Engineering Limited is the group's engineering business arm. It undertakes EPC
Projects, Infrastructure, on-site fabrication of structures, installation, testing and
Commissioning of Electrical and Mechanical Equipments, Piping etc. for large
industrial projects such as Power, Refineries, Steel, Cement, Fertilizer, Petrochemical
and Desalination Projects. The company was initially established as Western India
Erectors in 1963 and came under the UB Group in 1988.
The group entrance to the IT sector had also been marked by the formation of UBICS,
Inc. The company provides IT consulting, Bodyshopping services and professional IT
products to business companies.
Market Overview
Indian beer market is valued at INR 35 billion with volume sales of 172 million cases
for FY 2008-09 and at the current trend the market is expected to grow at an annual
rate of 17.2% till 2011. Foreign brewers are eyeing the Indian beer market which is
largely untapped and has huge growth potential. International beer companies have a
good enough reason to tap markets like India. That their main markets, North
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10. America and Europe, are either flat or in a state of decline is no secret. Carlsberg, for
instance, said it could look at closing select European breweries due to a slump in
demand.
In contrast, beer is flying off the shelves in India. A recent report by global beverage
consultants Canadean states that consumption of beer in BRIC countries (Brazil
Russia, India and China) increased by almost 50 per cent during 2002-2007. In India,
beer sales grew at nearly 90 per cent, compared to a less than 60 per cent growth for
other alcoholic drinks. Industry sources estimate that the Indian beer market is
expected to nearly double to 23.3 million hectoliters by 2012 from 12.5 million
hectoliters at present.
But the market is difficult to break into. The two players, UB and SAB Miller, control
more than 80 per cent of the market. While UB with brands like Kingfisher, Zingaro
and Kalyani Black has a 48 per cent market share, SAB's bouquet of acquired brands-
- Haywards, Royal Challenge, Knock Out and Foster's deliver a combined market
share of 37 percent.(See exhibit 6 for Market share)
In the last 9 years beer consumption has been growing rapidly at a CAGR of 7%
Looking from the industry perspective, the Indian beer industry has been witnessing
steady growth of 10% per year over the last ten years. With the average age of the
population on the decrease and income levels on the increase, the popularity of beer in
the country continues to rise.
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11. Competitors
Currently more than 80% of the market is controlled by two major players United
Breweries Limited (48%) and SABMiller India (35%).Strong beer is predicted to
grow faster as it is perceived to offer value for money alternative to spirits. With
InBev acquiring Anheuser-Busch, it has potential to emerge as the third major player
in the Indian beer market. The future of beer market in India looks positive with the
entry of many international players. Beer sales will increase along with increasing
number of brands and sub-categories in India. Existing players like UBL and
Sabmiller are planning to expand their range of products.New players like Abinbev,
Carlsberg are bringing their internationally renowned brands to India.
Sabmiller
Sabmiller India is a subsidiary of SABMiller PLC registered in India as SKOL
Breweries Limited. For FY 2007-08 the company reported a net turnover of INR
10860 million and profit after tax of INR 344 million.
Brands:
Haywards 5000
Haywards 2000
Haywards Black
Foster‟s
Indus Pride
Peroni
Royal Challenge
Knock Out
Note on Foster’s:
Foster's Lager is a uniquely international beer, brewed with the finest sun-dried
malted barley, the purest water, and Foster's own specially bred 'Pride of Ringwood'
hops imported directly from Australia to give the beer an authentic flavour. Its crisp,
clean flavor won it immediate international acclaim when it was first brewed in
Melbourne in 1888. Today, more than one hundred years later, it is still recognized as
one of the world's best beers. Foster's Lager is a uniquely international beer, brewed
11

12. with the finest sun-dried malted barley, the purest water, and Foster's own specially
bred 'Pride of Ringwood' hops imported directly from Australia to give the beer an
authentic flavour. Its crisp, clean flavour won it immediate international acclaim when
it was first brewed in Melbourne in 1888. Today, more than one hundred years later,
it is still recognized as one of the world's best beers.
Business Strategy:
SABMiller has 10 breweries located strategically across India to serve the beer
markets efficiently. The company has a market share of 35% and stands in the second
position. The company has invested about INR 1250 mn in the past two years for
upgrading the breweries to global standards. Sabmiller has leveraged its global
expertise in packaging, pricing, occasion and product gaps were improved based on
consumer insights.Also it plans to bring the iconic Dutch premium beer Grolsch to
India. Sabmiller Plc has acquired the brand for USD 1.2 billion in 2007.
Other Players
Inbev India
Brands: Tennents Super, Beck‟s, Stella Artois, Hoegaarden, Leffe Anheuser-Busch
(AB) was acquired by Inbev in 2008 and formed AB Inbev India; currently operates
usingtrading name Inbev India. Inbev operates in India through a 49:51 joint venture
with soft drink bottler RKJ
Group.
AB started operations in India through a 50:50 joint venture with Crown Beers
International initially but later AB purchased the remaining ownership from Crown
Beer India Ltd. Business Strategy: Inbev India has a production capacity of 1.9
million cases a year through two contract brewering arrangements in Regent
Breweries in Madhya Pradesh & Dasappa and Sons Bangalore. Inbev plans to
introduce Tennents brand in North India either by finding a contract brewer or by
setting up a brewery. AB Inbev India launches Budweiser beer in North India in
August 2009. It has received a good response in the Southern states and Maharashtra.
The company expects to cross 2.9 million cases in sales of Budweiser beer by
December 2009.
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13. Carlsberg
It entered Indian market in 2006 & operates here through a joint venture named South
Asia Breweries and positioned itself as a premium mild beer. With the launch of its
flagship brand, the company is trying to create a premium, all-malt beer category. In
2009 Carlsberg was the 4th largest brewery group in the world. Its products are sold
in more than 150 markets. In 2008 the Group sold more than 120 million hectoliters
of beer, nearly 100 million bottles of beer a day. Their major consumers are in
Southern India. Howsoever, it consciously chose the north, east and west regions of
the country to set up its breweries
Strategy adopted by Carlsberg is to concentrate on to the untapped market of north
and west India in the initial stage of the production. Moreover, since it has positioned
itself as a premium product, it is only catering to the urban cities of India.
Challenges
Bottling shortage
What often happens is people have more bottles at home than they drink on a weekly
basis because they tend to buy regularly and bring them back irregularly. SABMiller,
which manages Shaw Wallace Breweries Ltd, has warned that the country could face
a beer shortage in the approaching summer, the peak consumption season. Mr.Richard
Rushton, Managing Director of SABMiller India Ltd, told Business Line in an
interview that he feared industry would not be able to adequately service the demand
in the summer months on the back of "an inefficient bottle pool management" in a
market that is heavily dependent on recycled bottles. MrRushton said, "The route
which the bottle takes to the trade and ultimately to the consumer should be the same
it takes back to the brewer through the value chain. But in India, it gets fragmented
and dispersed to spend a lot of time in the trade and results in high incidence of
breakage," he added. The 650 ml beer bottle is common to all companies and only the
250-300 ml bottle has proprietary designs and logos on it. Thanks to breakages and
diversion to other unorganized players, only around 60-65% of bottles are actually
13

14. returned to the company, says liquor industry consultant, UB Bhat. Till about a year
and half ago, bottles were being returned to companies at an average of Rs 3.00 to Rs
3.50 per bottle. Taking advantage of the shortage, second hand bottle traders hiked
prices from the normal Rs 3.00 to Rs 3.50 to Rs 7.00, almost equal to the price of a
new bottle! Not to be left out of the party, glass manufacturers sharply increased
prices too. The shortage in bottles took their toll on profitability of the companies.
Richard Rushton, managing Director of SWBL admitted that bottle prices had
seriously affected the company‟s profitability, especially considering that regulations
in a number of states prevent companies from passing on cost increases to. UB too
talks of an “unprecedented cost push” caused by the shortage in its annual report. In
fact, UB disclosed that the spiraling bottle costs shaved off Rs.30 crore - 40 crore in
its operations during the last financial year, 2003-04. Indian brewers have injected
about 250 million new returnable glass bottles into the beer market during the last
nine months to beat down prices of recycled bottles. [8] Many bars across the State of
Kerala now display the sign „No beer' and several others tell their patrons: “Only one
bottle per person, sir.” They apologetically tell the customers that they are not getting
sufficient.supplies from the Kerala State Beverages Corporation (Bevco),
Advertisements barrier
Building brands, particularly for alcoholic beverages, is easier said than done. In the
mid-1990s, the Indian government banned advertising of alcoholic beverages. By
then, existing brands such as Kingfisher, Foster's and Haywards had already built
their brand without any surrogate branding efforts. In contrast, the new entrants will
have to rely only on surrogate advertising. For instance, Cobra is now advertised on
television as sparkling water with the tag line "so smooth, anything goes down well".
As the advertisement of liquor is banned in India, Carlsberg has cashed its
international image to boost its sales in the domestic market. They have targeted the
public houses and discotheques for their promotion thatis very apt. Kingfisher
employs the style of surrogate advertisment, where it try to gain customer attention by
advertising about its mineral water etc. But with government banning even indirect
advertisements of wine, alcohol, liquor and any tobacco products forthwith in the
interest of public health, the brand building is going to be a great challenge.
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15. Beer highly taxed
Minority preference for beer in India and high tax structure are the major challenges
for Indian beer industry. One of the reasons for the low preference for beer is high
taxes imposed on beer consumption. On absolute alcohol basis, beer is taxed higher
than spirits in most of the states in India. There are about 26 different alcohol specific
taxes that constitute 50% of the consumer price, which is among the highest in the
world. In India, beer taxes are levied by individual states and taxes are also paid
between states. (See Exhibit 5 for comparison of tax rates) Beer, which is a softer
form of alcohol consumption, is taxed higher by most states compared to Spirits on
absolute alcohol basis. This is primarily because taxes on beer in India tend to be
relatively higher than spirits whereas in most parts of the world, in fact, the reverse is
true. Globally, on a per alcohol basis beer is taxed at 50% of hard liquor whereas in
India, beer is actually taxed 60% more than hard liquor.
The Indian beer industry is plagued with myriad taxes & levies that vary from state to
state. In fact no two states or UTs have a same or even a similar policy. The
inconsistency in the state policies leads to fostering an environment of
mismanagement & lack of focused strategy to manage state finances. States usually
do not adopt policies based on scientific management or by considering the social
aspects of managing this trade. The policies are generally short term in their outlook,
with little or no thought to long-term interests of all stakeholders, including the
general public.
Price restrictions
Price restrictions in many large markets remain a biggest challenge for the industry.
The Government decides the End Consumer Price (ECP), leaving the manufactures
with no say in determining the price of the beer. In a free market economy this has no
rationale.
Inadequate market infrastructure
The market infrastructure for beer in India is inadequate. For every 21000 persons
there is one outlet hampering the availability of beer. In China, for instance the figure
is 300. The highly regulated market hampers beer sales, unlike most developed
countries where beer and wine are not regulated in grocery/retail stores. The retail
distribution channels are not completely open for selling beer in India. Regulations
15

16. are stiff with respect to selling beer through modern retail chains where as in most
developed nations beer and wine is available in grocery or retail stores.
Restriction of movement of beer
For the movement of beer from one state to another, an export license and an import
license is required. Export fee is imposed in the state where beer is manufactured and
import fees on the State where it is sold. In some states only beer manufactured in that
state can be sold. Few states like Tamilnadu have strict rules of selling only beer
manufactured within the state.
Consumer choice and preferences:
India is predominantly a hard spirits market and beer is a minority preference for
those who consume Beverage Alcohol. Beer makes only 4% by revenue of the total
alcoholic market. It would be pertinent to mention that while per capita consumption
of spirits in India is 65% of global average, in the case of beer it is a mere 3% of
global average. (See Exhibit 4 to compare beverage consumption across the world)
World over it has been identified that policy focus should not as much be on
controlling consumption but more importantly on reducing harm. Therefore, beer and
wine dominate the alcohol market in most countries. It is considered to be common
man‟s drink and in many countries is even priced in parity with soft drinks. But in
India things are different in India. The per capita consumption of beer in India is just
1 liter per person per year as compared to the world average of 22 liters. This is one of
the lowest in the world.
Capital barrier
The capital required to set up and maintain a brewery is very high. Branding is
another issue. It takes time fora new beer brand to gain acceptance and shift loyal
customer tastes. So the companies prefer to grow inorganically by acquisitons and
mergers.
The Government-owned monopoly distributor of liquor.
Distillers are owned by government so they are the only distributors in the country.
For each district there is one depot.
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17. Scope Of The Breweries Industry In India
Young population
Nearly 28% of Indian population live in urban areas which comes close to the
population of USA. Urbanization is happening at a very fast pace and about 40% of
the total population is expected to live in urban areas by 2020. Also people in India
are relatively younger when compared with global average. About 50% of the Indian
population would be under 30 years even in 2015.
Low per capita consumption
Indian per capita beer consumption is very low compared to global average. In the
total alcohol market in India, beer contributes only 4% of revenue. The low
penetration in beer consumption provides a substantial and sustainable growth in
demand for beer in future.
Rising income levels
India is one of the most attractive consumer markets in the world with about one-sixth
of the global population. The rising income levels has a direct positive impact on beer
sales in India. Also, urban consumers who are more exposed to the western culture
socialize with beer. The growing income levels particularly in the urban earning class
is a potential market for beer manufacturers in India.
Dynamism in Beer market
Many foreign beer manufacturers have entered or plan to enter the Indian beer market
with their product line. The market is set to flourish with 15 new breweries and 10
international brands in the next 3 years. With the global markets experiencing low or
stagnating growth and focus shifting to India, the Indian industry is expected to
witness fast growth in the coming years.
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18. Ratio analysis
Current Ratio:
Current ratio is one of the oldest of financial ratios. Its usage dates back to 1891; the
primary users were short-term lenders. Even today, this ratio is regarded as a key ratio
in the credit appraisal system of banks in India in spite of the fact that current ratio
has lost most of its shine in modern-day financial management whose approach is to
reduce the value of this ratio rather than increase it. The attention received by current
ratio from short-term lenders for such a long time is due to their preoccupation or
anxiety over sudden slowing down of realization of current assets from which they are
to receive payment. The 2:1 historical standard was evolved to ensure that even if as
high as 50 percent of current assets fail to realize in time, the lenders would not be
worse off. The cushion, which is popularly termed as net working capital, provided a
sense of security to the lenders.
Current Ratio = current asset/ current liability
year Current asset Current liability Current ratio
2010 894.4 373.01 2.39
2009 672.79 246.25 2.73
2008 446.02 253.10 1.76
2007 395.32 219.26 1.80
2006 286.4 169.77 1.69
Interpretation:
Current ratio indicates short-term solvency of the firm i.e. ability to meet the short-
term obligation. Higher the current ratio higher is the amount available to pay for
meeting current obligations. By looking into table above we can say that the current
ratio of the company for the past five years is showing is good since the ratio has been
18

19. increasing. The company during the past two years has a good current ratio so it could
payoff current liabilities using current assets. Which shows their ability to pay off the
current obligation is good.
Quick Ratio:
The term quick assets refer to current assets, which can be converted into, cash
immediately or as a short notice without diminution of value.
The quick ratio is the ratio between quick assets and current liabilities and is
calculating by dividing the quick assets by the current liabilities.
Quick Ratio= total current assets- inventory/ total current liability
year Quick asserts Quick liability Quick ratio
2010 698.38 373.01 1.87
2009 509.75 246.25 2.07
2008 329.10 253.1 1.30
2007 282.96 219.26 1.29
2006 212.8 169.77 1.25
Interpretation:
We can see hare that the quick ratio for the 2010 is not good though the current ratio
is high, this shows high inventory holding during the year. This is not very good for
the company when there is any claim of liabilities because there is high inventory
which cannot be used to pay off the current liabilities.
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20. Debt ratio;
Debt Ratio= total debt/total assets
year Total debt Total asserts Debt ratio
2010 671.33 1831.10 0.37
2009 616.36 1697.90 0.36
2008 525.22 1136.48 0.46
2007 476.17 1033.81 0.46
2006 253.41 760.63 0.33
This shows the total assets available to pay off the debts; here the debt ratio is the
highest in the year 2007 and 2008 that is 0.46. this says 0.46 is the debt for every 1
Rupee of assets owned by the company. And in the year 2006 and 2009 is the least
which shows less debts on the assets owned by the company.
Net Profit Ratio:
The net profit margin is indicative of management‟s ability to operate the business
with sufficient success not only to recover from revenues of the period but also to
leave a margin of compensation to the owners for providing their capital high net
profit margin would ensure adequate return to the owners as well as to enable a firm
to withstand adverse economic conditions when selling price is declining, cost of
production is rising and demand for the product is falling. A firm with a low profit
margin can earn a high rate of return on investment if it has a higher inventory
turnover.
Net Profit Ratio = net profit/ net sales
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21. Table Showing Net Profit Ratio
Year Net profit Sales Ratio
2010 96.97 1986.28 0.049
2009 62.49 1691.75 0.037
2008 62.47 1370.47 0.046
2007 65.09 1046.24 0.062
2006 19.41 679.41 0.029
Interpretation
From the above the net profit ratio during the year 2010 is increasing compared to the
to the net profit ratio of 2009. Net profit ratio in the year 2007 was at the peak with
0.062 because of the efficiency of the company and due to the cost effectiveness.
United breweries has been maintaining good profit margin and it is a stable company.
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22. MARKETING STRATEGY OF UNITED BREWERIES
Product
United Breweries is the no 1 selling product in its segment. It is produced out of
good quality of raw material is used to maintain the quality of the product. It is
used maintain the standard of a product in the long run. Consistency of the
product quality is high it is mainly due to technologies used by the united
breweries and their uniformity in production and its emphasis on quality
product. United Breweries always tastes fresh due to the raw material used by
the company in its production activities. United breweries have well developed
transportation so it helps the company to maintain its quality and tastes.
United Breweries not look into short term but also looks into the long term objective
of the organization. For UB brand image is most important for the people related with
it. They want to retain the customer for the long run to help in stable growth. United
breweries do not compromise production with quality. Through the quality of
products it is able to withstand the competition and maintain its share in the market. It
has production unit centered in 20 different location of the country it helps them to
cope up with existing demand.
Pricing
United Breweries have different beers for different segments in the industry. They
knew that they could not concentrate on similar type of product so they went for
expansion of their business. In order attract people of different segments of the
market. United Breweries produce different priced beers to attract the middle income
group as well as the high income group. United breweries group produce UB (united
beer), which is available in 2 types UB strong, and UB light, which are low priced
goods ranging from 58 to 65. This beer is produced keeping in mind the rural area
people, middle income group and also for wedding and other functions. It has
segmented its market according to their income group high income and low income
group. For high income group they concentrate on kingfisher, kingfisher blue, the
rates range from 80 to 115. UB beer has no competitors in its segment so it maintains
monopoly in its rate segment. UB beer has very good feedback from the customers.
It has very ideal pricing strategy, which will help the group in the long run. It also
helps them in reaching the customers throughout the market.
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23. Place
United Breweries is dominant throughout the country it has about 48% share in the
beer market in the country. United Breweries has 16 companies owned breweries and
it also has nine contracts breweries in 20 different locations of India. And it has its
presence in 60 countries over the world. So it has a very good distribution network so
the supplies will be served fresh. It helps them in supply of the demand for its
products. helps them in transferring without any physical damage while supplying. It
also helps that have production centered in 20 different locations through out the
country. And it also has online marketing to helps them to reach the customers in the
most effective and efficient manner.
Promotion
It has tagline called „king of good times‟ which is very popular through out the
country. Although beer advertisement is banned in the country it uses adds of mineral
water to create demand for its beverages. It has continued its advertisement through
pubs very aggressively. Kingfisher calendar every year also helps in its promotional
activities it helps them in attracting youth and also creates brand image. It also
sponsors live concert and rock bands, it helps them to create brand image and gives
them demand for their product. They also sponsor football team named east Bengal.
This will help them in creating brand image and helps them in attracting youth
customers. It also promotes its product in rural areas by various promotional
strategies. It is tied up with NDTV good times, which is a lifestyle channel it helps
them to reach out to the various segments of market. Although the competition is high
it is still able to maintain its market share.
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24. Analysis of the survey:
The survey was done with an objective to find the marketing and promotional
activity of some of the randomly selected dealers in kinnigoli, mundkur.
The questionnaire prepared for the survey mainly was with a primary objective of
finding the importance of promotional and market analysis, the various aspect relating
to the United breweries product and its market in these areas. and to know the
consumer buying behavior.
Questionnaire is the list of questions prepared by an enumerator to collect the primary
data from the field. During my survey I have contacted 5 respondents (dealers).
Through an ideal number of questions, sincere attempt is made to collect as much as
Information possible. The respondents were selected on the basis of convenience and
judgment sampling method.
According to the survey all the 5 dealers were unhappy that no incentive was given if
they exceed the expected sales it was surprise to know that all the dealers wanted to
sell slok breweries because incentive given was high. Incentive was not only given to
owners but vendors also. From the survey the dealers said the sales will be at the peak
april to july because it is a wedding season. As my research was on rural area there
might be another possibility for increase in sale from april to july people will have
cash in their hand due to agriculture season. Supply of UB products to distillers is
good except for the months there was no supply of UB products. from the dealers it
was found customers are satisfied with the UB then any other brands. In remote
demand for UB is more then kingfisher.
From the observations one can say that the brand UB enjoys high brand equity and the
company is in the growth path.
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25. Surveyor’s input:
After the survey it can be analysed or it can be recommend for the growth of United
Breweries
There should be should be sales incentive for the dealers those who exceed the
sales targets.
The company should appoint more sales representative to improve the
Relationship between dealers and company.
Advertisement materials should be given to the dealer
It should provide good amount of benefits to the retailer so that they get
motivated and also influence the consumer to buy UB products.
The company should introduce 250ml pet bottles so that they could increase
their sales in rural areas.
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26. Conclusion
After the survey, It can be concluded that the sale of united breweries is growing.
Apart from hitting the right price points, UB has been continuously innovating in line
with what is required in India. From the pricing point of UB has both low priced and
high priced beers, so it covers both the segment of the society. UB has succeeded in
India because of its quick decision-making, quality and regular supply of its
product.And its promotional strategy “king of good times” created ever lasting image
of the company.
United Breweries has assumed undisputed market leadership with a national market
share in excess of 50% through a process of aggressive acquisition and market
penetration, the United Breweries 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.
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27. Bibliography
en.wikipedia.org/wiki-breweries group
www.ubgroup.com
the ub group.com/pdfub%20holdings%20ar0607.pdf
en.wikipedia.org/wiki/ history of beer
en.wikipedia.org/wiki/beer
www.ventureline.com
www.sabmiller.com
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