United Breweries Limited · NSE:UBL
United Breweries — Investor Presentation (December 2011)
30 slides from United Breweries's investor presentation, December 2011
Slide 1: Brewing a success in India
IR presentation 2011 Brewing a success in India Guido de Boer CFO United Breweries
Slide 2: UBL: Key facts and figures
UBL: Key facts and figures 10 million hectoliters 54% market share, the largest brewer in India 1.5 litre per capita consumption 18 owned breweries, and 10 contract breweries 39% share for the Kingfisher brand - it is synonymous with Indian beer 75% owned by Dr Vijay Mallya and Heineken Source: FY20
Slide 3: India and the Beer opportunity
India and the Beer opportunity
Slide 4: Demographic dividend to be reaped
Demographic dividend to be reaped Population increase fuels potential for rapid beer market growth Population in 2030 Below 25 year olds as % of total population in 2030 India India 20% China China 11% Brazil Brazil 2% Russia Russia 1% 0 500 1,000 1,500 0% 10% 20% 30% mln India will have the world’s
Slide 5: Consumption is set for strong growth
Consumption is set for strong growth A significant middle class will emerge supporting increased spending power Number of Beer will become Household income brackets households million increasingly affordable thousand, Indian rupees, 2000 to a growing number 2005 2025 Globals (>1,000) 1.2 +123m 9.5
Slide 6: Beer consumption in India is well below other 'BRIC' countries
Beer consumption in India is well below other ‘BRIC’ countries The Indian beer market has grown strongly over the past 5 years from a low base Per Capita Beer Consumption 80 76.1 64.5 60 40 34.5 PCC in litres 20 CAGR 14% 0.8 0.9 1.1 1.2 1.3 1.5 0 2005 2006 2007 2008 2009 2010 China Brazil Russia Ind
Slide 7: Today's beer consumption is very low
Today’s beer consumption is very low India is far below other emerging markets of similar income levels India Comparable Markets Per Capita Beer Consumption at 1.5 liter 20 liter comparable GDP Share of alcohol <0.5% Wine 5% consumption 78% Spirits 8% 22% Beer 87% Note: 2010 data of India versus mar
Slide 8: Two key reasons
Two key reasons High prices & low availability AFFORDABILITY AVAILABILITY Highest duty in the world 65,000 licensed outlets Duty not set according to across the country alcohol content 1 per 18,000 people Expensive alcoholic In China: 1 per 300 people beverage Beer is not the alcoholic b
Slide 9: Affordability
Affordability Beer prices in India are very high An Indian has to work up to 7x as India is the only BRIC where a beer long to afford a beer is more expensive than a Big Mac Minutes work for a beer Beer relative to Big Mac India 51 India 1.1x Brazil 18 Brazil 0.5x Russia 8 Russia 0.5x China 7 China
Slide 10: Affordability
Affordability Excise is highest among BRICs and drives preference for hard liquor Taxation is significantly higher Beer is taxed significantly higher than other countries than hard liquor Relative pricing vs Taxation of Beer spirits per unit of pure alcohol India Kingfisher 75 Brazil Premium 2.6x Ru
Slide 11: Availability: Case Study: Mumbai Beer shops
Availability Case Study: Mumbai Beer shops New Policy established Number of beer shops has increased Since the 1970’s no new licenses sharply… 300 have been issued for liquor shops 215 190 In 2006, the Maharashtra government started to issue ‘beer shop’ licenses for outlets that can only sell beer a
Slide 12: A highly regulated market
A highly regulated market Leveraging the existing framework Excessive State regulation and intervention Route to market Economics, need to have a brewery in each state Pricing India is not homogeneous country 27 uniquely different states Ban on advertising alcohol Difficult to build new br
Slide 13: India is at the start of the growth curve
India is at the start of the growth curve Income growth will drive per capita beer consumption Beer consumption versus income level Demographics will fuel further market growth 80 Brazil Russia UBL expects to grow volume at an Mexico average annual rate of 15% over the Per Capita Beer consumption 60
Slide 14: Capitalising on UBL's strengths for growth
Capitalising on UBL’s strengths for growth
Slide 15: UBL's leadership is undisputed
UBL’s leadership is undisputed Market leading position in India Strong market position will continue to drive economies of scale and superior returns All time high market share of over 54% UBL is more than two times its On a brand basis the leadership is even more apparent nearest competitor AB-Inbe
Slide 16: What is this leading position resulting from?
What is this leading position resulting from? UBL’s Competitive Advantages UBL has been able to achieve its market leadership by leveraging four competitive advantages: Brands Manufacturing People footprint Route-to- Market
Slide 17: The strength of the Kingfisher Brand is unparalleled
The strength of the Kingfisher Brand is unparalleled Iconic brand – KINGFISHER is Brand Equity among young synonymous with beer for Indian consumers: consumers No other beer brand comes close: All-India market share Mild Beer FY11 Kingfisher is India’s most liked Kingfisher beer brand by far. No.2 h
Slide 18: But it is not only Kingfisher…
But it is not only Kingfisher… …UBL leads across all segments Mumbai mild beer portfolio Q2FY12 Segment No.2 Relative Key brand share share Super 65% Corona 0.25x 170+ Premium PRICE INDEX 135 Premium 49% Carlsberg 0.96x 100 Mainstream 70% Fosters 0.23x 80 Economy 81% Golden Eagle 0.19x
Slide 19: Investing behind the brand
Investing behind the brand Leveraging aspirational properties in fashion and sports Cricket: Indian Premier League Football: Kingfisher East Bengal Formula One: Force India Fashion: Kingfisher swimsuit calendar
Slide 20: Heineken
Heineken Building brand equity for the future Selective launch in key metros: Mumbai, Delhi, Bangalore, Kolkata and Goa Gradual roll-out based on: 1. Perfect execution Targeted Distribution Premium Visibility Cold & Fresh Stock management 2. Driving awareness & be part of the conversation. Strong fo
Slide 21: Manufacturing network across all major states
Manufacturing network across all major states UBL brewery footprint Unique brewery footprint In line with the requirements of a complex regulatory framework 18 owned breweries and 10 contract breweries Closeness to market a critical success factor Freight costs Import and export duties Fre
Slide 22: Best Route to Market
Best Route to Market In distribution… India has 27 states that have distinctly different routes to market Ability to manage this complexity is one of UBL’s core strengths Established distributor relationships Group scale - with 60% share in spirits and 54% in beer - provides significant benefits Mos
Slide 23: Best Route to Market
Best Route to Market …as well as in retail freshness Cold stock Fastest selling brands Leadership in cold chain management Point of sale visibility Must stock brands provides portfolio benefits Economies of scale
Slide 24: People
People Most experienced management in the industry Customer facing management has been with the group for 20+ years Very low churn rate Strong background in dealing with regulatory environment and market complexities Very difficult for foreign entrants to replicate Chairman’s added value Dr Vijay Ma
Slide 25: UBL has a proven track record
ts UBL has a proven track record
Slide 26: Exceptional volume growth
Exceptional volume growth UBL volumes increased five fold in less than a decade UBL Sales volumes In Million Hectoliters 12 10 8 6 5x 4 2 0 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11
Slide 27: Continued outstanding performance
Continued outstanding performance Performance highlights FY2006-2011 Sales up with an average 32% y-o-y EBITDA exceeds Rs 4 billion 40 5.0 30 4.0 20 3.0 2.0 10 1.0 0 - 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011 EBIT has quadrupled since FY2006 Net Profit has grown with 54% CAGR 4.0
Slide 28: Closing remarks
Closing remarks
Slide 29: In Summary…
In Summary… Indian beer market growth opportunity unparalleled in the world UBL is the clear market leader with strong segment leadership positions UBL expects to grow volume at a CAGR of 15% over the next 5 years A superior route-to-market and manufacturing footprint provides consumer reach and sca
Slide 30: Questions, please?
Questions, please?
United Breweries — Investor Presentation (December 2011) on 6ix