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Carlsberg plans purchase of Indian brewer

Carlsberg A/S, one of Europe's largest brewers, plans to buy Parag Breweries of India as it looks to growing sales in Asia to offset weakening demand in the US and Western Europe.

The Danish brewer, which began selling beer in India over the weekend, is seeking government approval for the Parag purchase, Jesper Madsen, Carlsberg's senior vice president in Asia, said in New Delhi on Saturday.

Carlsberg, like rivals SABMiller Plc and InBev NV, is pushing growth in Asia. Beer sales in India are forecast to grow 17 percent annually in the next five years as higher disposable incomes boost consumption, Research & Markets said.

India is set to become the second-biggest Asian beer market, after China, by 2020, Madsen said.

"Carlsberg is targeting a leadership position in the premium beer segment in India," he told said.

The Economic Times newspaper reported on Sept. 14 that Carlsberg may pay 320 million rupees (US$8 million) for a stake in Parag.

The European brewer may buy the stake in Parag and its holding company Agnes Impex and combine them to own 60 percent, the report said.

The Parag Breweries facility, located near Kolkata, India, is under construction. When completed, the brewery will have an initial capacity to produce 150,000 to 200,000 cases of beer a month, the Economic Times said.

The Copenhagen-based company also plans to start producing from its two breweries in Rajasthan and Maharashtra with annual capacities of about 50 million liters of beer, by early next year, he said.

Carlsberg operates in India through the South Asia Breweries venture, in which it holds a 45 percent stake. The venture bought a brewery in Himachal Pradesh, north of the Indian capital of New Delhi, in May to boost its presence in the world's second-fastest growing major economy.

The Industrialization Fund for Developing Countries holds 10 percent in South Asia Breweries. The remaining 45 percent is owned by a group of investors, led by Carlsberg's partner in Sri Lanka, Lion Brewery Ceylon Ltd.

The company sells Carlsberg beer at 35 rupees for a 330ml can, compared to 25 rupees for India's best-selling Kingfisher beer, which is manufactured by United Breweries Ltd.

Last Tuesday, Carlsberg entered into a joint venture with state-owned Hanoi Beer & Beverage Corp to build a brewery in southern Vietnam.

In May, InBev, the world's largest brewer, formed a joint venture with RKJ Group in an effort to sell more beer in India. InBev, based in Leuven, Belgium, took a 49 percent stake in the venture with the Indian beverage company, with the option to increase its share in the future.

SABMiller, which purchased Foster's Group Ltd's Indian brewing unit last year, plans to spend an average US$100 million a year in the South Asian nation, chief executive officer Graham Mackay said last November.
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