Heineken Takes Charge Of India’s Largest Brewer

United Breweries Group – An Indian conglomerate company with a history frame of 164 years recently passed on its flagship brand United Breweries Ltd. to the Dutch multinational company – Heineken.

End of July witnessed world’s second largest beer maker taking control of India’s largest producer of beer. Heineken’s recent acquisition of additional ordinary shares in UBL on June 23, 2021, taking its shareholding in UBL from 46.5% to 61.5%. This decision was announced by Heineken following United Breweries Limited annual general meeting held on 29^th July 2021. Subsequently, United Breweries Ltd. is said to become one of the top operating companies of Heineken with Kingfisher deemed as one of the top 5 global brands. This deal is profitable and a sorted step by Heineken due to India’s population (that’s nearly one fifth of the world’s population) versus its population engaged in consuming beer. Broker Jeffries said that accounts for only 1% of world beer volumes despite having the majority (18%) of the global population. Traditional drivers of beer expansion, a young population and economic growth, were in place, but high excise duty meant affordability was an issue. This indicates fortuity of entering the huge market with a long-term growth opportunity.

The Formal Happenings

The current chairman of UBL – Vijay Mallya left India in March 2016 to escape legal actions filed by Indian banks to whom he owes ₹9,000 crore in loans. Heineken International was seeking shareholder approval to change United Breweries Ltd.’s Articles of Association (AoA) enabling it to nominate a chairman, since Vijay Mallya is chairman for life and currently has sole authority to nominate a successor. Following this, the banks took hold over the stakes while India’s Competition Commission approved Heineken’s proposal of additional equity on Monday. Dolf Van Den Brink is all set to lead as the chairman after A K Ravi Nedungadi one of the nominees of original promoters of the company, voluntarily stepped down from the board and did not seek re-election during the annual gathering meeting held on 29^th July 2021.

In the year 2009, VJM Group and the Heineken Group had entered into an alliance with both groups being equal co-promoters holding 37.5% of total equity share capital in the company. Followed by certain rights and privileges codified into the AoA. But later on various provisions relating to the rights and privileges of all promoter shareholders were deleted. This step was taken in the best interests of the company due to Heineken’s steadily increasing its stake in the United Breweries Group.

Dolf Van Den Brink’s view on UBL’s history

“UBL has a proud history dating back more than a century as an influential shaper of the beer industry in India. It built its position as the undisputed market leader in India with a strong network of breweries across the country and a fantastic portfolio led by its iconic Kingfisher brand family, complemented more recently by a strong Heineken international brand portfolio. We are honored to build on this legacy and look forward to working with our colleagues at UBL to continue to win in the market, delight consumers and customers and unlock future growth.”

Dolf van den Brink, Chairman of the Executive Board and CEO

Thomas Leishman founded the UB ground in the year 1915. Initially late Vittal Mallya was elected as the first Indian director for UBL in the year 1947. A year later he went on to replace R.G.N Price as the chair person of the company. The initial impact created by UBL was manufacturing bulk beer for the British troops before independence. During the 60’s Kingfisher entered the market and kept on moving forward with a significant growth rate and the rest is history. United Breweries expansion came in place after acquiring other crucial breweries and addition of subsidiaries – McDowell’s being one of the first addition to group subsidiaries.