the acquisition of Shaw Wallace’s beer portfolio for a reported US$264m in 2003.

This
gave SABMiller ownership of strong brands like Haywards 5000, along with its
existing brands. After the acquisition, SABMiller focused on spreading its footprint
across India, including opening new breweries in states where Shaw Wallace did not
have a presence.
In 2008, beer prices saw steep hikes in key beer consuming states.
Consumers’ reactions
to the price hikes saw many cut back on consumption, which adversely affected sales
growth. Excessive
regulation and further extensions of government intervention, in the areas of
distribution and pricing, is
affecting the growth and profitability of the industry as well as restricting
government revenues. In
addition, restrictions on advertising and licensing of retail outlets continue to present
challenges to the
Industry.
The Indian beer industry is plagued with a myriad of taxes & levies that
vary from state
to state. These along with price regulation, inadequate market infrastructure
and restrictions in
interstate movement of beer, pose a great challenge for the industry. Unlike most
developed countries
where beer is less regulated and available freely, high level of regulation and higher
end consumer price
hampers beer sales in India. Uniform tax regime for beer in all states will be a boon
for the industry. If
implemented, it will help the beer industry by rationalizing end consumer prices in all
states, as is in the
case of other consumer goods. In addition to economic contribution, a uniform tax
structure will also
create increased agro linkages that are beneficial to a country like India. It is
important to realize that
the beer sector can contribute immensely to the agricultural sector, as beer is an
agro-based product.
Also marginal barley farmers, particularly stand to benefit from the growth of the beer
sector.

BOSTON CONSULTANCY GROUP MATRIX (BCG MATRIX)

It is a widely used portfolio management method for evaluating the performance of
business units. There are four quadrants in a BCG matrix: question marks, stars,
cash cows and dogs. On the X axis, market growth is measured, which indicates the
level of market attractiveness On the Y axis, market share is measured, that serves
as a measure of the company's strength in the market
STAR
Stars are high-growth, high-share businesses. Very often, they need heavy investment
for financing their rapid growth. Eventually, their growth slows down and they turn into
cash cows.

 TAJMAHAL BEER:- Taj Mahal Premium Lager beer is prepared with finest
malt made at
United Brewery own malt house using premium quality barley. It has a
distinct aroma
and unique taste. The demand of this beer is mainly in abroad (australia,
france, usa) as
it is premium priced and have bitter taste which is not liked much in
india though it is
served in some premier hotels in india. The demand outside is very good
and it accounts
for good market share in the exported beer in india.
  KINGFISHER STRONG:- spectacular growth of 36% is seen in strong
beer (against a
market growth of 16%) was witnessed. Kingfisher Strong has now
achieved the number
one position in the strong beer segment.

CASH COW
Cash cows are low-growth and high-share businesses. Such established and
successful business lines require less investment to maintain their market share.
They generate a lot of surplus that a company can use to pay its bills, or invest in other
businesses.

 KINGFISHER LAGER BEER:- it has witnessed a market growth of 13% in

comparison to
the lager beer industry growth of 9.4%.in the lager beer segment, UBL is
the market
leader in all the 10 largest states of the Country. UBL commands a
market share of
around 40% with 67% of the market share in the lager beer segment.

QUESTION MARK
Question marks are low-share business units, in a high-growth market. They require
a lot of cash, for maintaining the market share. Any business has to think between
building a question mark into stars or whether they have to be phased out
 LONDON PILSNER:- it has witnessed a market growth of more than 20% and
targeting a
market share of 15% . (Indiantelevision.com)
  KINGFISHER DRAUGHT:- this beer has less water in comparison to
other beer type. it
has good market growth as it is proving success in its 2 nd year still the
market share is
less. (thaiindian.com)
 KINGFISHER BLUE:- this is launched around 8-9 months before to tap
those customer
who wants less alcoholic beer in comparison to strong beer but more
than mild. It has
around 6% alcohol content. Since it has launched sometime before
hence the market
share occupied is less as strong beer and lager beer segment is
increasing very fast
however market growth rate main up.

DOG
Dogs are low-growth and low-share businesses. They may generate enough
surplus to maintain themselves, but do not hold out the promise to be a large source
of cash.
 UB ICE BEER:- this beer is launched for trendy people in 330ml can.It
was different from
the traditional lager beer as it was made using a unique refrigeration
process which
involves the formation of ice crystals which were filtered out giving the
brew a crisp,
clear and strong taste. It did’nt got good response as it has very low
market growth
instead people are drinking more the lager and strong beer.
 KALYANI BLACK LABLE:- one of the oldest brand launched in 1969. It
has low market
share as it is only popular in east india and it assumed to be
economical . the market
growth for this brand is not good as people are shifting towards other
beers such as
London pilsner which is also economical brand.

ANSOFF MATRIX
To portray alternative corporate growth strategies, Igor Ansoff presented a matrix
that focused on the firm's present and potential products and markets (customers). By
considering ways to grow via existing products and new products, and in existing
markets and new markets, there are four possible productmarket combinations.
MARKET PENETRATION
The firm seeks to achieve growth with existing products in their current market
segments, aiming to increase its market share.

 KINGFISHER LAGER PREMIUM:- it has witnessed a market growth of 13%

in comparison
to the lager beer industry growth of 9.4%.in the lager beer segment,
UBL is doing
market penetration in all the places by promoting the beer in
every state. UBL
commands a market share of around 40% with 67% of the market
share in the lager
beer segment.

 KINGFISHER STRONG:- The company is investing much in this product

and also the
customers are increasing due to the more alcoholic content and it
has registered
spectacular growth of 36% in strong beer (against a market growth
of 16%) was
witnessed.
MARKET DEVELOPMENT
The firm seeks growth by targeting its existing products to new market segments.

 TAJMAHAL :- This beer is made mostly for export purpose and contain less
alcoholic content
though the taste is unique due to its bitterness. The demand of this beer is
mainly in abroad
(australia, france, usa) as it is premium priced and have bitter taste which is not
liked much in
india though it is served in some premier hotels in india.
 LONDON PILSNER:- this beer mainly aims lower income group as it is
economical beer and this
beer contain less alcoholic content hence catering to all together different
segment.
PRODUCT DEVELOPMENT
The firms develops new products targeted to its existing market segments.

 KINGFISHER DRAUGHT:- this beer contain less amount of water and

comes in 500ml
can. Hence creating a new product in existing market
 KINGFISHER BLUE:- this is launched around 8-9 months before to tap
those customer
who wants less alcoholic beer in comparison to strong beer but more
than mild. It has
around 6% alcohol content. It is also done to create a new product.
 KINGFISHER BOHEMIA:- Kingfisher- the brand that has been synonymous
with providing
a "good time" to consumers have launched their own brand of
wines in India -
"Kingfisher Bohemia". It is launched in 2008 to get the wider reach in the
alcoholic drink
market.
 KINGFISHER ULTRA:- This will be launched within some months. It is a new
drink having
sweetness in it.

DIVERSIFICATION
This resulted in the company entering new markets where it had no presence before

 KINGFISHER LEISURE WEAR:- kingfisher is diversified in the leisurewear

segment extending itself
in the path of providing good time to customers.
 KINGFISHER AIRLINES:- kingfisher airlines had becomes a very well known
company in itself.this
is a full-fledged carrier providing comfort to its fliers.
 KINGFISHER SWIMSUIT CALENDAR:- kingfisher also launch its annual swimsuit
calendar which is
the second costliest calendar in the world.
 SPORTS:- kingfisher also diversified in various sports Current such as in
Formula 1, Rugby and
Football.

PORTER’S FIVE FORCE MODEL

This model is developed by Michael Porter, this model analyzes the nature and
intensity of competition in an industry through five forces (rivalry, customers, supplier,
new entrants, and substitutes). These five forces are explained as below:-
BARGAINING POWER OF SUPPLIERS:- With increasing cost of raw material and
decreasing cost of barley suppliers bargaining power was high but with backward
integration by acquiring Maltex Malsters Ltd. And shifting their production of beer on
malt company has achieved a hold on its raw material and considerable reduced
the supplier strenth and dependency. Company has aslo collaborated with
Government of pujab and haryana for supply of iits raw material.
RIVALRY:- Rivalry is the means through which competitors fight for position by
using tactics such as price, competition, advertisement battles, and new product
introduction, to lower the profits of competitors in the industry.
A CAGR of 11% is expected for beer in the next 5 years many MNcs are
eyeing the Indian
market. Currently the major rivalry for kingfisher premium is Budweiser, Carlsberg,
Foster and Tiger and
for kingfisher strong it’s Hayward 2000, Hayward 5000, Palone. SABMiller’s who
came to India by
acquiring small breweries and made its hold as Best-selling strong beer brand but still
kingfisher being
Largest-selling strong beer brand (29%market share) is currently being supplied in 55
country. There are
also some small local players that are in the market but does not provide much threat
to kingfisher.
THREAT OF NEW ENTRANCE:- Beer industry is in Growth phase with 11% CAGR, so it is
attractive for the
new players. But strong brands like kingfisher and haywards which already have their
brand recall and
extensive advertisement new entrants are expected to struggle to expand their
consumer base as they
try to penetrate the beer market in India. Foreign brewers have been eyeing the Indian
market for some
years now as India is widely acknowledged to be the last untapped big growth market
Several

international brewers have currently built brand associations and are

marketing their brands aggressively through various point-of-sale promotions
throughout their distribution networks. But with strong players in the market the new
entrant will face problems of
a) Economies of scale For example benefit associated with bulk purchases and sales
b) Cost of entry For example investment in technology
c) Distribution channel For example ease of access for competitors
d) Government Legislations introduction of new laws might weaken companies position
e) Differentiation For example certain brands that cannot be copied
f) Supplier power Possibility of forward integration by supplier

BARGAINING POWER OF CUSTOMERS:- It is the extent to which customers are

successful in forcing prices down, or securing high quality or more service at the
same price. Customers tend to be powerful when the quantities they purchase
form a large portion of the seller's total sales. Buyer do not understand the
quality of the beverages and as there are not many players in the market the
customer has less command over price.
THREAT OF SUBSTITUTE:- India is predominantly a spirits market and beer is a
minority preference for those who consume beverage alcohol. So substitute is
biggest threat as preference for beer among beverage drinker is less but the low
penetration in beer consumption in comparison to international levels offers the
expectation of substantial and sustainable growth in demand for beer in years to
come, particularly given the youthful age of India’s population.

MICHAEL PORTER’S VALUE CHAIN

PRIMARY ACTIVITIES
INBOUND LOGISTICS:- Beer is brewed in either the company’s owned or non-owned
Breweries, with
certain Breweries set up for certain functions. This also reduces the cost and there
is less treat of the
suppliers. The company also has its franchise for the production of the beer. The best
example is of the
Taloja plant situated in Mumbai. The experience of Kingfisher brand since 1915 adds
to the experience
and efficiency of the firm. The is thing is also very clear from its balance sheet as the
EBITDA of United
Breweries is 2675.2 Millions which is 35.61% more than previous year (2007-2008).
The owned plant
also has reduced the switching cost of the suppliers of Kingfisher. Higher prices and
short supply of key
raw materials like malt, hops and barley can reduce the profit margin and affect
operations. Barley and
glass bottles constitute 12% and 40% of the total operating expense of UBL. Any
price increase in this
two commodity has a direct bearing in reducing the overall operating margin. Due to
price increase of
barley by over 33% and increase in bottling cost, during FY2008 the net profit margin
fell by 26%.[10] In
states like Uttar Pradesh, Rajasthan and Madhya Pradesh which, account for 80.34% of
barley
production in India, the area under cultivation is shifting to other crops like
sugarcane. The barley production has declined by over 60% from 3135 KMT to 1220
KMT from 1975 to 2005. To hedge the risk on rising raw material prices, UBL has
entered into long term arrangements for sourcing of the vital inputs. In addition it
has extended its own contract farming initiatives in the state of Punjab. The 51%
Equity stake in Maltex Malsters Limited, a manufacturer of malt, is also an
initiative for vertical integration and excellence in inbound logistics.

OPERATIONS:- Quality and hygiene are the key elements of the

United Breweries'
manufacturing philosophy. To this end, the Central Scientific Laboratory (CSL),
headquartered at
Bangalore sets standards for all its breweries. Quality Management Systems
laid out along the
lines of ISO 9000 are strictly adhered to, controlling quality at every stage of
production, from
raw materials to the end product. Also, besides controlling the production
process, the CSL
analyses the Company's beer taken off market shelves all over the Country,
the competition's
beers and beers across the world. These beers are tested as per the standards
laid down by the
European Brewery Convention on 40 different parameters. By these standards,
United
Breweries' beers don't just equal, but even surpass, several Dutch and American beers.
OUTBOUND LOGISTICS:- No internal distribution/Use third party to distribute
product. The
channel is very strong. As we know alcohol is a state subject in India and hence
each state has it
own taxation, pricing and distribution policies. No inter state movement of
alcohol is allowed.
Also since beer is not delinked from other spirits it is heavily taxed at over
42%. Since tax on
alcohol contributes to over 17% of state revenues, the government is hesitant
to change the tax
treatment. Any further increase in taxation on beer would shift consumer
preference towards
other alcohol products thereby reducing the demand for beer. In states of
Delhi, Andhra
Pradesh, Karnataka, Tamil Nadu and Kerala government controls the
distribution of
alcohol. Whereas in states of Rajasthan, Bihar and Himachal Pradesh auction
based distribution
is used. Reforms in the distribution system in these states would increase the
competitiveness in
the market and lead to increased sales as was demonstrated by the 400%
increase in beer sales
in the states of Punjab and Haryana after the distribution reforms in July 2008. It
has also
 lowered the barriers to entry present in the industry and thus brings a
more competitive
environment in the industry. But the quality and its channel is so strong that it
doesn’t find any
threat from the new entrance. The corporate strategy of kingfisher to
demonstrate the
complete plant to any of the distributer reaching the plant has improved the
brand loyalty and
increase the switching cost for the users. It has a network of 23 distilleries
across the country to
meet the requirements at the regional level giving it an unparalleled
distribution reach within
India.

MARKETING/SALES:- Lot of focus on quality marketing as well trained sales

force to sell the
product in India is carried by the Brand. Vijay Mallya, the flamboyant CEO of
United Breweries -
the company that owns the Kingfisher brand - is one of the most flamboyant
CEOs in Asia. Vijay
Mallya believes in leading his brand from the front by leveraging his
personality. Vijay Mallya is
referred to as India's Richard Branson. A great part of the personality of the
Kingfisher brand is
based on Mallya's personality. He is credited with having single handedly
changed the image of
his beer brand from a commodity to a lifestyle brand. Hence he carry so strong
brand marketing
that it is said that at every second 4 bottles of Kingfisher bottles are sold. Sales
force is trained
and highly experienced.

SUPPORT ACTIVITIES
PROCUREMENT:- Choose high quality ingredients to ensure higher quality
end result. Heavy reliance on this process.
TECHNOLOGICAL:- In technology advancement they have automated the
complete plant in 2000 by the Allen Bradley system. This has considerably
reduced the cost and increase the rate of production. The cycle time is
reduced to half of the previous statistics.
INFRASTRUCTURE:- Very strong management with a good understanding for
competition and zeal for staying on top of industry. Its infrastructure is good as
it is backed by the parent brand of UB Groups.

PORTERS GENERIC STRATEGY

Companies can achieve competitive advantages essentially by differentiating their products and
services from those of competitors and through low costs. Firms can target their products by a
broad target, thereby covering most of the marketplace, or they can focus on a narrow target in
the market. According to Porter, there are three generic strategies that a company can
undertake to attain competitive advantage: cost leadership, differentiation, and focus.
Kingfisher is following a differentiated strategy by introducing a product
range in all the
categories like premium beer, mild beer and strong beer cater to all the segments in
the market. They
also differentiated their product through marketing their product by associating their
brand with major
events, like sponsored West Indies team in world cup 1996 by showing a spirit of
team, IPL, east Bengal
football club, Mumbai marathon, Bangalore open. With the company target to youth
segment it also

used the focus strategy by associating with events that youth likes such as Formula
one race where it
showed and given the brand a sense of excitement and a sense of thrill.
Various sports club of
kingfishers are sponsor by youth brands like Reebok, Nike etc. They have also
introduced products
specific to region like, kalyani black in eastern india, UB exports is famous in
Karnataka in order to focus
on their customers.
.