UB plans production units overseas

United Breweries, India's largest liquor company and world's fourth biggest, is expanding its horizon by setting up manufacturing facilities abroad.

To begin with, the group will take on a brewery for contract manufacturing in Australia next month, while a liquor facility in Sri Lanka will be a reality within six months. On top of this, UB is exploring possibilities in the Asean region for its spirit business.

Group chairman Vijay Mallya said it has identified Malaysia, Cambodia, Laos and Vietnam where manufacturing of spirit can be taken up. "We are looking at all three options; it could be a greenfield project or an acquisition or contract manufacturing tie-ups. Depending upon the volume of business and the opportunity available, we will take decision," Mallya said.

The primary reason why UB likes to have its own set up is to avoid high duty component existing in some countries. "We will continue to export to those countries where duties are not high. UB would like to utilise the capacities existing in India as they are not fully utilised," he added.

All the big liquor companies in the world such as Diageo, Pernod Ricard, Bacardi International or Allied Domeq have multiple manufacturing capacities across the globe. In contrast, UB has focused more on the domestic market, which is India.

At present, UB has liquor manufacturing capacity in Nepal only. As for the brewery business is concerned, it has a facility in United Kingdom and USA with capacities in the region of 1.2 million cases each. As far as export markets are concerned, UB has so far concentrated in the middle east and neighbouring countries.