S&N extends Indian venture with £88m stake in United Breweries

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The Independent Online

Scottish & Newcastle, Britain's biggest brewer, is spending up to £88m on 37 per cent of United Breweries, the Indian brewer which makes Kingfisher beer. Most of the stake is being bought in the open market, with the rest flowing from Scottish & Newcastle selling its Indian beer business to United Breweries.

Scottish & Newcastle, Britain's biggest brewer, is spending up to £88m on 37 per cent of United Breweries, the Indian brewer which makes Kingfisher beer. Most of the stake is being bought in the open market, with the rest flowing from Scottish & Newcastle selling its Indian beer business to United Breweries.

"The agreement is a natural development of our very successful joint venture with United Breweries," Tony Froggatt, the chief executive of Scottish and Newcastle, said. The Edinburgh-based company brews Kronenbourg 1664 and Maes Pils.

The investment includes £28m for redeemable preferred stock in United Breweries. Controlling shareholders, led by the chairman Vijay Mallya, have agreed to reduce their stake until it matches Scottish & Newcastle's.

The deal is another step by Scottish & Newcastle to expand in emerging markets, where beer consumption is growing more quickly than in Western Europe. The company, which holds the biggest shares of the UK and French beer markets, started a joint venture with United Breweries in May last year. Last June it bought 19.5 per cent of China's Chongqing Brewery.

Beer accounts for just 10 per cent of alcohol sales in India, which has a population of more than 1.1 billion. The market has grown by 9 per cent a year over the past five years and is likely to keep increasing, aided by an expanding economy and government deregulation. United Breweries and Scottish & Newcastle will control half the market.

The partnership is an opportunity to bolster Kingfisher by distributing the brew through Scottish & Newcastle's network. Ravi Nedungadi, the chief financial officer of United Breweries, said: "The present joint venture is limited to India, but growing the Kingfisher brand in other markets is part of our plan."

Scottish & Newcastle's international beer division had sales of £90m last year.

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