Saturday, May 19, 2007

The Empire Strikes back - in High Spirits

It was recently announced (including by the Financial Times on May 17, 2007) that United Breweries (UB), the alcoholic drinks comglomerate controlled by Vijay Mallya had acquired the Scotch Whisky manufacturer White & Mackay for $1 billion. This now gives the Mallya organisation access to a production capacity of 40 million litres of Scotch Whisky, catapulting UB to the position of the third largest manufacturer of spirits in the world (after Diageo and Pernod Ricard).

This follows a series of investment deals from India concluded in 2006, when for the first time, India's outbound investments exceeded inbound foreign investments in value.

2007 promises to maintain that trend. According to the Financial Times report, the first four months of 2007 has seen 73 successful takeovers of foreign companies by Indian companies in deals totaling $24.4 billion, as compared to 38 foreign deals for Indian companies in the same period worth $17 billion. Tata Steel's $13 billion acquisition of Corus Steel led the way.

Vijay Mallya's declared objectives for the W&M acquisition was as much to help expand his Indian business as it was for foreign market penetration. In keeping with the rising sophistication of the Indian consumer market, the consumption of Scotch in India has been growing at 25% a year. Other premium alcoholic drinks are likely to increase in demand too, which has also prompted UB to earlier acquire the sparkling wine manufacturer Bouvet-Ladubay. This presumably ensures that when champagne corks pop in the UB boardroom from now on, they will only need to open bottles of their own manufacture.


3 comments:

Anonymous said...

This is all fine, but aren't there serious governance/ethics issues with UB? Or am I confusing them with other companies?

Sudeep said...

It would be really interesing to have a comparison between the Tatas and their global vision and that of the Mallyas..

Anonymous said...

One of the few websites which have content and not just personal opinion