IR presentation 2011

Brewing a success in India

Guido de Boer
CFO United Breweries

UBL: Key facts and figures

10 1.5 18

million hectoliters litre per capita consumption owned breweries, and 10 contract breweries

54% market share, the largest brewer in India

39% share for the Kingfisher brand - it is synonymous with Indian beer 75% owned by Dr Vijay Mallya and Heineken

Source: FY2011 company Information, Industry Reports

India and the Beer opportunity

Demographic dividend to be reaped

Population increase fuels potential for rapid beer market growth
Population in 2030
India China Brazil Russia
0 500 1,000 1,500

Below 25 year olds as % of total population in 2030

India China Brazil Russia
0% 2% 1% 10% 20% 30% 11% 20%

mln

India will have the worlds largest population by 2025 In 2030, India will have over 1.5bn inhabitants Net increase in working population of 270 million by 2030

In 2030: 20% of the worlds below 25 year olds will be Indian compared with 11% from China Significant growth in the legal drinking age population in India

Source: United Nations (2011), McKinsey Global Institute (2007)

Consumption is set for strong growth

A significant middle class will emerge supporting increased spending power

Household income brackets

thousand, Indian rupees, 2000

Number of households
million

2005
Globals (>1,000) Strivers (500-1,000) Seekers (200-500) Aspirers (90-200) Deprived (<90)
1.2 2.4 10.9

+123m

2025
9.5

33.1
94.9 91.3 101.1 93.1 49.9

Aggregate consumption
trillion, Indian rupees, 2000

2005
Globals (>1,000) Strivers (500-1,000) Seekers (200-500) Aspirers (90-200) Deprived (<90)
1.2 1.0 2.1 8.5 4.1

12.5x

2025
14.1 16.5 24.6 11.9 2.4

Beer will become increasingly affordable to a growing number of people in India Increase in number of upper & middle class households of 123m by 2025 Middle and upper class will drive 12.5x consumption growth Higher income expected to support significant increase in discretionary spend

Beer consumption in India is well below other BRIC countries

The Indian beer market has grown strongly over the past 5 years from a low base
Per Capita Beer Consumption
80

76.1 64.5

60

40

34.5

PCC in litres

20

CAGR 14% 0.8 0.9 2006 1.1 2007 India 1.2 2008 1.3 2009 1.5 2010 China Brazil Russia

2005

Source: Canadean (2011)

Todays beer consumption is very low

India is far below other emerging markets of similar income levels

India Per Capita Beer Consumption at comparable GDP

Comparable Markets

1.5 liter

20 liter

Share of alcohol consumption

<0.5% Wine 78% Spirits

5% 8%

22%
Note: 2010 data of India versus markets with a similar GDP per capita

Beer

87%

Two key reasons

High prices & low availability

AFFORDABILITY Highest duty in the world Duty not set according to alcohol content Expensive alcoholic beverage

AVAILABILITY 65,000 licensed outlets across the country 1 per 18,000 people In China: 1 per 300 people

Beer is not the alcoholic beverage of the common man

Affordability
Beer prices in India are very high An Indian has to work up to 7x as long to afford a beer India is the only BRIC where a beer is more expensive than a Big Mac

Minutes work for a beer

India 51 India

Beer relative to Big Mac

1.1x

Brazil

18

Brazil

0.5x

Russia

Russia

0.5x

China

China

0.2x

20

40

60

0.0x

0.5x

1.0x

1.5x

Affordability
Excise is highest among BRICs and drives preference for hard liquor Taxation is significantly higher than other countries
Taxation of Beer
India Brazil Russia Kingfisher Premium 75

Beer is taxed significantly higher than hard liquor Relative pricing vs spirits per unit of pure alcohol

2.6x
Bagpiper
China 0% 20% Excise Duty 40% 60% VAT and other tax 50 100 29

Indicative rates as % of consumer price. VAT is only levied on value added, so effective rate is lower.

Based on consumer prices in Tamil Nadu

Availability
Case Study: Mumbai Beer shops Number of beer shops has increased sharply
300 190 215

New Policy established Since the 1970s no new licenses have been issued for liquor shops In 2006, the Maharashtra government started to issue beer shop licenses for outlets that can only sell beer and wine, but not spirits driving high growth in beer shop volumes
31%

Mar10

Mar11

Nov 11

accelerating growth of the overall market 15% 4%

3% 8%

12%

14%

Liquor shops Permit rooms

Beer shops

Liquor shops Permit rooms

Beer shops

Industry

Source: Company estimates. Percentages depict volume growth rates for FY11

A highly regulated market

Leveraging the existing framework

Excessive State regulation and intervention

Route to market Economics, need to have a brewery in each state Pricing

India is not homogeneous country

27 uniquely different states

Ban on advertising alcohol

Difficult to build new brands

Requires ability to operating in very different structures

India is at the start of the growth curve

Income growth will drive per capita beer consumption Demographics will fuel further market growth UBL expects to grow volume at an average annual rate of 15% over the next five years By the end of 2015, India is expected to reach 3 liter per capita

Beer consumption versus income level

80
Brazil
Per Capita Beer consumption

Russia Mexico

60

40

Vietnam China

Colombia

20

Philippines Kenya
Nigeria India

0 $0 $5,000 $10,000 $15,000 $20,000

GDP per Capita (in USD, PPP)

Source: Canadean (2011), World Bank (2011), Company forecasts

Capitalising on UBLs strengths for growth

UBLs leadership is undisputed

Market leading position in India Strong market position will continue to drive economies of scale and superior returns All time high market share of over 54%

UBL is more than two times its nearest competitor

AB-Inbev 1% Carlsberg Others 4% 10% Mt Shivalik 4% M Meakins 4%
SAB 23% UBL 54%

On a brand basis the leadership is even more apparent

50% 40% 30% 20% 10% 0%

All-India market share FY11

What is this leading position resulting from?

UBLs Competitive Advantages

UBL has been able to achieve its market leadership by leveraging four competitive advantages:
Brands

People

Manufacturing footprint

Route-toMarket

The strength of the Kingfisher Brand is unparalleled

Iconic brand KINGFISHER is synonymous with beer for Indian consumers No other beer brand comes close:
All-India market share Mild Beer FY11
Kingfisher Royal Challenge Fosters UB Export London Pilsner Budweiser Kalyani Sandpiper Tuborg Golden Eagle 0%

Brand Equity among young consumers:

>6x

20%

40%

60%

Kingfisher is Indias most liked beer brand by far. No.2 has only 172k fans On a global basis, Kingfisher is the most liked alcohol brand after Heineken Leaving all global beers such as Budweiser and Corona, and renowned spirits as Smirnoff and Bacardi well behind it

Brands in green are part of UBL portfolio

But it is not only Kingfisher UBL leads across all segments

Mumbai mild beer portfolio Q2FY12 Key brand

Segment share

No.2

Relative share

170+ PRICE INDEX

Super Premium

65%

Corona

0.25x

135

Premium

49%

Carlsberg

0.96x

100

Mainstream

70%

Fosters

0.23x

80

Economy

81%

Golden Eagle 0.19x

Investing behind the brand

Leveraging aspirational properties in fashion and sports Cricket: Indian Premier League Football: Kingfisher East Bengal

Formula One: Force India

Fashion: Kingfisher swimsuit calendar

Heineken
Building brand equity for the future

Selective launch in key metros: Mumbai, Delhi, Bangalore, Kolkata and Goa Gradual roll-out based on:
1. Perfect execution Targeted Distribution Premium Visibility Cold & Fresh Stock management Driving awareness & be part of the conversation. Strong focus on digital media Set benchmarks at every touch-point - Quality over quantity K2 bottles World class PoS materials Leveraging UBL strengths in market

2.

3.

4.

IPS segment is still a very small part of the overall market

Manufacturing network across all major states

UBL brewery footprint

Unique brewery footprint

In line with the requirements of a complex regulatory framework 18 owned breweries and 10 contract breweries

Closeness to market a critical success factor

Freight costs Import and export duties Freshness
Owned breweries Contract breweries

Ability to manage contract brewers in key states

Best Route to Market

In distribution

India has 27 states that have distinctly different routes to market Ability to manage this complexity is one of UBLs core strengths
Established distributor relationships Group scale - with 60% share in spirits and 54% in beer - provides significant benefits Most distributors have been UB Group partners for multiple decades The best distributors and trade partners aligned with UB Group

Best Route to Market

as well as in retail

freshness

Cold stock Fastest selling brands

Leadership in cold chain management Point of sale visibility Must stock brands provides portfolio benefits Economies of scale

People
Most experienced management in the industry
Customer facing management has been with the group for 20+ years Very low churn rate Strong background in dealing with regulatory environment and market complexities Very difficult for foreign entrants to replicate

Chairmans added value

Dr Vijay Mallya provides significant added value as ambassador for the industrys interests and is a member of parliament

UBL has a proven track record

Exceptional volume growth

UBL volumes increased five fold in less than a decade UBL Sales volumes
In Million Hectoliters

12 10 8 6 4
5x

2
0 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11

Continued outstanding performance

Performance highlights FY2006-2011

Sales up with an average 32% y-o-y

EBITDA exceeds Rs 4 billion

40 30

20
10 0 2006 2007 2008 2009 2010 2011
EBIT has quadrupled since FY2006

5.0 4.0 3.0 2.0 1.0 2006 2007 2008 2009 2010 2011
Net Profit has grown with 54% CAGR

4.0 3.0 2.0 1.0 0.0

2.0
1.5 1.0 0.5 0.0

2006 2007 2008 2009 2010 2011

All amount are in Rs bln, for year ending 31 March

2006 2007 2008 2009 2010 2011

Closing remarks

In Summary

Indian beer market growth opportunity unparalleled in the world UBL is the clear market leader with strong segment leadership positions UBL expects to grow volume at a CAGR of 15% over the next 5 years A superior route-to-market and manufacturing footprint provides consumer reach and scale benefits Strong fundamentals in place to continue strong profit growth

Questions, please?