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Rexam enters India to tap beer growth

By staff reporter , 22-Aug-2006

Packaging giant Rexam has gained its first foothold in India, signing a local joint venture that plans to supply cans to the country's promising beer market.

Rexam said it would invest £7m in a new joint venture with Hindustan Tin Works. The two are set to run a beverage can plant near Mumbai, expected to start production in the final quarter of this year.

The deal hand Rexam a bridge into an emerging market that shows strong potential for beverage markets and houses around one sixth of the world's population.

 

"The Indian beverage market is forecast to grow at 6 per cent annually over the next three years and represents an attractive growth opportunity for beverage cans, driven by a fast growing young population and substantial middle-class growth," Rexam said in a statement.

 

The joint venture will concentrate largely on India's beer market.

 

The country's average per capita beer consumption still sits at a lowly one litre, compared to 23 in China, 60 in Eastern Europe and 31 in Latin America - all considered fellow emerging markets.

 

Most international brewers have eyed up the Indian market, though it has been SABMiller that has largely led the charge into the country, via several acquisitions.

 

Earlier this month, the group paid $120m (£63m) to buy Foster's India. It said the Foster's beer brand had grown 13 per cent annually since its launch in India in 1998, and that the country was now Foster's third largest market.

 

SAB chief executive Graham Mackay told an analyst conference earlier this year that beer still had a "long way to go" in emerging markets.

 

This, he said, was because "consumers are trading up from lower quality, cheap beer, into modernised mainstream products and then on into what we refer to as 'worthmore' brands.

 

"Consumers are also moving into beer as an aspirational mainstream alternative to cheap spirits, or other types of local indigenous alcohol."

 

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