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BRIEF PROFILE

INDIA’S FIRST STATE–OF–THE-ART CRAFT BREWERY AT NASHIK, MAHARASHTRA

2

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EXECUTIVE SUMMARY

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Executive Summary

OVERVIEW

• The market for fine quality, hand crafted beers in India is around USD 25 million with a significant potential demand in the

sector

• Ace Alcobev Private Limited (“Ace”) is establishing a 50,000 hectolitre (5,000,000 litres), state-of-the-art Craft brewery in

Nashik, Maharashtra that operates to highest international standards to cater to the fastest growing beer market in the world

o Located 250 kms from cities of Mumbai and Pune, together comprising 8% of India’s beer consumption

o Ace has secured all requisite licenses and acquired 25 acres of land for this project

• Nashik is renowned for its wine and a popular destination for wine tourism. Ace has designed its brewery to attract incoming

tourists for Brewery Tours, a first-of-its-kind in India, to promote its brand/s and beer consumption.

• A proven management team of seasoned alcoholic beverages industry professionals has identified and initiated execution of

multiple strategic initiatives to successfully position the company in the Indian market

• A diverse distribution channel to be handled by one of the largest Alcobev distributors which has a network spreading across

25 key potential cities of India

OPPORTUNITY

• Opportunity to enter India’s fast growing craft beer market by partnering Ace:

o 20,000 hectoliters capacity in year 1, increasing by 20% YOY to reach full capacity within 5-7 years

o Ace has entered into a Technical Expertise & Product Development understanding with one of the oldest family owned

and leading brewing groups based in Germany

o Ace has entered into a Distribution understanding with one of the largest Alcobev brand distributors having a network

spreading over 25 key potential cities / metros of India

• Opportunity to acquire stake/ invest in India’s first-of-its kind craft beer/ brewery project

o Total Project Cost : ~USD 4.50 million

CRAFT BEER IN INDIA

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India: Craft Beer

OVERVIEW

The craft beer sector in India is most promising

• Craft beer is an American trend which has been booming globally and is now set to catch up in India in a big way

• Currently there are around 3,000 craft breweries in the US, totaled an estimated USD $ 17 billion by value of craft beer sales in

FY 2013 & representing 15 % of the US beer market by Volume ( The US beer market is currently valued at USD $ 100 billion )

• Micro brewing is primarily a boutique business where beer is brewed inside a premises in regulated quantities and served fresh

, using quality ingredients

• The Microbrewery boom started in 2008 here in India, currently 30 odd Brewpubs / microbreweries are operating across 5-6

cities and the market for fine quality hand crafted beers is around USD 25 million (Another 10 are in the process of being

set up)

• Craft breweries are generally small , independent and traditional with a focus on integrity, diversity , authenticity, innovation,

quality of ingredients, flavours and brewing technique

• There is significant potential demand in this sector since the market is dominated by one style (Lager) of beer and consumers

are only now being exposed to new styles of quality and flavorful craft beers

BREWING PROCESS

Source: Economic Times, Prost

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India: Craft Beer

MARKET TRENDS

• Brewpubs are attracting Indians away from industrial bottled beers. High end hotels and restaurants are keen to bring “ The

Beer on Tap “ concept back to serve their customers different styles of international quality delicious craft brews

• The preferred shelf life of beer among traders is 6-12 months

• Most beer sold in India is within the price range of USD 1.3 - 2.2. Beers considered “premium” will sell for USD 2.8 - 8.5

• Bottled beer is most popular (60% of consumption) but cans and draught beer (in kegs) are growing; 330ml bottles are

common

• Craft brewers from USA, Australia and Europe are showing keen interest to enter the now growing Indian craft beer market

GROWTH FACTORS

• Quality: Craft beers taste much better than the mass market

produced beers, as they are brewed in small batches with the

finest quality of ingredients and equipment used to produce it.

• Health Benefits: Research has shown that craft beer offers

more health benefits and nutrition than red wine

• More Variety: Thousands of flavourful craft beers can be

brewed by using different ingredients thus providing more

options to choose from

• Pairing with Fine Cuisine: The brewers can produce a range

of craft beers to suit nearly every kind of food, including

desserts

• Beers for every Season: Certain craft beers are better suited

for different seasons depending on its taste and texture

Source: Economic Times

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Benefits of Craft Beer

Source: www.craftbeer.com

COMPANY OVERVIEW

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• Ace Alcobev Private Limited (“Ace”) plans to establish a state-of-the-art craft brewery in

Nashik, Maharashtra that operates to highest international standards to cater to the

rapidly growing beer market in the world

o License: Received license and all clearances to manufacture up to 250,000

hectolitres

o Land: Acquired 25 acres in Nashik MIDC*, located 250 kms from Mumbai

o Water: Provided by MIDC and tested for beer production

o Installed Capacity: Proposed to brew 50,000 hectolitres(5,000,000 litres) in the

first year

o Technical Expertise & Product Development: Entered into an understanding

with one of the oldest family owned and leading brewing groups based in Germany

FINANCIAL HIGHLIGHTS

Company Snapshot

Headquarters:

Year of Incorporation: 2011

Brewery:

• Nashik, Maharashtra

• Mumbai, Maharashtra

Types of Beers:

• German Lager

• Belgian Blond Ale

• Imperial Double India Pale

• Weissbier

• Dunkel

• Radler

• The project cost is estimated to be USD 4.50 million, with the promoters contributing

USD 1.50 million, while the remaining USD 3 million being raised from Investors &

Institutions Geographic Location

Delhi

Chennai Bangalore

Hyderabad Pune

•

• •

• • •

NASHIK Mumbai

Year 1 2 3 4 5 6 7 8

Turnover

(USD mn) 3.05 4.00 5.04 6.17 7.40 8.75 9.69. 10.71

EBITDA

(USD mn) 0.56 0.95 1.40 1.84 2.41 3.03 3.51 4.04

EBITDA % 18.50% 23.73% 27.82% 32.55% 32.55% 34.70% 34.70% 37.69%

Utilization 40% 50% 60% 70% 80% 90% 95% 100%

MIDC: Maharashtra Industrial Development Corporation

USD 1 = INR 60

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Marketing & Operations

PRODUCT PORTFOLIO

• Ace proposes to brew the following styles of beer:

PACKAGING

• Use of innovative packaging techniques to promote the brand and increase visibility:

Type Flavour Alcohol by Volume

German Lager Mild ,crisp, blond , clear , easy drinking, low hoped 5%

Belgian Blond Ale Full flavored, rocky head, mouth feel -silky & sweet 6-8%

Imperial Double India Pale Stronger, paler, bitter, hop aromas 8%

Weissbier Made from malted wheat , smooth, strongly hoped, fruity aromas & creamy texture 5%

Dunkel Dark color with a clean taste of lager, smooth , malty flavor , very little hop bitterness 5%

Radler A beer based mix drink with carbonated lemonade 2-3%

One Way Keg 5L Party Keg Exclusive Packaging

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• The 1st year of brewery commissioning would have 40%

of the installed capacity, i.e. 20,000 hectoliters

• Three stock keeping units to be maintained:

o 500ml and 330ml bottles mainly for the retail

market (off-premise)

o 30 litre kegs for on premise consumption

o 5 litre party kegs for retail market (off-premise)

• Around 50% of the production to be sold in kegs

SALES CHANNELS

Marketing & Operations

PRODUCTION DISTRIBUTION

• Strategic plan is to target 150 key high potential on-

premise outlets & off-premise retail outlets in the 1st

year in Mumbai, Pune, Nashik, Nagpur, Aurangabad,

Daman & Goa., along with installing taps & draught

dispensing equipment at good potential outlets

• Distribution to off-premise retail outlets will be handled

by one of the largest Alcobev brand distributors having

a network spreading over 25 key potential cities of India

Opportunity Strategy

On-Premise Taps • Front-end presence helps increase brand

equity and off-premise sale

• Growth in brew pubs signals a shift in

beer drinking habits of urban Indians

• Set up 2 tap rooms/pubs, spread across 700-

1500 sq. ft., to serve fresh beer on tap

• Design a menu which pairs food with the

beers on offer

Off-Premise Retail • Indian beer market has grown strongly at

CAGR of 14% over the last 5 years

• Distribution partner to aggressively market

and stock the beer bottles and party kegs in

leading retail outlets of major cities

Exports • Position the product as India’s first craft

beer available internationally to target

Indian expats communities abroad

• Develop exports to Indian restaurants

globally

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Ace’s USP

Micro-Brewery Industrial Brewery Craft Brewery (Ace)

License Capacity

(Per Annum) 2500 HL >200,000 HL 250,000 HL

Regulations for Sale of

beer

Only within the premises

No retail

Kegs (Allowed in some states)

Retail

Trade

Retail

On premise

Types of Beer Various Lager Various

Packaging (SKUs) None 330 ml

650 ml

330 ml

500 ml

5 liter party keg

30L/50L keg

Quality High Mass produced High

Flavor Good Watery Full Flavor

Alcohol Strength Upto 8% Upto 8% Upto 8%

• Company is uniquely positioned to capture existing market & cater to new demand

• First mover advantage will offer potential for significant market share

• Pan India presence to add to brand equity and volumes

• Tap rooms/ tap installations, to be set up at key locations, will offer a brand experience along with fresh beer

• Tourism & Events at the brewery will ensure brand activation

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The Brewery Brewery Site Brewery (proposed)

Brew House (proposed) Amphitheatre (proposed)

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Plant and Machinery

PROPOSED EQUIPMENT

• Ace plans to establish a state-of-the-art craft brewery applying best operating practices currently available, designed for

premium results

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• Maharashtra’s beer market is 15% of India, growing at

12-15%

• City of Mumbai alone sells 6% of total national beer

market

• Major cities like Mumbai, Daman, Pune and

Aurangabad are at a distance of about 200 kms; while

Hyderabad, Bangalore and Panaji are less than 700

kms away

• State has open policy in distribution and pricing of beer

and is therefore, an attractive entry point for

International Companies

Location Advantage

WHY MAHARASHTRA WHY NASHIK

• 250 kms away from Mumbai & well connected via

highways

• Plot located in MIDC Industrial Zone where basic

infrastructure like road, water, electricity is readily

available

• Close to other key states like Goa, Andhra Pradesh,

Karnataka , and Daman .

• Nashik’s natural beauty coupled with wine grown in

region has earned it a reputation as India’s wine capital

and destination for wine tourism

• Ace’ brewery has been designed to arrange for Brewery

Tours, a first-of-its-kind in India. Considering the ban

on alcohol advertising, Ace is keen to attract captive

wine tourists (among others) to its scenic plant location

for brewery tours & beer festivals

*Population for the year 2011, in mn

*Volume for the year 2010, in mn cases

Largest

consumer of

beer in India

Single largest

contributor of

beer volumes in

western region

Per capita consumption

of beer is among the

highest in the county

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LEONARD MENEZES, CEO

A Management Post Graduate from Mumbai University and a senior alcoholic beverages industry professional with over twenty

years of working experience at United Breweries Limited (UB).

At UB, Leonard worked in Marketing, Business Development, Production and Distribution across India, Middle East, Africa and

other international markets. Prior to Ace, he was CEO at Privilege Breweries Private Limited (contract manufacturing for AB

Inbev) and played an instrumental role in setting up the business.

ABHIJIT RAO, MANAGING DIRECTOR

Abhijit graduated from American Intercontinental University, London with a Business Management degree (International

Business).

He has lived in Nashik for almost ten years and has been responsible for running plant operations and leading administration

activities at VTC Limited, a business owned by his family. His public relations and network in government departments have

been a tremendous asset in setting up this brewery project.

ABHINAY RAO, DIRECTOR, BOARD MEMBER

Abhinay holds a B.S in Industrial Management from Purdue University, an MBA from USC’s Marshall School of Business and

MSc in Finance from London Business School.

Abhinay’s expertise lies in Corporate Finance and he was with Sovereign Capital Partners in London before returning to India in

2011 to lead the Mumbai operations of India Advisory Partners (India) LLP. Prior to that, he was CIBC World Markets Investment

Banking team in New York and has also worked with Zurich Financial Services in Los Angeles.

Team Profile

THE TEAM

APPENDIX: INDIAN BEER MARKET

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India: Beer Opportunity

CONSUMPTION

Source: Canadean (2011), World Bank(2011), United Nations(2011)

• The Indian beer market has grown strongly over past 5 years

from a low base

DEMOGRAPHIC DIVIDEND

CAGR 14%

• Income growth will drive per capita beer consumption

India is at the start of the growth curve

Beer Consumption vs Income Level

• India will have the world’s largest population by 2025

• Population increase coupled with young demographics will

fuel rapid growth of beer market

• By 2030, 20% of world’s below 25-year olds will be

Indian

o Net increase of 270 million in working

population

o A significant middle-class is set to emerge

supporting increased spending power

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India: Beer Opportunity TRENDS

Source: UBS, Company Estimates

• India’s beer consumption is far below other emerging

markets of similar income levels

• Low consumption only means that the market offers a great

potential for growth for beer in India

CHALLENGES

CHINA INDIA

Average Price :

90% of beer sold at below

RMB 4 (under Rs.28)

650ml beer costs >Rs.100

Number of Shops :

One for every 295 people One for every 17,350

people

Market is highly regulated

• Ban on advertising alcohol, although surrogate methods

could be used for marketing

• Excessive state regulation and intervention

Affordability & Availability

• Taxation is significantly higher than other countries and

also much higher for Beer than hard liquor

• Duty not set according to alcohol content

• 72,000 licensed outlets across the country

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UBL 54% SAB Miller

23%

Mohan Meakin 4%

Mt. Shivalik 4%

Carlsberg 4%

AB Inbev 1%

Others 10%

• UB has held disproportionate share, but market is now opening up to new players. Carlsberg has reached 6% share in <6

years and has 6 breweries through mix of acquisitions and greenfield projects, and is adding one in Bihar now.

Market Overview COMPETITIVE ANALYSIS

Source: Market share data for FY11.

BREWERIES – BY REGION & STATE

MOHAN

MEAKIN

East

12%

West Bengal • • Orissa • •

N.E. States •

We

st

31

%

Goa/ Daman • Maharashtra • • •

No

rth

22%

Punjab • •

Haryana • • • Rajasthan • • •

Uttar Pradesh • • •

Himachal Pradesh • •

So

uth

35%

Karnataka • •

Andhra Pradesh • • • Tamil Nadu • •

Kerala • •

United Breweries

(Owned & Contracted)

SAB Miller Breweries

Mohan Meakin Ltd.

Carlsberg India

Indian Beer Market

270 million cases

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Market Overview INTERNATIONAL PLAYERS IN INDIAN BEER MARKET

Source: Company Websites, Economic Times

Company No. of

Breweries Brand

Entered

India in Presence Comments

AB Inbev Initially, a 50:50 joint venture

with Crown Beers Ltd. Now a

100% owned subsidiary

2 2007 Southern &

Western India

• Bud Magnum positioned as highest-

priced strong beer in India

• 49:51 JV with RJ Corp for marketing,

distribution & sales of the beer

Carlsberg India Pvt Ltd 6

2006 Pan-India • 3rd largest beer brewer in India within 6

years of operation

2009 Pan-India • Sold a million cases in the first 6 months

of its launch

Heineken Group Holds 37.5% equity shares in

United Breweries Ltd

1 2011

Maharashtra,

Delhi, Bangalore,

Kolkata, Goa

• The fastest growing line in UB’s portfolio

• Has 65% share in Super Premium Beer

segment

SAB Miller India 10 1996 Pan-India • 2nd largest market share in India

• Growth of 5% in volumes in FY 12

Molson Coors Cobra JV between Molson Coors and

Cobra Indian Beer

1 2009 Exported to 50

countries

• Plans to acquire breweries in India to

expand presence

Mahou San Miguel A 50:50 joint venture with

Arian Breweries

1 2012

Bihar, Haryana,

Rajasthan,

Uttarakhand, Uttar

Pradesh

• Entered into JV with Arian Breweries

• Plans to attain 2% market share in the

initial phase

• With entry of international players into India, large number of brands are now being brewed locally

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Maharashtra: Brewery Landscape

*Daman is a Union Territory and not part of the State of Maharashtra

MAHARASHTRA BREWERIES

• Most breweries in Maharashtra are concentrated in 3-4 cities

and on average, are over twenty years old

• Aurangabad is home to six of the ten breweries in the state.

Water shortage in Aurangabad is a cause of concern and

impacts brewery cluster in the city

• City of Nashik, where Ace Alcobev’s craft brewery is located

has multiple water sources including being near source of

India’s second longest river, Godavari

Brewery

Name Group

Year

Established

Installed

Capacity

(HLPA)

(A) Aurangabad

Aurangabad

Breweries UB 1993 0.50

Carlsberg India

Ltd Carlsberg 2008 0.70

Foster

Breweries SAB Miller 1998 0.40

Inertia Industries UB 1989 0.70

Lilasons

Breweries Lila’s 1994 0.40

Pals Distilleries SAB Miller 1981 1.10

(B) Daman*

Blossom

Breweries Khemani/ UB 1989 0.90

(C) Khopoli

Mohan Rocky Mohan

Meakin 1988 0.10

(D) Lonand

Privilege

Industries AB Inbev 2010 0.30

(E) Thane

Bombay

Breweries UB 1994 1.20

Hindustan

Breweries Agarwal Closed 0.60

TOTAL INSTALLED CAPACITY HLPA (excl Daman) 6.0

Daman

Mumbai

NASHIK

Pune

Aurangabad (A)

(E)

(B)

(C)

(D)

Maharashtra

State’s consumption is

projected to more than

triple in next 10 years

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Contacts

Leonard Menezes

Mumbai Ace AlcoBev Pvt. Ltd

314 Midas, Sahar Plaza

Andheri Kurla Road

Mumbai - 400 059 , INDIA

leonardmenezes@hotmail.com

+91 9920 717426

Abhinay Rao

Mumbai India Advisory Partners (India) LLP

803, Meadows,

Sahar Plaza, JB Nagar,

Andheri Kurla Road, Andheri East

Mumbai 400 059 India

abhinayr@iapib.in

+91 22 6565 9901