UB, Heineken toast a tie-up

Ending an almost two-year-long dispute over partnership with the Vijay-Mallya owned United Breweries Ltd (UBL), Heineken NV, the world's third-largest brewery firm has agreed to permit UBL to brew and market the Heineken brand in India.

The beer-maker agreed to a key demand by Mallya that it merge its Indian joint venture arms into the United Breweries fold for Heineken to get equal representation on the board of UB, India’s largest brewery firm.

The Heineken brand is likely to be launched by the beginning of the summer season of 2010. UBL will receive a licensing fee. Heineken will be sold through the same UB network as distribution of beer and liquor is common. Heineken, on its part, will use its global distribution system to market the Kingfisher brand in overseas markets.

Heineken became a 37.5 per cent shareholder in UBL after it bought this stake from UK-based brewery firm Scottish & Newcastle in a global deal in January 2008. After the deal, however, it was not allowed to become an active shareholder and leverage UB’s distribution strength since it had a joint venture with Singapore’s Asia Pacific Breweries (APB), which was in direct competition to UB’s brands like Kingfisher in India.