Vijay Mallya – Dutch Uncles

How Vijay Mallya Inherited an Empire and Made It Bigger

Tanisha Achrekar — Thu, 18 Mar 2021 02:35:04 +0000

We live in a country where people are always afraid and hesitant to talk about their successes and achievements. While most millionaires and billionaires like to stay away from the limelight, one was not afraid to shine as bright as possible. The king of good times, Vijay Mallya. He was not hesitant to show his exuberant and extravagant lifestyle by throwing the biggest parties of the country, calendar girls, owning a formula-one team or having an IPL team, the Royal Challengers Bangalore. He was an entrepreneur whose persona was much larger than his empire.

The inheritance of an empire

Vijay Mallya was the son of the chairman of United Breweries, Vittal Mallya. During his 20s, Mallya enjoyed taking part in formula one. Around 1982-83, he also won Indian Grand Prix. However, he could not continue that further as life took an unexpected turn. In 1983, Mallya’s father collapsed due to a sudden heart attack. At only 28, Mallya had to step in his father’s shoes and become the chairman of the United Breweries.

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At only 28, Mallya stepped into his father’s shoes.

Expansion like never before!

Back in those days, there was a lot of taboo associated with alcohol. Mallya wanted to introduce the culture of cherishing liquor. In 1986, India was becoming a more consumer-centric economy. He used this opportunity to introduce Kingfisher draft beer to the youthful crowd of Banglore. Although there were some political backlashes he faced, he was determined to get what he wants. The plan worked! The popularity of Kingfisher grew phenomenally. So much so that people asked for a Kingfisher instead of a beer. He was associated more closely with Kingfisher compared to all the other liquor of the United Breweries. During those times, Mallya’s success in the liquor industry grew to such an extent that he was popularly known as the ‘Liquor Baron’. In 1999, he introduced India to strong beer consumption with Kingfisher Strong, which to date happens to be one of the highest-selling beers.

Along with the liquor industry, Mallya also was a keen investor. He bought a major stake of Berger Paints in 1988 and sold a majority of his stake in 1991 with an enormous profit. After the Mangalore Chemicals and Fertilizers was declared as a sick unit by the Karnataka government, the billionaire took control of it as well. He further bought Rifa Publications, Herberstones and Shaw Wallace & Co. Ltd. Herberstones were the makers of bagpipers, the most sold whiskey in the country and Shaw Wallace & Co. Ltd. were the biggest competitors of United Breweries.

In 2005, Vijay Mallya entered the aviation industry by launching Kingfisher Airlines. Kingfisher Airlines was closest to his heart and he was emotionally quite invested in it. With no time, Kingfisher Airlines became the second-best domestic airline by market share. He offered the most luxurious experience in his airline which was never seen before in India. Alongside, he also invested in things he was passionate about. In 2007, Mallya bought a large stake in the Formula One team, Spykar and rebranded it as Force India. He also bought the franchise of Royal Challengers Bangalore in 2008 and became a part of the Indian Premier League (IPL). His passion and his personality always kept him in the limelight and soon he became internationally known as ‘India’s Richard Branson’.

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Vijay Mallya’s Entrepreneurship Journey

Roopali Kotwal — Wed, 17 Mar 2021 06:35:03 +0000

What picture would you imagine when you read the name, Vijay Mallya, in this day and age? Not a good one! Isn’t it? After all, ‘actions speak louder than words.’ But let’s not conclude yet.

Vijay Mallya may have lost his credibility today but there was a time when he made his mark and was very much relevant. Let’s not forget his contributions and achievements during his entrepreneurship journey.

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‘Actions speak louder than words’

The Mallya Legacy: Teachings of his Father

Vijay Mallya started off very young. He belonged to an affluent family. He got his entrepreneurship lessons from his father who was a successful investor and a businessman of his times.

He imbibed the quality of being competitive and striving for the best, from his father, Vittal Mallya. It was his father’s teachings that made him think, envision a much bigger empire and excel in things as mediocrity was something his father never appreciated. Mallya’s father believed in accountability and he actually learnt record-keeping from him. He was groomed as a businessman under very strict rules laid down by his father.

Vijay Mallya became the chairman of United Breweries Groups (UBG) in 1983 following the death of his father when he actually wasn’t ready.

How Mallya Built the Empire

The Indian tycoon has been very popular for his extravagant lifestyle. Addressed as ‘India’s Richard Branson’ for his investments in a brewery and liquor company, an airline, Formula One (F1) Team ‘Force India F1 Team’ and Indian Premier League (IPL) cricket club ‘Royal Challengers’ Bangalore. He was the owner of the Bangalore cricket team and co-owner of India Formula One (F1) Team. He was also a member of Parliament twice.

Often called as flamboyant, he was entitled the ‘King of Good Times.’ The Kind of Good times label was actually a slogan designed for his ‘Kingfisher Beer’ brand and he was the ambassador to promote the same.

Mallya had varied interests. From horses, yacht (Indian Princess and Indian Empress), airlines, brewery, football to F1 cars, he sought all and was a part of all.

The ‘liquor baron’ owns 26 properties all over the world. He has quadrupled the business (UB Group) he inherited from his father and grew it into a multinational conglomerate. He built blockbuster brands like Bagpiper, Mc Dowell’s, Kingfisher, etc.

‘Kingfisher Calendar’ is published annually by the United Breweries (UB) since 2003 featuring the models in swimsuits. The Kingfisher calendar platform gives an opportunity to the ‘Kingfisher Supermodels’ to get noticed. The ideation of the platform is credited to Vijay Mallya along with his Photographer Atul Kasbekar. The platform gave a boost to the careers of many models and Bollywood actresses like Katrina Kaif, Deepika Padukone, Lisa Haydon, Yana Gupta and Nargis Fakri. This is one of the long-lasting contributions of Vijay Mallya to India along with his brewery business.

What is in it for me?

Known for all right reasons, until one idea/investment went wrong (the defunct Kingfisher airlines). Give a pause and look at this from a different perspective. Look at what he has created!

We must acknowledge the fact that he built a big business empire and survived for more than 30 years in his entrepreneurship journey. Ex-Chairman of United Spirits but continues to be the Chairman of the UG group (India) and other businesses. Despite all odds, Mallya lived and continues to live a life that is still a dream for many!

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Is Kingfisher Beer the King: When You Cover More than 50% of the Market Share?

Smruthi Krishnan — Tue, 16 Mar 2021 12:30:08 +0000

Kingfisher, an Indian beer brewed by United Breweries Group, Bangalore was launched in 1978. Ranked 74th among India’s most trusted brands according to the Brand Trust Report 2012, it has a market share of nearly 50 percent in India and is available across 52 countries in the world. According to the Brand Trust Report 2014, Kingfisher was ranked 198th among India’s most trusted brands. From 2009 to 2015, United Spirits (USL) / Diageo exited all non-core investments in United Breweries and sold 850,000 INR shares to Heineken, giving them the leverage of managing affairs of India’s largest beer producer. Today, The Heineken Group holds 42.4% equity shares in United Breweries Ltd giving them an upper hand over Vijay Mallya in running the company.

About Kingfisher and United Breweries

United Breweries Holdings Limited (UBHL) is an Indian conglomerate company headquartered in UB City, Bangalore in the state of Karnataka and is India’s largest producer of beer. Their core business includes beverages but they have diversified into other sectors including Kingfisher airlines in 2003 which however reported losses since its commencement. Mallya and his team have been reported to have failed to follow due diligence crashing down their entire empire. Kingfisher suffered a loss of over ₹10 billion (US$140 million) for three consecutive years.

Other Indian Brewery Start-ups

White Owl

Mumbai-based, Award-Winning Brewery, White Owl is known for handcrafting beer with an extensive craft beer portfolio. Focusing on small-batch brewing, as of August 2019, White Owl distributes its craft beer on Tap, in Bottles and in Cans at over 2,500 restaurants, bars & retail stores across Mumbai, Pune, Goa, Bengaluru & Delhi.

Medusa Beer

Catering to the needs of the younger crowd, Avneet Singh founded Medusa Beverages in April 2017 and began its operations in January 2018. The brand made a turnover of Rs 150 crore in 2019 implying the huge demand for craft beer across the country. After launching in Delhi, Medusa Beverages is now present in Punjab, UP, and Chhattisgarh.

Kati Patang

The Indian craft beer brand is available at liquor outlets across Bengaluru and Delhi. The company recently launched its Zesty Amber Ale brewed in Bhutan with access to the purest Himalayan spring water that enhances the flavour of the beer.

White Rhino Brewing Co.

India’s first craft brewery, White Rhino was founded in 2016 in Malanpur, heart of the Chambal region. They aim to bring both quality and variety to the Indian beer market.

What is in it for you?

There is a huge demand for craft beer across the country. But there is a huge gap between demand and supply in the beer market. When United Breweries started out, there were no big competitors in the Indian beer market, which gave them the leverage to optimise the beer consuming population.

They focused on one product and marketed it based on the heritage and cultural history of the Indian subcontinent which helped them expand overseas. In Spite of the controversies and scandals around Mallya, Kingfisher continues to be a leading brand in Indian beers because of the trust the brand has instilled in consumers far and wide. Targeting the right consumers is important but earning their trust is the winning goal. Handcrafted beers are popular in the market now, pick your unique ingredients, focus on quality and not quantity, especially when you start out.

Small batch brewing has helped several brewing companies to scale and expand in the past few years. Disrupting the beer brewing industry is difficult but not impossible. So, go ahead, win hearts through a pint of beer and happy brewing!

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A Timeline of United Breweries – India’s Largest Producer of Beer

Aakash Sharma — Mon, 15 Mar 2021 02:35:03 +0000

United Breweries, or UB Group, is an Indian conglomerate headquartered in Karnataka. Its core enterprise includes beverages and ventures in various sectors. The company markets beer under the ambit of the Kingfisher brand and has several other liquor brands.

United Breweries also began an airline in India, Kingfisher Airlines. The Indian Directorate General of Civil Aviation barred the latter’s operations in 2014 following financial discrepancies.

The History of United Breweries

The United Breweries Group was established by Scottish businessman Thomas Leishman in 1915 when he compiled the Castle Brewery and Nilgiris Breweries (1857), Bangalore Brewery Company (1885), British Brewery Corp. (1903) and BBB Brewing Company Limited (1913) into a union of brewing companies. The group took a beginners route in beer making and brewing by learning from a British brewery in South India.

The UB Group made its first impression by brewing beer for British troops before India gained independence in 1947. They transported beers in giant barrels or “Hogsheads”. Eventually, in 1947, Vittal Mallya was elected the company’s first Indian director at 22. A year later, he replaced RGN Price as the company’s President.

Vittal Mallya bought the business in 1947 and tried to succeed in the Indian markets while expanding globally. Kingfisher, the group’s most visible and profitable brand, made space for itself in the Indian markets in the 1960s. In the 1950s and 1960s, the company expanded significantly through the acquisition of other breweries. Today, each of India’s 89,763 breweries sells at least one United Breweries brand.

UB’s ventures across the spectrum

McDowell’s, which is the largest umbrella spirits brand globally, comprising three categories – whisky, brandy, and rum, was acquired as a subsidiary of United Breweries in 1951. Since then, the brand has helped United Breweries expand its portfolio in the wine and spirits sector significantly.

Strategically, the group turned to the agro-pharmaceuticals industry when Vittal Mallya acquired Kissan products and built a longstanding relationship with Hoechst AG in Germany to found the Indian pharmaceutical company Aventis Pharma, the Indian subsidiary of the global pharmaceutical company Sanofi-Aventis.

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United Breweries has more than a 40% share of the Indian brewing market with 79 distilleries and bottling units worldwide.

United Breweries on an ever-growing trajectory

According to the company’s mission statement, “United Breweries Limited represents aggressive innovation and marketing complemented by a strong distribution network, including an impressive distribution of domestic and traditional production facilities across the country”.

Company’s flagship product, Kingfisher, has consistently received international recognition and numerous awards at beer festivals internationally. The famous Kingfisher Premium Lager Beer is currently available in 69 countries and is the first Indian beer to make space for itself globally.

Current Leadership

In 2005, UB funded the acquisition of Shaw Wallace & Company Limited (SWC), an Indian liquor manufacturer. This acquisition made United Breweries the largest beer company in India. UB also owns the Mendocino Brewing Company in the United States, and is affiliated with United Spirits Limited in the US.

The group’s current chairman is Vijay Mallya, the well known ‘King of Good Times‘ and India’s most famous liquor baron, who eloped the nation on March 2, 2016, allegedly to escape legal action by Indian banks to whom he owes some ₹9,000 crores (US$1.3 billion) in loans. Once known as India’s Richard Branson, who popularised Kingfisher with his famous Calendar Girls photoshoots, Vijay Mallya got on the wrong side of the Indian law agencies in 2016.

Regardless, United Breweries has more than a 40% share of the Indian brewing market with 79 distilleries and bottling units worldwide, all under Vijay Mallya’s leadership.

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Start-ups! What can you learn from Vijay Mallya?

Anju Nambiar — Sat, 13 Mar 2021 04:35:04 +0000

Vijay Mallya, once perceived as a true-blue Indian businessman, was celebrated with much fanfare. But his success story which took off spectacularly and was meant to be narrated and re-narrated for generations to come, quickly fizzled out and turned into an unpleasant, high-profile case that has left a bitter taste in everyone’s mouths.

Former owner of the Royal Challengers Bangalore Cricket Team, ‘The King of Good Times’ Vijay Mallya is the prime example of why everyone must run away from money lending financial institutions like the plague. If that sounds like a harsh take on bank loans, the whole country has seen the vortex which India’s very first ‘bad boy’ fell into and the vicious cycle in which he consciously entered and is still steeped too deep.

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When Liquor Baron Vijay Mallya took ownership of the company, the net turnover was INR 300 Cr.

The story of Kingfisher:

‘Kingfisher’ is a beer brand launched in 1978 as a subsidiary of the UB (United Breweries Holdings Limited (UBHL) group in Bengaluru. When Liquor Baron Vijay Mallya took ownership of the company, the net turnover was INR 300 Cr.

What did Vijay Mallya do right?

Was Vijay Mallya, India’s ‘Richard Branson’ a bad businessman? Did he not inherit entrepreneurship from his father and how did things turn sour for him?

To get answers to these questions, we need to look back in time before the infamous Kingfisher Airlines was born.

Mallya started off with a bang in the business world when he assumed the position of Chairman of the United Breweries Group in 1983, following in the footsteps of his late father Vittal Mallya, a renowned Indian businessman.

Everything worked out perfectly for Vijay Mallya at the start and it seemed like he was a worthy successor to his father’s legacy.

The company expanded under his leadership and in just the span of a year, achieved a turnover of 64%.

It also broke records touching 10 crores in beer case sales in the country which elevated the company to the position of being ‘India’s second largest spirits company’.

Liquor Baron to Fugitive – The events that unfolded:

Vijay Mallya’s interest in multiple businesses suddenly piqued and he was especially drawn towards the aviation sector.

He went on to launch an airline named after his very own beer brand. Both Vijay Mallya’s reputation as well as the name placement automatically elevated Kingfisher Airlines into being the second largest airline in India.

The glitz and glamour surrounding the launch of the airline and the excitement around the ‘Calendar Girls’ bolstered Mallya’s excitement to launch international flights.

To keep both domestic and International flights in the air, Mallya amassed a loan of 9000 crore INR from over 17 Indian banks, by using his political affiliations and by-passing all the laws that came in his way. This was the final straw which changed Mallya’s reputation and led to the downfall of his business.

Now every child in the country knows the story of the downfall of Vijay Mallya.

What’s in it for me?

Although the narrative around Vijay Mallya’s reputation abruptly changed to the extreme end, start-ups have much to learn from him. As a businessman, the irony is that he was indeed an incredibly good investor. A less known fact is that Mallya has invested in a good number of breweries abroad. Here, the lesson for start-ups is that they should be aware of the relevance of what they are investing in.

Vijay Mallya was a subject matter expert in his arena. His knowledge on investments came due to the empire which was left to him by his father. Out of all the business legacy families of India, the Mallya Empire had a particularly good mix of businesses and many products to showcase. Start-ups can learn from this about the importance of amassing knowledge on the right investments.

Vijay Mallya was a visionary, despite all that ensued. He had a keen eye about what was brewing at the time. Railways had become privatised and Foreign Direct Investment (FDI) had just come into the picture. With Foreign Direct Investment (FDI) seeping into railways, Mallya tapped into the white-collar sector’s need for luxury domestic travel. Start-ups can take a leaf out of his book to know how to keep a tab on the bubbling opportunities and swoop in when the time is ripe.

His deep understanding of the business growth as well it’s undershoots enabled him to bring competition into airlines. As soon as Kingfisher airlines took off, many others including Indigo and Air Deccan followed suit. Mallya was a true disruptor to aviation amidst much that was happening at the time. Start-ups inspired by everything Vijay Mallya did stand to gain much by inculcating a certain degree of disruption for any new venture.

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5 Important Business Lessons from Vijay Mallya

Aakash Sharma — Fri, 12 Mar 2021 06:35:04 +0000

Vijay Mallya, the son of former the Chairman of United Breweries Group Vittal Mallya, is an Indian businessman and late Member of Parliament (Rajya Sabha). Mallya is the former owner of the IPL team Royal Challengers Bangalore.

Born with a silver spoon in a business family, he followed his father and became the chairman of United Spirits, the largest spirits company in India, and continues to serve as chairman of United Breweries Group. This Indian conglomerate has interests in beverage alcohol, aviation infrastructure, real estate and fertilizer industries.

Dubbed as ‘the King of Good Times’ by tabloids and media globally, Mallya led (and continues to lead) a lavish life. He introduced the ‘beer and bar culture’ in India in the 2000s with his brand of Kingfisher. Kingfisher was created with much higher expectations and was aimed at the swish set of the Indian population.

Vijay Mallya – the King of Good Times

The liquor baron that Mallya became in the years following Kingfisher’s introduction in the Indian markets led many to view him as India’s Richard Branson. He branded and marketed a hitherto tabooed issue of liquor with ‘models and calendar girls’. The message of drinking for having a good time made him into that of a colourful billionaire. And colourful he was as his pompous parties gathered A-list celebrities in his Bombay and Goa penthouses.

As his liquor brand gained massive success, he widened his portfolio. And in 2005, he ventured into the airline industry with Kingfisher Airlines. He brought the experience of Kingfisher beer to the airlines, as his video message welcomed passengers over the aircraft’s in-flight entertainment system.

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Putting money just on the face of a glamorous mogul and their air castles lead to the avalanche that Vijay Mallya's Kingfisher Airlines suffered.

But what happened to Vijay Mallya and his brand is hidden from no one.

Yet, even as Kingfisher Airlines proved to be Vijay Mallya’s failure, there are some key economics lessons to be absorbed from the stumbles of this once high profile liquor baron.

Don’t venture into uncharted territory without experts on board

Vijay Mallya ran a successful group of companies before founding Kingfisher Airlines. But he had no experience in the extremely tricky airline industry. Because of poor strategy, Kingfisher’s lenders and shareholders paid for the heavy losses. The lesson here is that investors should not be tempted by attractive assets, core holdings, new derivatives and other foreign financial products alone. They should invest in tangible projects rather than in speculative “dream” projects.

The vicious cycle of the debt trap

While Kingfisher Airlines was severely underperforming, Mallya continued to spend a lot of money in efforts to maintain the high-end airlines’ operations. He took a bunch of money from the banks to help the sinking airline. The banks also ignored Kingfisher’s growing losses and continued to sanction loans. This overleveraging took Mallya down in a significant blow. Kingfisher accumulated losses of Rs 4,301 crore and, as of March 2021, owes over Rs 9,000 crore to a string of Indian banks.

Check performance and change the trajectory

Even though everyone comprehended it, Mallya denied acknowledging the obvious, let alone made any efforts to make amends. He continued to deny Kingfisher Airlines’s critical situations and portrayed a false image to investors. To avoid being prey to such mega-scandals, investors should regularly review the services of the businesses they have invested in and take corrective action if necessary.

Financial investments should be strategic rather than heartfelt

Any new industry is hazardous and often a weapon of large-scale destruction of wealth if it is explored unguided. Ordinary investors should stick to investment options like PPFs, time deposits, and mutual funds. Putting money just on the face of a glamorous mogul and their air castles lead to the avalanche that Mallya’s Kingfisher suffered.

Unmerited pride harms a business’ future

Pride played a crucial role in Mallya’s downfall. It was only because of his other ventures’ good performance that Mallya was convinced his Kingfisher Airlines would also be successful. Investors and stockholders should not rely too much on pride-driven revenue streams and weigh their options before putting in the money. Overconfidence and too starry of an image lead people to invest in capital directly rather than participating in a business’s services, and that is precisely what should be avoided.

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