A centuries-old trade is now enjoying a micro twist in India. Companies from Germany, China, Austria, Hungary, Slovenia and the US are making a beeline to sell microbrewing technology and equipment to Indian investors in a bid to latch on to a new fad. Currently, there are around 11 microbreweries in India and the number is set to jump to 100 by 2012 when the market for equipment is estimated to total about R350 crore. About 55 applications have already been filed by investors for approvals in different states.
Microbrewing is primarily a boutique business where beer is brewed inside a pub in regulated quantities and served fresh, using natural ingredients such as malts, hops, yeast and water. An established business in several countries, it is beginning to open up in India with states such as Haryana, Maharashtra, Punjab, Karnataka and Goa amending their excise policies to include microbrewing.
India?s favourable demographics and growing purchasing power are encouraging multinational vendors to bet on the premium beer market, which currently constitutes just 5% of the overall beer market of 200 million cases (one case is equivalent to 12 bottles of 650 ml each). The market is dominated by the UB Group, which sells around 100 million cases alone, and SAB Miller with a 30% share.
Nonetheless, the premium beer market, dominated by international brands, has been growing faster than the market average. While the overall beer market may be growing at 18% in India, according to estimates by CFB Consulting GmbH, a German advisory, the premium segment is booming at double the pace, albeit from a much smaller base.
About 20 international brands started selling in India over the past three years eyeing the 350 million middle class and 200 million consumers of beer, wine and other alcoholic beverages. Across the world, consumers are shifting from hard liquor to wine and beer, which have lower alcohol content.
All this is good news for microbrewery equipment makers, who think investors would agree to pump in money in the new business and be able to charge consumers a premium for freshness and variety ? there could be 90 varieties of beer and Indians are currently used to just a handful. A mug of pub-brewed beer could cost R250 while a bottled 650 ml one may not come for more than R80.
Most equipment makers trading microbrewing technology say the initial feedback has been encouraging, particularly from Gurgoan, where the first pub breweries came about around 2009. Nevertheless, there are multiple challenges both vendors and investors must overcome before the new industry can mushroom in India. These include regulatory hurdles as well as lack of technical knowledge in India. The latter can directly impact the quality of beer produced. ?Lack of technical knowledge can lead an investor into buying bad equipment which can affect the quality of beer ? microbial infection is very common if the quality of fermentation suffers,? said Pradeep Verma of CFB Consulting. His firm advises clients on micro and commercial breweries, apart from providing turnkey solutions to the segment.
India is fast becoming a battleground between low-cost Chinese equipment and the highly-priced German ones with both sides claiming a better return on investment. At the moment, German equipment can cost three to four times that of Chinese ones and Indian investors appear to be preferring the Chinese ones that cost around R80 lakh. German equipment, in contrast, costs R3.5 crore.
Of the 11-odd installations in India so far, most are from Chinese vendors. But Rockman?s Beer Island, located at the Ambience Mall in Gurgaon, has deployed high-end German technology.
Another German firm in India is BTB Brau Technologies, which is promising a return on investment from 12 to 24 months. ?The quality of material is substandard in Chinese equipment.
Also, the recurring maintenance cost is higher in those equipment,? said Bala Kumar, India head of BTB Brau Technologies. His firm has priced equipment competitively between R50 lakh and R2 crore.
Rohit Jafa of Sino Trade Corporation, a firm that installs and commissions Chinese microbrewery plants, said even Chinese equipment is based on German technology. ?The Chinese have simplified the equipment for easier use by lesser educated workers. Beer making principles remain the same,? Jafa noted. ?Good beer depends upon the brew master?s recipe, process, and beer raw materials. The role of equipment is minor,? he added. Sino Trade has set up the maximum number of plants in India ? about six installations in all. One of the lowest-priced equipment comes from Abhijit BrewTech that sells microbrewery equipment for R25-30 lakh. It has brought in an American technology where the raw material is pre-processed ? only yeast and water needs to be added in the pub. ?One doesn?t need a brew master. The quality is the same since freshness depends on the fermentation process that is done on premise,? said Amit Adatia, managing director of Abhijit BrewTech. He has won an order in Mumbai.