By Sonam Saini
It started with Doolally, India’s first microbrewery that launched in Pune in 2009 and, a few years later, in Mumbai with The Doolally Taproom. Several other microbrewery chains opened up ever since in the tier I markets — Striker Pub and Brewery, Toit Brewpub, District 6 and The BrewMaster, to name a few. The popularity of craft beers soared and soon they were available in bottles. After Ankur Jain launched Bira 91 in 2015, the bottled craft beer segment has seen Simba, Kati Patang, The White Owl, White Rhino, Brewbot and Medusa Beer, among others, enter the market.
Even though the eating out and house party culture prevalent among the youth is helping these new-age beer brands grow, it’s probably not enough to bring in profitability yet.
Exposure to the brewpub culture in cities like Pune, Mumbai, Bengaluru and Delhi has made consumers more experimental. Shantanu Upadhyay, co-founder and CEO, Kati Patang, says that people are now willing to spend more on better quality food and beverages. “In the US, there are several craft beer brands, whereas in India the market is just opening up. There is a lot of headroom to grow.”
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The India Beer Market Outlook 2023 report states that the Indian beer market is expected to grow at a CAGR of more than 6% during 2018-2023. In this period, the report states, consumers will shift from standard brands to premium brands, spurring the launch of niche beer brands.
Take the case of The White Owl, a brew pub that is moving into the premium bottled beer business with three variants — Spark, Ace and Diablo — priced at `110-130 for 325 ml. Meanwhile, Bira 91 comes in five variants including Light Lager, White Ale, Strong Ale, Blonde Lager and The Indian Pale Ale, priced between Rs 90-200 for 330 ml.
Then there’s Simba, which, since its launch in 2016, has released four variants: Simba Wit, Simba Stout, Strong and Lager; the first two variants are for the metros and tier I cities, while the other two are for tier II and III cities, available at a starting price of Rs 110.
The beer market is led by United Breweries’ Kingfisher, while Budweiser and Carlsberg, available at a similar price point of Rs 100-150 for 650 ml, are also significant players. According to Upadhyay, craft beers that are sold at a 50% premium will claim 10-12% of the Indian beer market by 2025.
Craft beer brands are still in an investment and cash burn phase. Launching a craft beer brand, according to industry estimates, requires an initial investment of around Rs 70 crore. Marketing is a crucial function for new brands and commands around 10% of the initial investment.
Since these craft beer brands lack deep pockets, marketing usually implies partnering with events such as Lakme Fashion Week, India Art Fair, and food and music festivals. These brands also tie up with fine dining restaurants, small chef-owned restaurants, five-star hotels and millennial hotspots.
“The niche market may pick up after five years, but till then every player has to have a foot in the mass market as well,” says Harish Bijoor, founder, Harish Bijoor Consults Inc.
Bira 91, currently available in 10 markets including Chandigarh, Delhi, Goa, Hyderabad, Jaipur, Gurugram, Kolkata and Karnataka, plans to expand to another seven markets soon. It has launched a new variant, Boom, priced at`130-180 for 650 ml, specifically to tap the mass market.
Going mass means building a different kind of distribution network, redesigning the strategy and redeveloping the manufacturing system. Saurabh Uboweja, CEO, Brands of Desire, says that although brands would want to “monetise the equity they have created in the niche markets by tapping the mass market”, such a foray does not guarantee a profit.
According to Bijoor, distribution is the biggest challenge. “Most craft beer brands have weak distribution models. Instead of investing in distribution directly, companies are launching more sub-brands to improve sales,” he points out.
Going mass would also mean maintaining a premium and mass positioning within the same brand. That is why Simba has preferred to stay in the premium zone. “Our packaging is very millennial-oriented in order to stand out,” says Prabhtej Singh Bhatia, founder, Simba Craft Beers. Bhatia believes that this strategy will help the company achieve a turnover of Rs 130-140 crore in the current fiscal, and reach Rs 200-250 crore in the next fiscal.