🥡 Craft Beer & Alcohol Trend Takeaways
The trend of craft beer & alcohol is just beginning in India - there is a lot of demand that is still unmet/undiscovered.
High Capex/Unpredictable Regulations will be largest determinant to the growth of this industry.
Millenials/Gen Z will drive the growth of this market - successful brands will position themselves for this age segment and market to them where they hang out.
Two brands completely changed my perception of Craft Beer in India – Doolaly & Bira.
I vividly remember the first time I tried both these beers. A friend took me to Doolaly in 2015, hidden away in a corner of Bandra Reclamation in Mumbai – I was excited but hesitant to see what kind of ‘Craft Beer’ India could offer. For Bira, I saw it on a menu at Eddie’s Bar, again in Bandra, and was shocked that it was the same price as a Kingfisher but claimed to be a craft beer.
I was an immediate convert to both. I was one of the first 50 members at the brand new Doolaly – I got a special mug and drank copious amounts of their beer that summer. With Bira - I have ordered literally hundreds of bottles at restaurants, bars and wine shops.
Doolaly and Bira are vastly different brands, with the latter growing exponentially on VC money. However, they’ve both shaped the beer landscape in India in their own ways – paving the way for the dozens of brands we now find at our local wine shop.
Craft Distilling has also started its own evolution with the entry of Indian Gin brands such as Stranger & Sons and Greater Than and Amrut in the Whiskey category.
We explore the opportunity of building a Craft Alocohol focused business in this week’s newsletter.
🍺 What is Craft Beer & Craft Alcohol ?
It is a vague definition with a lot of grey areas but it gives me a mental image of the type of brewer/distiller who falls into the category of ‘Craft’. I imagine a few dedicated brewers/distillers who buy natural ingredients to brew/distill using small scale production techniques and do the quality control themselves - these techniques would also result in small differences in taste across batches.
🧐 Market Gap
There was a wide gap in the market between the cheap, domestically grown brands such as Kingfisher, Old Monk, etc. and the imported brands.
There was no mid-market positioning. Kingfisher Ultra and the Danish Duo (Carlsberg & Tuborg) tried to fill this gap but there was still a lot of opportunity, especially in taste.
Doolaly paved the way by changing licensing requirements in India, starting with Maharashtra.
“The existing licenses allowed breweries to either manufacture, distribute or retail their beer; the microbrewery business model is one where we had to do all three. Eventually, after fourteen months, the brewery license was modified to accommodate microbreweries like ours.”
Consumer tastes are shifting across the board especially with the larger exposure to global tastes and trends.
Dollaly’s founder Suketu Talekar said in an interview that “consumers today are far better informed and discerning as compared to five years ago. They are holding businesses to a higher standard when it comes to products and services they are buying. Also the same lot is far more experimental when it comes to the choices they make while eating out and drinking. That means as a business you are afforded far greater latitude in terms of what you can experiment with.”
Craft Beer became huge in the US and Indian consumer trends tend to mimic the Western markets a few years later as people travel back and forth.
💰 Market Size
The entire Alcohol industry is about $50 billion. Craft alcohol market is currently led by Craft Beers and has $7 Billion market share. And Craft Alcohol is expected to grow at a much faster rate (~20% y-o-y). Craf Alcohol brands have the potential to become national players that can take on the behemoths like Kingfisher or Haywards (or even be acquired by the behemoths at good valuations).
Alcohol licensing is a state subject and laws change from state to state. The state excise department issues license for brewpubs and microbreweries.
Here’s what blew my mind when talking to people about how they set up their micro-brewery:
Setting up the craft brewery will be approx. 1 crore.
You cannot apply for your liquor/brewery license before setting up the entire brewery.
Well - what if you don’t get the license? Your fault for setting up all that equipment.
It’s clear to me that licensing is the biggest factor in this entire process. You can figure out the production - but the licensing is a long process that has taken 1+ years for some people. Here’s the Maharashtra Excise Manual Vol I, start reading.
If you have the patience to figure out the website and maybe pay ~Rs. 1000 - 2000 , this seems to be a detailed report about how to start production of your own craft beer.
Bira – Is it really craft beer anymore?
Simba - Was never craft but a beer upstart nonetheless.
Doolaly – Expanded through its pubs.
Gateway Brewing Company
Shares a founder with Stranger & Sons and Svami Tonic Water.
Witlinger - unknown level of funding.
Toit - Also growing through pubs
Coolberg - $3.5 million in Funding
Zero alcohol beer
They have a second gin called ‘Hapusa Himalayan Dry Gin’
GinGin - I could not find their website.
I know I’ve seen another tonic brand recently but can’t find it.
The democratisation of Alcohol has just begun - there will be a lot more alcohol brands popping up in the next decade.
This will be driven by the reduction in cost and access of licenses and equipment.
Demand will be driven by India’s young population who will want something different from their parents.
Brands will counter-position themselves against old, stodgy brands and have a Millenial/Gen Z focus.
India is the largest consumer of Whiskey in the world by volume - however, most of what’s sold as Whiskey in India wouldn’t be called Whiskey in Europe.
Whiskey has a large potential for consumer awareness and standardisation along with a focus on quality.
Big brands, like Kingfisher, will be jealous of the millenial brand appeal of new brands and will try to launch their own craft brands.
Once they fail, they will buy the new brands for growth & brand appeal.
Big brands will also experiment with more flavours - Kingfisher Kokum? KingMango maybe?
Wheat Beers (like Heffeweizen) are the most popular craft beers in India but every brand has one. Along with a Porter, Stout and an IPA.
Distinctly Indian/regional flavours will help brands stand out more.
Some flavours that are already out there:
Kokum (Great State Aleworks, Susegado and Kimaya)
Jaggery (Goa Brewing Company)
Mango (Toit, Doolally)
Betel leaves (Arbor Brewing Company)
The core beer & alcohol manufacturing business requires a significant amount of capital in licensing and equipment (anywhere from 1cr to 7cr). However, if you can find a contract manufacturer - that is a way to introduce a new brand (please check for legalities in your area).
Supply Raw Materials:
Most hops (used to add flavour to the craft beer) are imported due to quality issues.
Demand for Botanicals (for flavoring alcohol) will increase as the craft industry matures. India has a good supply of Botanicals but there could be a play in sourcing good quality products.
Events business to help new-age craft alcohol brands launch with a focus on Milennials and Gen Z.
Events are a significant part of launching and distributing alcohol brands. I have been to a few in my life - very fun.
Check out our upcoming podcast with Stranger & Sons to hear more about this.
Build your own brand in a Tier 2/3 city.
Distribution to different cities/regions is difficult and expensive. Build a brand with solid distribution in an underserved region.
Whiskey and Beer are the two most consumed alcohols in India – can you innovate for your local area?
Consultations on flavour profiles.
Several brands we spoke to started by just experimenting with flavours themselves. Make the product development process faster by providing flavour consultations.
Help restaurants find flavour profiles to match their own dishes. Or create specific product lines for restaurants.
Stranger & Son’s collaboration with Bombay Canteen.
Make the process of getting licenses easier for new brands.
Licensing is the most cumbersome part of alcohol manufacturing/branding.
Market alcohol in a unique way.
Marketing of alcohol, even on social media, is prohibited by the government. That’s why we have Royal Stag CD’s 🎸.
SEO focused digital marketing might be the future of Alcohol marketing in India - especially now that Maharashtra has allowed Direct to Consumer growler delivery for beer.
Hyper local influencer marketing.
Direct to Consumer beer/alcohol delivery may remain post-Pandemic.
Maharashtra & Jharkhand allowed home delivery during the pandemic. This may or may not continue.
This has already upended the traditional supply chains for beer in Mumbai.
Build a celebrity-backed Alcohol brand.
Can you give equity to a huge star and build a premium brand around them?
Exports to South East Asia or Africa.
These regions will also go through their own developmental journey and start demanding higher quality and variety in alcohol.
This will create opportunities for brands to expand internationally or for players to supply raw materials/machinery.
Dude, the Indian laws around alcohol are insane and vary by state.
True - but some brands have figured it out. Also, this is a higher barrier to entry that will keep competition out of the market.
Alcohol is still stigmatised and banned in several areas of India.
Marketing and branding will have to be sensitive to these challenges. Don’t promote excessive drinking.