India: Indians trading up when it comes to their favourite beers
When Rahul Singh opened The Beer Café (TBC) at Gurugram’s Ambience Mall in 2012, he’d mortgaged his house and taken out a ₹3 crore loan, with no Plan B. His previous business, Golfworx – an indoor golf concept club – had failed; if TBC went the same way, he’d be jobless and heavily in debt. Luckily, his punt paid off: Today, the homegrown chain has expanded to 40 outlets across 13 cities, with a presence in Tier 2 cities such as Amritsar, Ludhiana, Mohali and Lucknow, GQ India reported on May 26.
His background as a retailer – Singh was apparel director at Reebok for nearly eight years – meant an immense working knowledge of the country’s retail landscape. Within one year of opening in Gurugram, he followed through on his goal to take his café to small-town India, where he saw an untapped opportunity. “India’s economic potential lies in the growth of smaller cities that have been witnessing a transformation. Higher disposable incomes for young people, greater social acceptance of alcohol consumption among men and women and a growing late-night culture are all helping the growth of beer,” says Singh. With the most recent TBC having opened at The Pavilion mall in Pune last month, he continues, “Cities like Pune and Amritsar provide similar revenues as larger metros, but give better returns on investment, as the cost of operations is low. The biggest paradox [in India] is that we have third-world sales and first-world rentals. Our business is dependent on location. And because the same catchment is being chased by everyone – from banks and clothing outlets to restaurants – rent prices are extremely high. The global benchmark for occupancy is less than 10 per cent of revenues. Here, it’s 20-30 per cent.”
So far, The Beer Café has received a total investment of ₹80 crore, with Series A and Series B rounds by Mayfield, Granite Hill and RB Investments. Singh is now looking to expand its pan-India footprint by growing to 24 cities, with a total of 150 outlets by 2022 – an achievement that will help consolidate its position as a category leader in what is a $7.1 billion Indian beer market.
Most entrepreneurs will tell you that the beverage industry is arguably the most difficult F&B sector to crack in India. For one, it’s continuously up against the Constitution’s Article 47, which advocates prohibition. “When it comes to beer, it’s even more complicated. It’s the only alcoholic packaged beverage with an expiry date. It requires a lot of space, education, equipment and extensive hygiene control. So it’s something that everyone’s wary of,” says Singh.
The Beer Café’s USP, according to Singh, is its accessibility, easy-going atmosphere, affordability and the sheer variety of beers on offer. TBC stocks at least 80 per cent of the beers registered in a given state, including, in many cases, locally microbrewed beers on tap. Hyperlocal analysis – patterns of beer consumption in smaller geographic areas – helps decide the sourcing and stocking for each outlet. Singh has also mastered the art of speaking to his audience in a language they understand: via a dedicated mobile app. Among its many features, it offers a whole range of services – a bar on the cloud, for instance, that allows you to buy a keg, case or bottle of liquor and consume it across any outlet, or gift it to any other user. Some outlets are also equipped with a Pour Your Own Beer wall – you can scan and then pour the beer of your choice yourself. You’ll be charged for as much beer as has flowed through the tap.
Currently, TBC pours about 2 million litres (6 million pints) per year, or 5,700 litres per day, across all its outlets. “Our per-customer beer session is three pints, or one litre, which is great compared to the national per capita of just two litres per year – one of the lowest in the world!” It’s helped that over the last five years, the conversation around beer has evolved dramatically. The advent of local microbreweries, especially in cities like Mumbai, Bengaluru, Pune and Gurugram, has meant greater access to fresh brews and a more evolved conversation about craft beer, a massive trend across the US and Europe. The spike in the number and range of imported brews has also allowed drinkers to experiment more than ever before. All of which has changed the perception of beer. “It isn’t a poor man’s drink any more. There’s a certain lifestyle associated with it. I’ve also witnessed a huge transition, with more women taking to beer lately.” Singh also notes that the contemporary Indian consumer is increasingly “trading up” in certain areas, while simultaneously “trading down” in others – eschewing materialism for unique experiences. Simply put, the tee they wear can come from a high street brand, but they’re not going to compromise on their Belgian Wit.
One of the things that has surprised Singh is that 30 per cent of TBC’s sales come through food. “I realised that [ordering] food with [your] drinks is inextricably linked in the Indian psyche.” Which is why he’s expanding his oeuvre, most recently with Elemenopi by The Beer Café in Gurugram, which offers an eclectic menu from over 10 countries, including Algeria, Croatia, Bosnia and Morocco. As is to be expected, the drinks menu is formidable, with 50 beers from nearly two dozen countries. And launching this month is Grapevine (also in Gurugram), an all-day wine café with a Parisian vibe, sans the snootiness. It’ll feature a carousel of automated wine-dispensing machines that will offer a wide range of wines by glass.
In the meantime, Singh will continue to be involved in the larger F&B industry, as the President of the National Restaurant Association of India (NRAI), which represents over 100,000 eateries. “My primary role is to advance the mission of our association. We’re an industry worth ₹352,000 crore, which is expected to grow to ₹552,000 crore, by 2022. For an industry of this size, and one that generates over eight million jobs, there isn’t any dedicated ministry. It takes over two dozen licences and permissions to be able to serve a sandwich,” says Singh.
He adds, “Internationally, businessmen yearn for ease of doing business in a country. I’d just ask for certainty. The constantly shifting goalposts sometimes mean governmental regulations being altered on a whim, occasionally erring towards regulatory overreach. I’d also advocate that authorities evolve with the times. Look at regulations that are imperative to the audience today. Relax some, like the legal drinking age of 25 years, and strongly enforce others, like fire safety. And do it consistently, not as a knee-jerk reaction to an incident.”
For the moment, Singh is focused on upping the ante with his brands. After claiming the beer market, and with one foot in the wine world, Singh is bullish on Indian consumers becoming more discerning. “This is something that social media and influencers in the space will help drive. Consumers will be trading up when it comes to F&B. The single malt and gin markets will grow extensively. In wine, we’ll see a proliferation of prosecco and rosé, the latter especially among men. With beer too, it’s going to be more craft than crap,” says Singh.
28 May, 2018
