India: Beer startups expanding and launching new products amid rise in funding

Amid the rise in funding, beer startups in India are expanding and launching new products to cater to the market, which is seeing growing disposable income and decreasing societal stigma around alcohol, the Business Standard reported on March 14.

The Indian beer market reached Rs 38,360 crore in 2022 and is expected to reach Rs 62,240 crore by 2028, exhibiting a compound annual growth rate (CAGR) of 8.1 per cent during 2023-2028, according to IMARC Group.

Homegrown beer brand Proost Beer, a subsidiary of Grano69 Beverages, secured Rs 27.5 crore through a mix of equity and debt funding last year. Presently operating in Delhi, Punjab, Uttar Pradesh, and Kerala, Proost plans expansion into five new markets. The company also aims to diversify its product portfolio, focusing on ‘mass premium affordable’ beers in the strong beer category.

Proost attributes the growth in the beer market to rising per capita beer consumption, increased disposable income, and diminishing societal stigma around alcohol.

“There’s a notable increase in young consumers who are open to enjoying quality beer while socialising with peers. Moreover, the expansion of the middle class, coupled with rising disposable incomes, has led to increased spending on alcoholic beverages like beer. Obviously, with huge potential of growth when compared to other nation’s per capita beer consumption, there is a substantial investment opportunity,” said VP Sharma, managing director, Grano69 Beverages.

B9 Beverages, the maker of Bira 91 beer, has secured $200 million in funding so far. Most recently it raised $25 million from Tiger Pacific Capital, an Asia-focused fund based in New York and Hong Kong. On the back of favourable trends, Bira 91 anticipates substantial growth, particularly with younger consumers favouring lower alcohol by volume (ABV), taste-centric drinking, and increased participation including women.

“We launch one new product every week at our taprooms and have a robust new product pipeline. We launched several new products last year, including Hill Station Ciders, Grizly Hard Seltzers, and Rise. This year, we have an exciting lineup aswell for the summer,” said Ankur Jain, founder and CEO, Bira 91.

Reybier Alo Bev, India’s first woman-led brewery in Goa, said that consumer priorities of affordability and ‘value for money’ thinking are driving its growth. Reybier aims to re-launch the ‘Indian heritage’ beers to bridge the gap between generations and genders. “We have two commercial beer brands – Royal C’zar and Mr.Bob which are available in Goa. As a plan of expansion, we are soon launching these products to other domestic and international markets,” said Rasagna Rao Dharmana, founder, Reybier Alco Bev.

Mount Everest Breweries Ltd (MEBL), a subsidiary of Associated Alcohols & Breweries Ltd, said the Indian beer industry is experiencing substantial growth in investments. It is driven by factors like rising disposable income, changing demographics, and consumer lifestyle. “These converging factors have led to an increase in investments in the industry since brands are trying to capitalise on the increasing consumer base,” said Vedant Kedia, Chief Growth Officer, MEBL.

Financing platform GetVantage said the Indian beer market, reaching Rs 41,470 billion in 2023 and projected to hit Rs 78,120 crore by 2032, presents a lucrative opportunity for entrepreneurs and both local and foreign beer brands. With a CAGR of 7.1 per cent from 2024 to 2032, the market’s expansion is set to continue, providing enough space for innovation and contribution from homegrown brands.

Since 2020, GetVantage has invested in alcoholic beverage and beer brands like Grano69, NAO Spirits, and Moonshine, fostering their expansion plans. The company aims to channelise over $5 million of funds into this sector within the next 12-18 months.

“With more people residing in cities, the demand for beer and related alcoholic beverages is rising. The growing societal acceptance of beer among both men and women is reshaping the landscape. Furthermore, the availability of beer in supermarkets is becoming common. With the expansion of retail chains, this market segment is gaining strength,” said Karun Arya, Chief Growth Officer, GetVantage.

Talking about the regulatory challenges, Proost points to the complex Indian landscape with varying state excise policies impacting small beer enterprises. “However, there’s a positive trend towards improved ease of doing business, streamlined registration processes, and smoother routes to market entry. The government is demonstrating a willingness to address the industry concerns, while further progress still needs to be made on regulatory reforms,” Sharma of Proost said.

Bira 91 highlights regulatory challenges like exorbitant beer taxes and outdated state regulations hampering the growth of the segment. “On a per serving basis, taxes are nearly ten times more than whiskey and spirits in several states, making beer one of the most expensive beverages for consumers. Additionally, in countries like Vietnam, Japan or the US, the number of shops and bars that can sell beer is in the millions, whereas, in a country like India, it is less than 100,000,” said Jain from Bira 91.

To Bengaluru-based World of Brands (WoB), despite favourable macro trends and consumer preferences for beer, inadequate state support hinders growth. High beer taxation and limited ‘beer-only licenses’ impede market access and distribution, requiring industry efforts to advocate for policy changes.

“Taxation on beer is still too high in comparison with spirits which makes beer an expensive product. Besides issues on taxation, preferences in distribution and availability of beer through ‘beer only licenses’ are limited to few states like Maharashtra and UP that have benefited them. Beer manufacturers have largely failed in providing long-term representations to the state governments, and an argument to get the state governments to provide more favourable policies on beer over spirits,” said Gurpreet Singh, co-founder and director, WoB.

India's beer market in numbers:

Rs 41,470 crore was the size of the Indian beer market in 2023

Rs 78,120 crore is the projected size of Indian beer market by 2032

7.1% is the anticipated growth rate (CAGR) of the beer market between 2024 and 2032

17 March, 2024