The craft beer scenario in India

Unlike the concept of microbreweries that have emerged in India (and we had dissected the pros and cons of it already), craft beer is a slightly different venture altogether. They consist of bottled beers directly imported from various countries into India. There is no local beer in India who can call themselves as craft beer. And it is understandable. The drinking culture in India is different from what you can find countries where craft beer is gaining prominence. And the global audience that the craft beer segment needs to thrive is missing in India.

To be blunt, there is no existing market for any craft beer in India(but one might emerge very soon). Even discounting the fact that they very few are there to relish the unique taste and culture of a craft beer it becomes even more difficult when you add the manufacturing cost. It costs more or less 3 times the cost of manufacturing a local macro beer with cheaper labor cost and economies of scale.

And above all, there is the strict liquor policy in India where the import duty for beer in India is 165%. When you add all this up it gives an unfair advantage for the big local brands and even big foreign brands over these new craft beer entrants.

Despite all this the only positive thing about the whole affair is the fact that the global audience that would form the core of the craft beer market is growing rapidly compared to other countries(partly because the existing amount is low). Some Belgian, German and the American craft beers are all trying to create a brand awareness and hoping that the market would grow into a sizable number one day and the regulations might be eased off. Even beer lovers like Beer in India would hope that it happens soon because it would be a shame if India did not experience the exotic flavors and the culture of craft beer.

The King of Good Times in India – Another never ending love story

Previously, we had discussed about the never ending love story between liquor and politics in India. There is another very strong love story in India for a very long time. Beer IN India and Kingfisher. Kingfisher, the King of Good Times has always been the market leader in the Indian beer market and it is still unrelenting. Maybe one day when and if the Indian liquor and beer market grows like in other countries around the world the dominance may fade. But for now they remain the kings. And despite being the fact that United Breweries Ltd. is a 150+ year old  company the face of the company is always Vijay Mallya, who is the chairman of the company and the son of late.Mr. Vittal Mallya who became the first Indian chairman of the company in the year 1947. He died in the year 1983.

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As soon as Vijay Mallya became the chairman of the company he changed the makeover of the company and since then has portrayed himself as the single biggest face of the company. By cutting down of loss making ventures and then concentrating on the core businesses like liquor, fertilizers, chemicals and pharmaceuticals. One important point is that these are all highly regulated fields of business and India and that helped him because of his way of negotiations and takeovers. Later came Kingfisher airlines, F1 racing and of course the IPL. Not to specify the number of celebrities associated with the brand, the calendar girls, the luxury and a political career.26-Mallya-Padukone-IndiaInk-blog480

Vijay Mallya widely polarizes opinion. He is viewed as an entrepreneurial icon who is shrewd and who knows how to enjoy his life from a very brash businessman. The opinion of any common man in India would be scattered along this spectrum. Whatever the opinion is, one thing is for sure. He is a man who has a taste for a lavish lifestyle.vijay729-420x0

Although the Kingfisher beer was a very strong market leader when he took over he has to be given credit for the exponential growth of UB since his takeover. With more than 20 different types of beer the domination has been nothing short of phenomenal with Kingfisher alone holding close to 50% of the market share for beer in India. It is an understatement to say that Kingfisher is the most associated keyword when it comes to beer in social media in India. There is a reason why it is called the King of Good Times.

Liquor and Politics – A never ending love story

Hi Beer In India viewers. It has been some time since an article was written. But it is good to be back isn’t it?? And it is the same old….same old. First it was Kerala, now it is Tamil Nadu. Liquor is perhaps the best thing for politicians to turn to when they are in trouble (no…..I did not mean it that way)

It is almost election time in Tamil Nadu, which is scheduled to happen in the summer of next year. Ever since the date of Late actor and founder of AIADMK Dr. MGR, there has never been two consecutive terms of the same party or the CM ruling Tamil Nadu. The people usually get fed up of the ruling party and the opposing party wins by a huge margin the next term. But things are more vague this time around. No, this is not a political rant. But politics is in the centre of the latest liquor situation right now. Or rather it would be more appropriate to say that the liquor situation is in the centre of Tamil Nadu politics right now. A recent survey even said that the people of Tamil Nadu believes liquor to be the most pressing issue right now in the state. After media fueling the menace of liquor in recent times the opposition political parties have all jumped up on it to try and gain some mileage for the upcoming election.

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We have discussed about this time and time again. Everyone knows it is absolutely impossible to impose a liquor ban in the state. My problem with all this is, there is a persistent issue. And it needs to be dealt with. Imagine going to a hospital with a particular problem and you get the wrong treatment. It is as much dangerous, if not more, than leaving it untreated. It is the same here. No one really wants a solution. If there is no cause there is no need for a hero. Everyone wants to turn a blind eye to the fact that liquor is just a catalyst to the already existing societal problems.

All this will be pushed under the carpet after the election is over irrespective of who comes to power. There needs to be a healthy open and a reasonable debate over this and education and awareness over this issue from a very basic level is the need of the hour. As of now arguments from all sides are flawed and even the media are trying to take a politically correct stand. The situation is looking very bleak in Tamil Nadu.

The Great Beer Debate – Craft vs Macro

The raging debate in the beer industry is that which involves craft and macro beers. The debate is not just about whether one is better than the other but it is a little bit more complicated. There are many layers in this debate and many different debates which I will try to make sense of in this article. Craft beer is hardly a topic in India but I really felt that Indian beer enthusiasts ought to be enlightened about certain things with regards to these controversies.

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The battleground is the US beer market.  Craft beer has definitely been a revolution in the United States where over 2400 breweries are present with a rapid growth of these breweries in the last few years promoting themselves as craft beer. It is likely that a new flavor of beer comes out each year because of this booming trend although they have a market share of only about 10%. But few years ago they were nowhere in the scene and now it is such a threat to macro beers that they have to dedicate an entire advertising campaign trying to undermine craft beers and it backfired big time. Of course it is not new for Budweiser who are constantly ridiculed and criticized often but this has sparked perhaps the biggest controversy of them all.

We shall try to understand what a craft beer is first. Definition is based on perception but the Brewers association in America defines it as a beer brewed 6 million or less barrels a year and that the brewery can only be owned up to 25% by another brewer in the industry who is not a craft beer brewer themselves. So this is more to do with the size of the brewery. In that case it is also called microbrewery. The reason it is so is because of the niche market it usually appeals to. The highly industrialized macro-beer is meant for anyone.

So now the debate has been sparked of because of Budweiser’s aggressive and controversial advertisement about which one is better. I am not here to say if one type of beer is better than the other or something (although I would tell that you may very well find a craft beer to suit your taste if you don’t like the lager). But we need to understand that the concept of craft beer is as old as beer itself. The term maybe new but not the beers. The modern beer that we are drinking are a result of rapid industrialization and economies of scale and has resulted in a moderation of the flavoring to suit everyone.

The other debate is what is really craft and what is not and how some are pretending to be craft beers. MillerCoors were even sued for marketing Blue Moon as a craft beer. Although there are guidelines set for what can be called as craft beer it is highly debatable and also it is only a matter of perception. We cannot stop a craft beer to grow larger than the confinements of what a craft beer definition is. It is sometimes funny that in business craft beer business is afraid of growing after a certain level because they will lose their USP but it is like a paradox. But they will not hinder their growth themselves. Also sometimes people don’t care as long as the beer they are drinking is good for them.

But the biggest problem is the takeover of small breweries. For example Budweiser had taken over several breweries selling craft beers and especially one brand which sold pumpkin peach ale which they ridiculed in their superbowl ad. It definitely gives us a hint of what their attitude is towards these types of beers and although the craft beer is becoming more famous and gaining some market share, it is extremely difficult to compete with the big names. So if they eventually take over some craft beer brands what will it mean for the long term future.

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There are several macro beers who even criticized Budweiser for the commercial but we cannot just say it was as noble as they would want it to sound. What does all this mean for the future of beer itself? I am sure beer is not going to go away but will the situation be better or worse than the present? It is anybody’s guess…….

The India Pale Ale story

We did speak a little bit about history in the previous article. Now is the time to dive into another lesson in history. We are a very patriotic lot. This has got much to do with the British colonialism which lasted until 1947 (I would say even more than that). But one of the lesser known stories about the time of British era in India was the advent of the India Pale Ale. Indian Pale Ale is one of the most dominating names in the craft beer circles. You cannot be amongst craft beers and not know about this. When I first heard about this name it intrigued me. The name definitely suggested that it had something to do with India. But did not know what it was at that time. It is a very interesting part of the beer history that has its links with India and yet beer lovers in India might not even have a clue about it. Isn’t it ironical?

Back during the 18th century the British sailors and the Navy and also British settlers in India missed their beer. Porter was the famous type of beer that was liked at that time but when those beers were exported to India but it turned sour because of the temperature and because of no shelf life during those days. They tried to set up a  mobile brewery in the ships but that did not work out for long distances. That was when a brewery called as the Bow brewery from East England came up with what we now call as the Indian Pale Ale. It was designed to be strong in content ant hops as the only way to stop the beers from getting spoilt is through alcohol and hops. Also he added more sugar and grain.IPA

Pale Ale is called so because of its pale color. Beers those days were usually black or brown. There is still a huge amount of debate whether this technique was done specifically for the Indian market or was it done for all beers being exported to long distances. Also if the brewer George Hodgson was the inventor of this style or was it already present. But nevertheless the beer type did eventually get the name as India Pale Ale and was a roaring success. It became the most famous type of beer to be sold all over the world and India in particular. Sales increased almost 5 times between 1775 to 1800.hodgson

India Pale Ale was the most widely sold type of beer internationally before the now popular lager took over. Lager has now become popular because of the mass production and the industrialization of beer brewing where a beer which offends no one is made. But IPA is the strongest name in craft beer circles and coinciding with the craft beer revolution starting in the USA, IPA has started to regain some of the lost ground. It is almost like a full circle for the IPA.

Surabhanam – The oldest Indian beer

History is a very interesting subject. Sitting in a history class might be boring for some but it is in fact one of the most important aspects in everyday life. I mean look at the endless debates about events, evidences, claims and counter claims. Everything in history is shrouded with so much of mystery that it is difficult not to be amazed by it. When that is the case is it not important for us to dive into the history of beers. Well, more or less we might have numerous accounts of it already online and history of beers in general is not what this blog is about. This is specifically about the History of Beer in Ancient India.

At some point of time in our lives there is every possibility that we could have come across the intoxicant named Somras or Somabhanam. It is regarded to be a highly spiritual drink. It is said to be consumed by only the elite and for very special purposes. Descriptions of the experience include hallucinations and deep spiritual insights along with very high anti-oxidant properties. Still the true nature of this drink and its ingredients is to be established correctly. But it also had a distant cousin. It is named as Sura or Surabhanam. It was a civilian drink and the drink of the masses. It was available for people of all classes and its description perfectly fit what we now call as an alcoholic drink. What is more is that it is made out of wheat, rice or barley and is fermented using yeast. Sounds familiar? Of course it was our very own beer. Probably the oldest in written history in ancient India. There are numerous references and texts about the use of both these drinks but for us Surabhanam is more significant because it is undoubtedly a beer. Even in the Mahabharata, the Kshatryas have taken this very drink before going to fights, it is said.

Now, the next thing we should try to understand is the social status of these drinks. Sombhanam was of course revered. It was considered to be the drink made by Brahma himself and although it is only perception, the drink might be something similar to Ayahuasca found in South America with healing and spiritual properties attached to it. Surabhanam was more of a recreational drink something similar to beer and other alcoholic beverages which are available now. Also over the period of our history there are extraordinary amounts of references about intoxicant drinks and how it is blended with our culture.4697

But Surabhanam is a controversial drink nonetheless. It was not believed to be a very good habit to be drinking these drinks. Much like how alcohol is perceived in India today, it was most probably the same in those days as well. There are texts which condemn the act of brewing and drinking the brew. Also it was punishable. And some even discussed about its ill effects of consuming it. Maybe the perception of alcohol stemmed from these beliefs. Maybe they were not wrong. But I am not here to debate if it is so or not. But isn’t it interesting to observe that it was not the Britishers who first brought beer to India but it was our very own people who were more than familiar with it and had enjoyed it as much as anyone has ever done? And speaking of the Britishers, of course they are the ones who brought in modern beer to India. It is a very interesting story. But that is for another day……….

Why setting up a Microbrewery in India can be still be a good option in the future?

We know that the microbrewery industry in India has many hurdles to overcome. But is it all doom and gloom for the aspiring microbrewers and beer lovers in India? Not so fast. Because I mentioned it as hurdles rather than as problems. Because sooner or later as the wave of Globalization grips India further we will see microbreweries all over India. I am sure it will happen one day no matter how far the day is from today. The reason is more people will come to know that alcohol is not the cause of any problem but is just an effect.  Also we are naturally inclined towards westernization (although I would argue that it is not the right thing always) the inclination towards beer will grow. Beer is an expression of culture in so many different countries that when we truly understand what beer is, then the perceptions will start to change.

And when talking about India, our biggest profession is service providing(in terms of GDP share). It has overtaken agriculture as the biggest occupation for some time now. India also has the highest number of MBA institutes in the whole world. In the midst of such a situation there are calls for new entrepreneurship ventures everywhere. India has even said ‘MAKE IN INDIA’ in this year’s Hanover trade fair. It is a reflection of our P.M. Narendra Modi‘s vision. So if someone actually decides to start a new business project, the one thing he should have to back up his market entry strategy is a good market potential. It is too risky to enter into a declining or a stagnant industry. And it is clearly unwise. And the ever increasing ever popular industry is the food and beverage industry. And when it comes to the microbrewery industry no matter how slow the growth is, there is growth. And that itself is a motivation. Primarily because of the many hurdles in India it is more difficult compared to setting up other business prospects. And in the direction that the world is heading we can see only one future in that regard i.e. the hurdles would diminish as the days go by.

Also when it comes to the microbrewery concept it seems to be an exotic option. It is very rare to find such bar restaurants of pure class with some really good beer served along with tasty Indian food. It is a perfect combination. Coupled with the fact that some microbreweries arrange tours inside the brewery explaining the process of beer brewing it does seem very exciting. And it is a very fascinating and attractive proposition for the potential customers. Of course the key would be to serve quality food, because the beer would more or less be good for the taste buds anyway. Even normal restaurants will be tempted to serve these craft beers in their menu by getting from the microbreweries or setting up one themselves.micro

And finally, coming to the concept of the craft beers. It has existed for centuries now and they haven’t made the profit that the industrialized beers have done. The uniqueness of the taste of the beer and the fresh nature of the beers is what it is popular for. The added advantage is that as far as these craft beers are concerned there is scope for lots of innovation that these microbrewers can do and it can be their USP. How lovely it would be to drink a specialty beer served straight from the barrel fresh and munching chilli chicken and mutton biriyani along with it? I would say that it would be really fantastic. I would even dare to say that this is the future of restaurants.

The Kerala beer situation  

After seeing what is happening in Kerala as far as liquor is concerned it is important to follow it up with what it means for Beer in Kerala. It is not difficult for anyone in Kerala to know that beer is not as popular as the other strong liquors are. The same goes for wine. But what is left for the average citizen in Kerala right now are an unusual number of new beer and wine parlors in Kerala as a result of the latest developments in the state. It would be a wild conspiracy theory to suggest that it was the plan of the Government all along to make the market more viable for lighter drinks and thus benefiting from it by working along with the big beer and wine companies in India. It is quite far-fetched. But the fact that the current situation benefits the beer and wine manufacturers should not be denied.

Despite the fact that beer is traditionally not one of Kerala’s most favorite drinks, the demand does rise during the summer months. But the difference this time around is that this year the demand has gone up to such an extent that it exceeds supply. Especially the stronger brands. It isn’t new for us to know that Indians always prefer the stronger brands.kerala

So basically, there is potential for beer to grow even more stronger in Kerala as the situation is so. But is it something that will remain long term? This is a tricky question. The Congress led UDF when proposing their new liquor policy last year was very strict. But then owing to the fact that the immediate closure of any industry would damage the lives of so many, they had decided to be lenient towards lighter liquors and thus previously operating liquor bars have now become beer and wine parlors. Without taking into account the motives behind all of this, the decision to be lenient actually was a very sensible option even if it means opposition from some religious groups regarding the same. And so, the closing down of retail shops and such parlors in a phased out manner is proposed it does mean that it might not be really long term but this issue is not just a social problem but also a political one. Which means we can expect lots of twists and turns.

So as it stands beers would benefit from this situation, far from what the Kerala Government had intended. And there are also several people citing it as a beginning for bad things to come as people tend to drink beer first when they are younger before starting to have the hard spirits. Which are not really false. And also there are suggestions that mixing wine with beer would be the best combination to become high. After all, getting high is the ultimate purpose of drinking alcohol for them isn’t it? For a true beer lover, it is actually a turn off. Adding to it is the potential hike in sales of illicit liquor, the Kerala Government may feel sooner or later that this is not the right way to deal this problem. And when or if they do it, what will happen to the latest beer boom in Kerala then? We will have to wait and see………..

The Kerala liquor situation

Let us try to understand one thing very clearly. The worst thing one can do to control something is to prohibit/ban it. We have overwhelming evidence of the failures of the idea of prohibition. The war on drugs by the USA is one glaring example. Having some misleading motives, the one thing the US managed to achieve is make the country No 1 in the list of prison incarceration in the world. And we know how things work in a so called dry state in India. It cannot be more ironic when a road sign in Ahmadabad warned ‘Do not drink and drive’. Gujarat is supposed to be the symbol of the Gandhian philosophy.

The latest to execute this idea of a dry state is the Kerala Government. Let us give this a thought. An average Indian would welcome this decision because never was alcohol consumption considered a good thing morally in India. This is the basic idea of the announcement of the revised liquor policy last year. And you cannot deny that is influenced by the ongoing battle between the state’s Chief Minister Ooman Chandy and the party chief V.M.Sudheeran. Since then it has been nothing short of a political saga that has gone on for almost a year. As recently as last month, the HC has upheld the Government’s stand and has allowed it to pass the new liquor policy. The key aspect of this verdict is “‘Right to drink’ is not a fundamental right” and so only 5-star bar hotels (24) are allowed to serve IMFL while some bars where closed and others were given a revised beer and wine license(to sell only lighter liquor). Also the retailers selling liquor are to be closed in a phased manner. So as it stands the Kerala Government has passed a new law that not many people on the surface would be against except for the ones who would stand to lose business because of this verdict (and possibly appeal to the SC). So just looking at it from an electoral point of view they have done something that appeals to the masses and satisfies its allies and various religious organizations.

Understandably alcohol abuse is a serious problem in Kerala. But  there are several key questions that need to be answered. All media who have covered the news for the last one year or so seem to agree that Kerala is the highest consumer of alcohol in the country. And I am still trying to find out the source which says Kerala as the biggest drinking state (in terms of per capita) in India. The Hindu is the only news outlet to publish that it might not be the case. I am seriously not sure here. Is Kerala really the drinking capital of the country or is it being projected so to promote a political agenda. I am not saying there aren’t any issues in Kerala. But it can easily said that there are alcohol issues in Kerala and measures are being taken to tackle it. Kerala needn’t be projected as the highest consumer of liquor to justify the alcohol abuse in the state. And what about toddy, which is totally neglected in this entire policy?

And economically it is not a good prospect for Kerala. They have liquor as their major revenue source and tourism stands to get a big hit through this notwithstanding V.M.Sudheeran’s flimsy argument that tourists don’t come to Kerala just to drink. Majority of the tourists don’t go somewhere ‘just to drink’ but the prohibition for alcohol consumption can influence many while taking a decision. And it has reflected upon the falling number of bookings in Kerala after the announcement of the new liquor policy. Due to this Mr. Chandy had to  take  a softer stand last year. One other reason for this was because of the bribery charges leveled at least 3 ministers.

This is a reflection of the worrying trend in India. BAN THIS, BAN THAT!! It doesn’t work that way. It is not rocket science to understand that the Government is just pushing the liquor industry underground. And they know it. They are not really worried about eradicating the problem. They want to just divert it into a different direction while gaining a political mileage. Imagine, an alcohol addict is in Kerala right now and he has to deal with the ban. The Government believes that he will come out of the addiction clean because of the ban and the problems that he had previously created is going to end this way. Isn’t this ridiculous.

It is easy to say ‘Ban the bloody stuff’ when the problem is much more deeper. Any form of alcohol or drug abuse are mainly a reflection or I might even say are due to the actual problems in the society and not the other way around. The Government will always turn a blind eye towards this vital piece of logic. But this isn’t new. And this won’t be the last.

Is the future really bright for the Microbrewery Industry in India??

When I come across various media talking about how microbreweries are doing good in India and discuss about its future prospects I almost believed that it is a really encouraging news for beer lovers. But one thing they fail to talk about are the serious problems for the beer market in India. I agree, the beer consumption per capita is growing. But why was it so low at the first place (2 Liters per capita). Probably because of our ‘culture’/social stigma associated with drinking and also our preference for stronger drinks like I have already mentioned here before. But this is only half of the problem. The other half is the near cartel like system in the beer industry that is existing. For e.g. In Tamil Nadu (where the liquor is bought and distributed entirely by the state government you will not have a great variety of beers available. The only one available is Kingfisher. And apart from that you have a couple of other brands like Kalyani and Haywards but not as abundant as Kingfisher. It is almost impossible for a craft beer to enter such a market because of unprecedented domination of a few companies. Although the industrialized beer will exist craft beer is the future with its ever growing popularity (even Budweiser realizing it, tried to undermine craft beers and hilariously failed). Situations are not much different in other states. Kerala for example is implementing prohibition in a phased out manner. It is not really a healthy sign for beer manufacturers outside of India or aspiring entrepreneurs to look into microbrewery as a business option, at least in South India.

When we speak about the cultural aspect and the social stigmas it gets complicated. We try to associate culture to everything that happens without a fundamental understanding of it. I recently saw a video where Indians were asked to give their opinions about ‘Pre-marital sex’. One particular person said, “India is known for its culture around the world. So having that in mind doing something would harm it”. I am not going to go into this debate because that is not what I am here to talk about. But I realized that what his thought process was simply not right. You just cannot blame culture for your actions because it is clear he doesn’t really understand what Indian culture stand for and more importantly why. Later I realized that it is the thinking process of many people all around the world. We do not try to understand what CULTURE is.  We do not know what any ideology that defines a culture, stand for. We have a pseudo-explanation which only scratches the surface of an ideology without fully understanding it. And cultures evolve just like us and we are the shepherds of our own cultures. Mahatma Gandhi is seen as the main reason why Gujarat is a dry state. If any argument pops up against this stand, we hurt the values and the culture he stood for(very recently an American brewery had to apologize to Gandhi followers for using his name and image in a beer). I mean, he was really against alcohol because he believed it was the single biggest root cause for all the problems in the society (which is debatable, especially in today’s context). By declaring Gujarat a dry state, did they solve the problems Gandhi hoped to solve? I would say, not really. The black market exists and is far more dangerous. Also it serves the rich and the poor are the most affected. Certainly not what Gandhi had in mind when he wanted to ban alcohol. Also the numerous deaths by drinking illegal liquor. Is this what our culture stands for? But still culture is the key word here. It is quite funny. Also there are dry days all around India (Most notable: Oct 2 – Gandhi’s birthday). What purpose does it really serve apart from honoring him in a pointless way clearly not understanding what his war against alcohol was based on? There are a total of 4 states(Gujarat, Manipur, Mizoram and Nagaland) and 1 Union Territory(Lakshadweep) which are dry or almost dry. But all have thriving black markets. These black markets are a genuine social and economic threat to the country(Actually a bigger threat than what Gandhi could have imagined).

Also the liquor distribution network is dominated by political parties all around India. And you simply cannot advertise alcohol in India(although companies do find a way around it by advertising their brand via sodas or CD’s). This does not bode well for new entrants(from overseas) or microbreweries. Maybe the media assumes people know about these things already and so they say growth of the microbrewery segment in India is encouraging because it is showing promise despite all these troubles. I believe that somewhere along the line, India will one day have a booming microbrewery Industry with growing customer base enjoying the exotic beers on offer. But sadly, we are still long away from that. And a lot of struggle is needed to be undergone before aspiring micro-brewers see the light at the end of the long tunnel.