The makers of Indian craft beer Bira 91 find a real high in a cheaper, stronger brew

Say cheers!
Say cheers!
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B9 Beverages, which owns and retails the Bira 91 brand of beer, has been expanding its presence rapidly in India and abroad since its launch in 2015.

Founded by the serial entrepreneur Ankur Jain, the company introduced India’s urban millennials to the idea of flavoured beer. Bira 91 soon emerged as a popular brand competing with established players such as ABInBev’s Haywards, United Breweries-owned Kingfisher, and Carlsberg’s Tuborg.

B9 Beverages has other innovations, too, to its credit. In 2017, it launched Bira 91 Light, the country’s first low-calorie beer. The same year, it also added Bira 91 Strong, India’s first wheat-based strong beer, to its portfolio.

Diversifying beyond these premium offerings, the New Delhi-based company entered into the mass beer market with Boom in February this year. According to Jain, the competitively priced brand already accounts for 25% of the company’s revenue. “Boom is doing very well for us. The product has extended Bira 91’s reach,” said Jain.

Quartz spoke to Jain, CEO of B9 Beverages, about Boom’s success, Bira 91’s product strategy, and the company’s expansion plans. Edited excerpts:

Boom marked B9 Beverages’ entry into the mass brand segment this year. How has the consumer response been?

Boom is doing fantastically well. It already accounts for 25% of our revenue. Boom extended Bira 91’s reach rapidly. Today, we are selling in outlets that Bira 91 never retailed from previously. Following the launch, we have ramped up our supplies. We have dispatched 0.5 million cases (24 bottles in a case) of Boom till June. We expect to cross a million cases a year by the second week of August.

The positive response validates our belief that consumers, across socio-economic segments, want more flavours for their beers and they are quickly adapting to it.

After entering the market with the niche brand proposition, what’s the key reason for expanding into the mass segment, now?

Bira 91 wants to become the brand of choice for every generation of Indian consumer. It’s important for us to operate in every price segment.

We already had a strong portfolio of beers targeting consumers in large cities. And when we looked at tier II and tier III towns, we realised that consumers’ ability to pay premium prices is much lower than in, say, metros. Even as Boom retains our brand promise of a niche (distinct) flavour, in terms of pricing, the product is closely aligned with other mass-market beer brands. At the same time, Boom offers higher alcohol content.

How is Bira 91 placed vis-à-vis competition? 

In markets like Maharashtra and Karnataka, Boom competes with brands like Kingfisher Strong and Tuborg Strong. These are the two largest beer brands in the country. In a few markets, we (Boom) command a premium price of about 10% over competitor brands.

So, what does Bira 91’s current product spread and pricing strategy look like?

Bira 91, is now operating in a wide price range. Our most affordable product is Boom, which is priced between Rs130 and Rs150 ($1.88 and $2.17) for a 650 ml bottle, depending on the region. Our older products like Bira White, Bira 91 Strong and Bira 91 Blunt are priced between Rs90 and Rs120 for a 330 ml bottle.

How does Bira 91 go about identifying product gaps in the market?

First, we listen to consumer feedback. We do a lot of research with our consumers, both formal and informal. We also have a close conversation with consumers at retail shops, just to understand what people are saying about our products, is there something they are missing? Then, we carry out formal research, both quantitative and qualitative, to identify consumer needs.

We not only look at our own numbers, but the team also looks at the competition’s numbers to identify both geographic as well as product gaps.

What are the key geographies that you are looking to expand into?

We recently launched in Andhra Pradesh. And we are soon going to launch the product in Kerala. These are very big and important markets for us. Then, the company is going much deeper into towns and cities where we are already present. These include markets such as Maharashtra, Karnataka, Madhya Pradesh, and Haryana.

What are your plans to add more capacity and expand existing infrastructure?

We commissioned our third brewery six weeks ago in Andhra Pradesh. We are soon going to commission another brewery in Mysuru. The expansion work at Nagpur brewery  (in Maharashtra) also got completed in this quarter. Our total capacity right now is in the range of 1 million cases a month, which will double up to 2 million per month in the next few months.

What are your current revenue figures and future targets?

We did about Rs160 crore ($23 million) in revenues last year and we closed financial year 2019 with revenues worth Rs200 crore. Going ahead we are looking at strong revenue growth driven by new product launches, market expansion and going deeper into existing markets.

What are the key trends that will dominate the Indian beer market?

Volume expansion in the beer market is happening at a rapid pace. People are drinking more beer, especially younger consumers. Also, the beer market is moving towards premiumisation. Consumers are also willing to try more flavours, which were never a priority earlier. Now, the taste has become a very important consideration while choosing a beer brand.

What are the key challenges for you right now?

The challenges before us and the industry are largely predictable. The biggest challenge lies in taxation. Beer is taxed at a higher slab, even when it has lower alcohol content compared with wine and other spirits. Because of this, some consumers prefer cheap whiskey and rum.

Another challenge relates to the goods and services tax (GST). We still don’t have a one-country-one-tax regime. Every state has a different taxation structure and retail policy. A lot of time and manpower needs to be invested to manage these things.