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ALE TALE

India’s most popular beer startup almost ran out of beer

By Suneera Tandon

“Sold-out” is mostly good news for businesses. It means consumers love your product, retailers like stocking it, and you’ve created demand for something new.

But the term doesn’t augur well if you’re the hottest new brand of craft beer in town, selling 50,000 cases a month, and backed by some of the largest funds in the country.

That’s what happened with Bira91, an Indian craft beer when a temporary snag in its supply chain late last year left consumers yearning for a pint of its Belgian brews.

“It was the inaccuracy of our projections which led to the situation,” Ankur Jain, founder of the New Delhi-based B9 Beverages, the maker of Bira, explained. “The demand is much more, that’s why you see a constant out-of-stock situation.”

A deal with a brewery in Haryana to locally brew Bira fell through late last year, leaving Jain dependent on imports for longer than expected. But the company has resolved most supply-side issues and is close to securing another $10 million from existing investor, venture capital firm, Sequoia Capital, among others, Jain added.

By August, a local brewery in Indore in Madhya Pradesh will make Bira available to more tipplers. Another brewery in the southern state of Karnataka will begin production in the summer of 2017.

Bira was launched in early 2015 to “fill the gap in the market for a trendy, unorthodox, fun and smart brand of beer that could be positioned between Indian brands and the expensive imported beers,” 35-year-old Jain told the Mint Newspaper in July 2015. The company is backed by Sequoia and investors such as Snapdeal co-founders Kunal Bahl and Rohit Bansal and Zomato’s Deepinder Goyal.

With its white ale and blonde craft lager versions, Bira became an instant hit among the country’s hip, young pub-goers—tired of old lager beers—who are turning to international brews.

Demand rose, helped by Jain’s move to drop prices and bringing Bira at par with other brews such as Heineken. When launched, a 330-ml pint of Bira cost anywhere between Rs170-220 in different markets. Prices are now down to Rs100 for a bottle of Bira white in markets such as Delhi.

Now, flush with fresh funds and two new breweries, Jain is back with bold projections.

Here are some edited excerpts from his interview with Quartz.

Why is Bira imported from Belgium in the first place?

When we were scoping for breweries in India, we could not find too many that would live up to our quality standards. Not so much from a raw material point of view, but from the capability of equipment and from the consistency of the beer produced. So, for all of those factors, we had to look outside of India. Belgium was a natural place for us to start.

Bira dropped its prices dramatically last year. Was that a planned move? 

So the Rs220 was only there for a month in Bengaluru. And, in Delhi, Rs170 was there only for a quarter at the retail shops. It was always going to be a premium beer and we wanted to establish a Rs100 price point because there is no other beer available at the same price point outside, of say, Heineken.

But that also increased demand, which you were not able to meet immediately?

We were doing 10,000 cases last summer. As of this summer, we’re at 50,000 cases at the end of June. When you import products, the lead time to respond to demand typically is 90-120 days. That dynamic was impacting the response time. When we made our business plan last year we were projecting (that) outlets, on an average, would need four cases a month. But by this summer, some shops were doing as much as 500 cases. That’s 120 times more than our projections.

So how are you resolving the supply issue now?

We entered into an agreement with a bottler in Haryana in July last year, which required some brewery improvements to be made by them. But that didn’t happen and the deal fell through by the last quarter of 2015. We have been importing the beer so far. So now we found an alternative brewer in Indore, signed an agreement early this year, invested in the brewery ($800,000) and upgraded it. The product will be the same. We have another brewery coming up in Mysore that will start production in summer of 2017. Indore will add about 2.2 lakh cases to our capacity.

And how will you fund this expansion?

Now we are close to securing $10 million, where Sequoia is one of the investors. And there are also two new investors.

Where will you use these funds?

The vision is to gain leadership in the premium beer market in India, where we’ve already demonstrated it in the on-premise market, i.e. on the restaurant side. We now need to do it on the retail side. We will expand in retail stores of existing markets as well as new markets such as Jaipur, Nagpur, and Hyderabad by the next quarter.

Our second dream is to be a consumer brand from India to have a truly global footprint. This year we launched at the Tribeca Film Festival in New York, where we sold more beer in two weeks than we sell in New Delhi in a month. We want to be present in the east coast of US, where we sell through a distributor.