We are break­ing even by early next year: Jain

Mint ST - - IN-DEPTH - BY SOUNAK MITRA sounak.m@livemint.com NEW DELHI mint

Ankur Jain, founder of B9 Bev­er­ages Pvt Ltd that sells the pop­u­lar Bira 91 beer, calls his plans au­da­cious. One year af­ter he launched Bira 91 in In­dia, Jain launched it in New York City at a time when the com­pany was strug­gling to meet de­mand in its home mar­ket and was cash-strapped. He now plans to take Bira 91 to five more coun­tries by next sum­mer. In an in­ter­view, Jain spoke his plans and am­bi­tion. Edited ex­cerpts:

De­spite your lim­ited pres­ence (12 cities at present) in In­dia, you are en­ter­ing so many global cities. Isn’t it too early?

The am­bi­tion for us has re­vised to get con­sumers shift to­ward more colours and flavours, glob­ally.

Con­sumers are look­ing for more diver­sions and brands have failed to bring those. We have re­al­ized that there is a space for global craft beer brand, and

each of the new coun­tries once the vol­ume reaches 10,000-20,000 bar­rels per an­num.

“It would make sense to lo­cal­ize pro­duc­tion. If the brand starts res­onat­ing this sum­mer, we should hit the mark by sub­se­quent sum­mer,” he added. So, in two years’ time, Jain is likely to start pro­duc­ing in each of th­ese coun­tries.

In five years, said Jain, Bira should be the leader in each of th­ese mar­kets. What he wants is sim­ple: Bira should be the first beer for the starters—at least the first colour­ful beer for a con­sumer in each of the coun­try the brand would be present in.

Jain might have got a con­fi­dence booster from his suc­cess in New York. But his in­vestors are still scep­ti­cal. “The whole global ex­pan­sion was launched early in the life of the com­pany,” said Pandey of Se­quoia Cap­i­tal.

To ex­e­cute th­ese, Jain will re­quire more funds—this time, a much larger amount. “Over the next few years, we’ll need to raise fresh funds in the range of $150 mil­lion through debt and eq­uity,” he added.

THE AC­CI­DEN­TAL BEERPRENEUR

Brew­ing beer wasn’t the orig­i­nal call­ing of Jain. His first ven­ture as an en­tre­pre­neur was a health­care in­for­ma­tion start-up— Re­liant MD, in New York in 2002 which he sold in 2007. His in­ter­est in health­care grew dur­ing his short stint at the health­care di­vi­sion of Mo­torola in Chicago.

As a child, Jain wanted to be an ar­chi­tect, as he al­ways wanted to fol­low in the foot­steps of his fa­ther, who was part of the Delhi Master Plan as an ar­chi­tect with the Cen­tral Pub­lic Works Depart­ment for about 35 years.

“I al­ways wanted to be an ar­chi­tect and copy my dad. But he dis­cour­aged me. I picked up com­puter sci­ence and went to the same col­lege where my fa­ther stud­ied in the US. While com­puter sci­ence was my ma­jor, I had ar­chi­tec­ture as a mi­nor,” he said.

Jain was picked up by Mo­torola at the Illi­nois In­sti­tute of Tech­nol­ogy, Chicago, in 2002. But soon, he re­al­ized he could not work for oth­ers. The en­tre­pre­neur was born with a health­care start-up.

When the ven­ture was be­ing in­cu­bated in New York, he fre­quented Brook­lyn Brew­ery, run by a for­mer As­so­ci­ated Press cor­re­spon­dent who opened the out­let af­ter he had had enough of cover­ing the West Asian con­flict. Those vis­its made a big im­pres­sion on Jain.

In 2007, he de­cided to re­turn to In­dia, we are very well-po­si­tioned to ac­tu­ally take lead­er­ship po­si­tion. The goal here is can we switch the main­stream con­sumers of beer to drink ours. We’ve been hav­ing made up his mind that his en­tre­pre­neur­ial fu­ture lay in brew­ing beer.

Re­turn­ing to In­dia, Jain joined Re­liance Fresh, then a core start-up within Re­liance In­dus­tries Ltd, as a re­tail di­rec­tor. In between, he went on a three-month road trip across Europe to iden­tify beer brands that could po­ten­tially suit the In­dian palate.

The trip in­cluded count­less pub crawls and vis­its to brew­eries, and even ex­pen­sive restau­rants that served ex­otic beers. He came back sign­ing with half a dozen brew­eries to im­port beer and sell in In­dia.

This time again, Jain’s fa­ther was not in favour of his son sell­ing beer. “My fa­ther did not speak to me prop­erly for al­most five years,” said Jain, adding that prob­a­bly helped him to do his own thing to be­come a dis­rup­tor and not a techie.

In 2008, he started Cer­ana Bev­er­ages to im­port ex­otic beer for sell­ing in In­dia. In May 2014, Jain soft-launched Bira 91. The hard launch fol­lowed in Fe­bru­ary 2015.

Ini­tially, he started sell­ing Bira 91 White (a low-bit­ter­ness wheat beer, as the com­pany web­site de­scribes it) and Bira 91 Blonde (an ex­tra hoppy craft lager), and later in­tro­duced other vari­ants—bira 91 Light, Bira 91 Strong, low calo­rie ver­sions and soon in cans.

Ac­cord­ing to Jain, the aim was to fill the gap in the mar­ket for a trendy, un­ortho­dox, fun and smart brand of beer that could be po­si­tioned between In­dian try­ing to cre­ate the mar­ket for flavour­ful beers.

US has been a great learn­ing for us, and we’ll repli­cate a sim­i­lar strat­egy in the new mar­kets—the UK, Sin­ga­pore, Hong Kong, Thai­land and the United Arab Emi­rates—based on our learn­ing in In­dia and the US.

Why did you choose th­ese mar­kets?

We have eval­u­ated more than 60 mar­kets (cities) be­fore fi­nal­iz­ing th­ese five. It was a tri­an­gu­la­tion of three things that we an­a­lysed— size of the mar­ket, the level of evo­lu­tion that the mar­ket has had in terms of con­sumer pref­er­ence re­gard­ing colours and flavours, and im­por­tance of the mar­ket in the global cul­tural scale.

So, fo­cus is go­ing to be the in­ter­na­tional mar­kets?

No, In­dia ob­vi­ously is the hub for us and will be our largest mar­ket. But at the same time, we want to look at both west and east tar­get­ing the mil­len­ni­als. Over the next 3-4 years, we’ll have to crack th­ese mar­kets and con­sol­i­date, and then brands and the ex­pen­sive im­ported beers. “The fo­cus was on taste and ex­pe­ri­ence in a mar­ket that is dom­i­nated by strong beers,” he said.

TOUGH TASK

Sell­ing al­co­hol has never been easy. Even global brands have strug­gled in the In­dian mar­ket. Beer again is a dif­fer­ent ball game.

In In­dia, around 85% of the beer mar­ket is dom­i­nated by strong beers (more than 8% al­co­hol con­tent) such as King­fisher, Kalyani Black La­bel, Carls­berg Ele­phant, Bud­weiser Mag­num and Miller ACE, grow. The op­por­tu­nity is huge in each of th­ese mar­kets. By the time we hit Rs1,000 crore in sales, about 90% of our rev­enue will be from In­dia, and around 5% from US and the rest from other mar­kets.

So, that’s the larger goal?

I think about a 20-year pic­ture. Over the next 20 years, if we ex­e­cute on our am­bi­tion of chang­ing the world of beer, we’ll be the global leader in the cat­e­gory. We are at the same place where Nike was in 1977. Like they have re­de­fined the world of sneak­ers, we need to re­de­fine the world of beer.

This will re­quire huge in­vest­ments. How much will you need to raise?

Over the next few years, we’re go­ing to de­ploy a large amount. Some of that will come from debt and some from eq­uity. We may need to raise around $150 mil­lion over the next three-four years.

How long it will take Bira to start mak­ing money?

Ev­ery Bira bot­tle makes money. We are break­ing even by early next year.

ac­cord­ing to the All In­dia Brew­ers’ As­so­ci­a­tion (AIBA). King­fisher, owned by United Brew­eries, leads the mar­ket with a 37.2% share in 2016 in terms of to­tal vol­ume, down from 41.5% in 2011, ac­cord­ing to mar­ket re­search firm Euromon­i­tor In­ter­na­tional. Tech­navio, a re­search firm, es­ti­mated In­dia’s beer mar­ket to reach $9.03 bil­lion in 2018 from around $4 bil­lion in 2014.

Then how did Jain man­age to make Bira fly off the shelves so fast?

The an­swer: There was a void in the mar­ket. Con­sumers were chang­ing. Bira came as a breather.

“Bira is In­dia’s first cred­i­ble spe­cial­ity beer brand which has bal­anced global craft beer her­itage with In­dian ori­gin. They have cer­tainly cre­ated the ‘craft’ cat­e­gory for In­dia and now dom­i­nate the pre­mium seg­ment of the mar­ket,” said Rahul Singh, founder and CEO of the Beer Café. “This does dis­rupt the share of voice for the mass-pro­duced be­he­moths and I see them chal­leng­ing Bira’s po­si­tion by in­tro­duc­ing a flurry of brands from their global port­fo­lio. This is a win-win for the In­dian beer con­sumers as it pro­vides a larger va­ri­ety and trade-up op­por­tu­nity for ser­vice busi­ness like ours.”

Craft beer is a rel­a­tively new cat­e­gory in In­dia and the mar­ket for it is grow­ing at around 20% a year, ac­cord­ing to AIBA. There are more than 80 mi­cro­brew­eries op­er­at­ing in In­dia, in­clud­ing White Rhino, Ar­bor Brew­ing Co., Ir­ish Vil­lage, Doolally Brew­ing Co., Effingut Brew­erkz, TJ’S Brew Works, Gate­way Brew­ing Co., the Bark­ing Deer, the White Owl Pvt. Ltd and Brew­bot.

In a re­port ear­lier this year, Euromon­i­tor said, “B9 Bev­er­ages is a craft brewer which has been mak­ing im­mense progress in the coun­try… A grow­ing young pop­u­la­tion, which soon took to the taste of this craft beer, has re­sulted in its strong suc­cess. The fur­ther rise of craft beer is ex­pected to be the main trend in the cat­e­gory over the fore­cast pe­riod. The huge suc­cess of B9 Bev­er­ages’ Bira 91 is ex­pected to fur­ther en­cour­age many global play­ers to in­tro­duce their own craft beers. Ad­di­tion­ally, with this cat­e­gory be­ing largely un­der­de­vel­oped, many new play­ers are also ex­pected to emerge”.

GET­TING THE MAR­KET­ING RIGHT

Ini­tially, Bira did not re­quire much mar­ket­ing. As Jain puts it, all it needed was right place­ments—a strat­egy that he plans to repli­cate in all new mar­kets world­wide. When he started, Jain just made Bira avail­able at pubs and restau­rants. “Peo­ple tasted it, liked it and it had gone vi­ral,” he said.

There was one more thing. The pack­ag­ing con­nected with young con­sumers. The logo of Bira 91 is a re­verse B, cou­pled with a play­ful mon­key, said Jain shows “a spirit of re­bel­lion against the con­ven­tional”.

Bira 91 was “imag­ined in In­dia” and made in Bel­gium with French and Bel­gian malts. Ini­tially, it hired a brew­mas­ter from Bel­gium as a con­sul­tant.

“That time, we had the lux­ury of not telling our story to con­sumers. The vac­uum in In­dian mar­ket was so big. But now, we need to com­mu­ni­cate that. We need to tell the global con­sumers that Bira is a beer—at the point of sales, and dig­i­tally in each mar­ket,” said Jain.

Be­sides, there are cor­po­rate events. At present, cor­po­rate events for Bira are taken care of by Jain’s wife An­keeta, whom he met on dat­ing app Tin­der in Oc­to­ber 2015 (three months be­fore Tin­der of­fi­cially launched in In­dia) and got mar­ried last Christ­mas. Jain logged onto Tin­der while he was about to close Bira’s first in­vest­ment from Se­quoia, look­ing for some­one “lib­eral with a cos­mopoli­tan mind­set”.

IN­SPIRED BY COKE STU­DIO

To tell the story of Bira to its con­sumers, Jain has picked up a few pas­sion points — mil­len­nial iden­tity, spice, food, hip-hop mu­sic and tech­nol­ogy, among oth­ers which will set the tone of its brand com­mu­ni­ca­tions in fu­ture.

In each of the mar­kets, the com­pany will en­gage with lo­cal foods and spices that would go well with Bira, the beer.

B9 Bev­er­ages, which re­cently teamed up with mu­sic stream­ing app Saavn in In­dia, is work­ing on a plan to cre­ate a plat­form for lo­cal artists who are into hip-hop mu­sic—a model close to one adopted by Amer­i­can bev­er­age maker Coca-cola Co. to find folk mu­sic artists in In­dia and Pak­istan through Coke Stu­dio.

“Some­thing like the dig­i­tal ver­sion of Coke Stu­dio. But the dif­fer­ence here is we are for co-cre­ation, and Coke Stu­dio was for re­viv­ing folk mu­sic. The in­tent is to build a plat­form that dis­cov­ers lo­cal mu­sic tal­ent,” said Jain who him­self is pas­sion­ate about hip-hop mu­sic. The Bira founder, who has picked up cook­ing as a hobby lately, be­lieves hip-hop as a genre is very tac­ti­cal for Brand Bira.

At present, the com­pany spends about 30-35% of its rev­enue in mar­ket­ing, which Jain said would even­tu­ally come down to around 25%.

IN­TER­VIEW

THE BIG DREAM

Jain, who hopes to close the cur­rent fis­cal year in March with Rs150 crore in sales, has al­ready set his eyes on a pos­si­ble ini­tial pub­lic of­fer­ing (IPO). “Once we reach the level of Rs1,000 crore rev­enue, it’ll make sense to look at a list­ing,” he said.

By when? Jain was lit­tle hes­i­tant in spec­i­fy­ing the time­line. “May be in five years,” he added.

But the IPO can’t be the fin­ish­ing line for the man who calls his own plans “au­da­cious”.

“I think about a 20-year pic­ture. Over the next 20 years, this busi­ness will be ex­tremely large and will re­quire huge in­vest­ments. In 20 years, if we ex­e­cute on our am­bi­tion of chang­ing the world of beer, we’ll be the global leader in the cat­e­gory. We want to re­de­fine this cat­e­gory,” he added.

The big dream that Jain has been nur­tur­ing for years, how­ever, is much larger. In his own words: “What has been miss­ing from In­dia is global lead­ers. Where’re the Ap­ples, Googles, Nikes of In­dia? Our am­bi­tion is to be that in the world of beer, at least.”

That’s clearly the rea­son why Pandey be­lieves Se­quoia will stay in­vested in Bira for a lit­tle longer than in­tended.

In In­dia, around 85% of the beer mar­ket is dom­i­nated by strong vari­ants (more than 8% al­co­hol con­tent). The mar­ket is es­ti­mated to reach $9.03 bil­lion in 2018 from around $4 bil­lion in 2014

PRADEEP GAUR/MINT

Ankur Jain.

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