We are breaking even by early next year: Jain
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.
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%.
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