IN PROHIBITION PAKISTAN, BREWERY PLANS SOFT DRINK SWITCH
In the red brick building of the 157-year-old Murree Brewery Co in the Pakistani garrison city of Rawalpindi, workers process about 15,000 cans of beer an hour in the technically dry Islamic republic.
Established in 1860 in the heights of the Western Himalayas to cater to demand from British soldiers during the colonial era, the brewery is the largest legal seller of booze in the country. On paper it sells to the less than 5% of the minority non-Muslim population. However, the fact is, though, that many Pakistanis also enjoy an alcoholic tipple in private and manage to bypass the ban on sales to Muslims.
However, Murree is starting to widen its range of soft drinks because of rising demand along with religious and legal pressure imprding its alcohol sales. The brewery has suffered in the past year from closures in southern Sindh province of the mostly hole-in-the-wall off-licence premises that sell its beers and spirits. The company cannot expand globally since alcohol exports are banned. The widespread use of bootleggers selling illegal imports adds to its struggles.
“We are almost stagnant in our sales of liquor. The growth engine, the volume business we are getting is from non-alcoholic beverages,” chief executive officer Isphanyar Bhandara, 44, said in an interview at the brewery, where posters display Murree’s products, including its single malt whiskey, tripled-distilled Russian vodka and Millennium brand beer. “In next three years, we plan to expand our production.”
The hope is that by increasing its soft drink range, Murree will shelter itself from political and religious turmoil that has characterised Pakistan’s 70-year history. Just over half of Murree’s revenues come from alcohol, compared with 90% eight years ago. Bhandara said his aim was to lower that to 10% eventually.
“There is a huge potential,” said Zeeshan Afzal, research head at Karachi-based Insight Securities Murree can’t “focus on alcohol because they find it quite difficult to market or sell it openly”.
Disposable income is estimated to have more than doubled since 2010 in the country of about 200 million people, according to the market research group Euromonitor International, while Pakistan’s economy has also expanded at a pace of about 5% annually since 2013.
Yet there are also doubts about whether Murree’s strategy will work. Pakistan’s soft drink market is “flooded”, said Abdul Azeem, head of research at Karachi-based Spectrum Securities. “There are many other brands and products — it will be difficult.”
Murree is one of the oldest listed companies on the subcontinent, with its shares trading on the Calcutta Stock Exchange as early as 1902. It is now listed in Pakistan, where its share price has risen nine-fold in the past five years as revenues almost doubled, according to data compiled by Bloomberg.
Bhandara’s grandfather, from a Zoroastrian family, acquired the brewery in 1947 after partition from India following British rule. Back then Pakistan was a more liberal society. Many older Pakistanis talk wistfully of a past in which Karachi, the former capital and the country’s biggest city, used to be home to numerous nightclubs, bars and casinos.
Pakistan “was the most heterogeneous Muslim polity in the modern world”, said Burzine Waghmar, a member of the Centre for the Study of Pakistan at the School of Oriental and African Studies in London. By the 1970s “a chauvinist, exclusive nationalism was encouraged which, with the cynical manipulation of religious tokenism, ushered in a climate of intolerance”.
In 1977 alcohol was banned for Muslims by then Prime Minister Zulfikar Ali Bhutto in an attempt to appease right-wing Islamists calling for his removal. The move didn’t work. Bhutto was overthrown in a military coup and eventually executed. The bans remain in place today.
Nevertheless, Murree has managed to do more than just survive. A fan of antique cars, Bhandara, the third generation of his family running the brewer, owns 16 Mercedes Benz classics, the ldest being a 1964 sky-blue two-door convertible parked outside his office. He’s also an ethnic minority lawmaker in Prime Minister Nawaz Sharif’s ruling political party.
However, Murree has recently faced pressure. Profits declined 22% in the nine months through March 31 after sales were temporarily suspended twice in Sindh province by its high court. The Supreme Court eventually overturned the bans.
The brewery also has to compete with smuggled liquor, which many Pakistanis turn to in lieu of being able to buy booze legally.
Bhandara estimates Pakistan imports at least 50 large shipping containers a month of illegal beverages, giving thirsty Pakistanis access to Johnnie Walker Black Label whisky, Smirnoff vodka and Gordon’s gin. About half of the beer available in the market is smuggled while the rest is brewed by Murree.
The brewery also faces security threats despite being located opposite the official residence of Gen Qamar Javed Bajwa, the army chief of staff. A sign on a wall next to the factory warns that any uninvited visitors will be handed over to the security services.
Some of the brewery’s 2,200 staff members don’t even tell their families and friends who their employer is for fear of social exclusion and violent repercussions. With signs of rising intolerance toward minorities, Murree’s future looks uncertain.
Despite the majority of Pakistanis being “quite open-minded”, the country suffers because of the actions of a very vocal, but small extremist element, Bhandara said.
“It’s a very lethal combination, it’s a very dangerous combination.” Bloomberg