AND Business Consulting Blog Post - Brewery

Feasibility of new business vertical for a leading microbrewery

An idea is brewing

A successful microbrewery operating in Bangalore and Hyderabad since 2012, our client acknowledged the rise of the bottled craft beer sales in India. Simply put, craft beer is a beer that is not brewed by one of the big “mega-brewery” corporations, and has a distinctive flavour & taste that caters to discerning beer drinkers. The client’s objective was now to enter the market as a means to diversify the brand in the competitive market.

The bottleneck

The manufacture and sale of alcohol in India is heavily regulated with taxes & duties adding up to 70-80% of the final cost of the bottle. Moreover, policies and rates fluctuate wildly between different states making it difficult for businesses to comprehend the same and make an effective entry in the market.

From a comprehensive understanding of the regulatory regime for the manufacture & sale of alcohol, we at AND provided the client reasonable estimate of how much taxes & duties would add to the final cost to consumer. In addition, they wanted to understand the financial implications of the 3 alternatives: (i) Make in India with own manufacturing unit, (ii) Make in India with 3rd party manufacturer, or (iii) Import into India.

A spirited ending

With the given challenges and after understanding the needs and strategy of the client, AND carried out the following activities:

  1. Primary & secondary research to understand the tax and licensing regimes in 4 states in South India (the client’s preferred manufacturing location)
  2. Financial analysis for the 3 alternatives proposed by Client
  3. Discussions with contract manufacturers in the target states, to understand spare capacity available with existing breweries.

With our evaluations, the client was able to (a) understand the regulatory prerequisites of setting up a unit, (b) select a suitable alternative based on its financial and commercial viability and (c) commence discussions with a suitable JV partner among the existing breweries.

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