Feasibility of bottled craft beer
Find out more about how we helped our client evaluate the feasibility of bottled craft beer in India.
1. An idea is brewing
Our client is a successful microbrewery operating in Bangalore and Hyderabad since 2012. They acknowledged the sharp rise of bottled craft beer sales in India. Simply put, craft beer is a beer that is not brewed by big “mega-brewery” corporations. Moreover, it has a distinctive flavour & taste that caters to discerning beer drinkers. The client’s objective was to enter the market as a means to diversify the brand in a competitive market.
2. The bottleneck
The manufacture and sale of alcohol in India is heavily regulated. Also, taxes & duties add up to 70-80% of the final cost of the bottle. Moreover, policies and rates fluctuate wildly between different states, even neighbouring ones. Hence, this makes it difficult to make an effective entry in the market.
By understanding the regulatory regime for the manufacture & sale of alcohol, we at AND provided the client a reasonable estimate of how much taxes & duties would add to the final cost of the bottle. In addition, we highlighted the financial feasibility of the following 3 alternatives. (i) Make in India with own manufacturing unit, (ii) Make in India with 3rd party manufacturer, or (iii) Import into India.
3. A spirited ending
To summarise, we carried out the following activities to evaluate the feasibility of bottled craft beer market:
- Primary & secondary research to understand the tax regimes in 4 states in South India (the client’s preferred manufacturing location).
- Financial analysis for the 3 alternatives proposed by Client.
- And, discussions with contract manufacturers in the target states to understand spare capacity available.
With our evaluation, the client was able to do the following:
- Understand the regulatory prerequisites of setting up a manufacturing unit
- In addition, select a suitable alternative based on its financial and commercial viability
- And, commence discussions with a suitable JV partner among the existing breweries.
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