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Craft beer in India – here come the glory days

Craft beer in India

here come the glory days

Narayan Manepally (CEO, Geist) on the market potential of craft beer in India

It was a Friday afternoon in the summer of 1993 and it was a gorgeous day in Portland Oregon (the sun seldom shines in the northwest of the US). Work was slow at Intel, so my cube-mate Jeff and I decided to go downtown for lunch. When we finished our meal, we saw this sign as we stepped out called Main Street Homebrew. The owner Kevin who had a degree in microbiology, gave us this really interesting education on the chemistry of beer and beer making. $65 later, we were walking out of the store with plastic buckets, tubes, glass carboys and more.

Jeff and I looked at each other and we knew that we had to go brew. We brewed our first batch of beer that very same day. I did the usual home-brewing stuff of ensuring it ferments, racking the beer into a Cornelius keg etc. and then totally forgot about it. Several weeks later, Jeff tells me that he has invited a bunch of friends over to try our beer (most of our friends at Intel were homebrewers). Convinced that our beer would be terrible, I picked up several craft beers from the local grocery store.

$65 later, we were walking out of the store with plastic buckets, tubes, glass carboys and more.

We poured the first glass of our beer – a California Golden Ale. It was fantastic! Our friends drank more of our beer than the ones we bought from the store, and I swear they were not being nice to us! I was hooked. I knew that day that I had to somehow make craft beer in India. Several years later, I met my childhood friend Paul Chowdhury in Bangalore at an Old Boys reunion. Paul is half German, half Bengali and full-time hippie. He was looking for something “un-corporate” to do, so we got together and started Geist. Today we are joined by another classmate Mohan Alapatt who, after quitting his high flying corporate job, is rapidly becoming “un-corporate” but thankfully not becoming as “un-civilized” as me.

Leveraging the craft beer potential

For all three of us, it is incredibly important to stay as close to craft beer ethos as possible and make our beer in our own independent brewery. Craft brewers are passionate about their craft, use top quality ingredients and are constantly innovating with different ingredients (both traditional and non-traditional) to add uniqueness to the end product. They experiment with fermentation techniques, yeast strains and other processes to produce a plethora of different styles and tastes. Many craft brewers find unique and interesting ways of connecting with their customers and the communities they work in – many also focus on giving back to the community on a regular basis. Often the measure of success for many craft brewers is not just an ever-expanding EBITDA number.

 

According to the Brewers Association, beer is a $100+ billion-dollar business in the US. Approximately $23B of this is the share of craft brewers. While this is still a minority and will probably continue to be a minority for a long time, what is interesting is that last 30 odd years, craft beer has grown on average ~15% YOY, whereas the large brewers are either flat or slightly declining. In 2016, the overall beer market growth in the US was 0%, whereas craft beer grew at 6.2%. It is quite clear that in the US, people love craft beer and their thirst for this kind of beer will only keep growing.

Growth in the early days in the US happened without social media or great access to the Internet. In 2000, there were 1566 craft breweries of various sizes in the US. In 2016, that number is 5301! You have 5300 breweries serving a population of 300M, of which, let’s assume that 100M American’s drink craft beer.

How much Young India and millennials love craft beer (also called micro-brewed beer in India) came as a pleasant revelation. As one of the early entrants into the craft beer space, we saw signs of a similar revolution in India. Customers at our brewpub in Bangalore can’t seem to get enough of the beers that we make. Many read opinions from beer bloggers and social media posts from around the world and frequently connect with us, telling us about what they like, what they don’t like, compare our beers with other craft brewers, tell us about world class beers they had abroad and want us to make them here. Their responses on social media to craft beer seem so much more educated and nuanced than I ever expected to see in the early days here. Several years after opening this brewpub, we still have long queues on weekends of people waiting to get in.

Taking the next step with craft beer on tap

Our customers often told us that they love the beer that we make but hate the fact that they have to endure Bangalore traffic to get to us (microbreweries in Karnataka are not allowed to distribute beer outside their compound walls). So, we decided to bring the beers closer to where are customers are. We setup a “Distribution Craft Brewery” under a new license and now sell Geist craft beer on tap in multiple outlets across Bangalore.

The response reinforces my belief that Young India’s hunger for world class products, their almost constant connectedness to social media and the internet, an innate desire to constantly educate themselves and their constant desire for variety, new tastes and innovation will not only help craft beer grow rapidly in India, it will probably outpace that of the US. We are 1.2+ billion people and our analysis is that the overall craft beer market is ~25M people, residing primarily in 5-6 major metros. In India today, we have around 80-100 craft breweries servicing a customer base of 25M vs. the US, where you have 5300+ servicing a customer base of 100M. With rising disposable incomes, increasing global travel and what seems to be an insatiable appetite for social media, the glory days of craft beer in India are ahead of us.