I recently tuned into Episode 18 of the "WTF is" podcast, featuring a stimulating conversation in the alco-bev space. The insights shared, especially by Abhishek Khaitan from Radico Khaitan & Suraj Shenai from Goa Brewing, were super enlightening & inspiring!
For those short on time, here are some fascinating highlights:
- Abhishek inherited a ₹70 crore turnover, 0 profit & ₹ 50 crore liability business. Over the years, he's transformed it into a ₹4,000+ crore powerhouse with Radico Khaitan.
- India's hard liquor market is US$ 40 billion, compared to a US$ 12 billion beer market, making India the only tropical country so highly over-indexed on hard liquor. For context, Vietnam consumes 300 million cases of beer & 30 million cases of hard liquor.
- Enter Maharashtra last due to exorbitant entry costs.
- Goa Brewing's strategy focuses on being the go-to beer for the home refrigerator rather than pushing on-trade sales & paying to enter bars.
- Prioritize repeat sales over primary sales. It is easy to show growth through continuous recruitment of new consumers & new markets, but outlet wise repeat sales is the real sign of growth & consumer stickiness.
- Alcohol brands are built gradually! One cannot simply pump in money & expect to "buy" a consumer similar to e-commerce brands where there is a call to action.
- Traditional VC funds have a 7-year return window, whereas alco-bev companies typically require 10-12 years to yield returns.
I of course respectfully disagree with Suraj's views on Hard Seltzers/RTDs (ready-to-drink beverages):
- Hard seltzers offer a wider range of refreshing flavors compared to the typically limited options of "on-soda drinks". We've worked really hard on the back-end to create a crisp, refreshing taste enhanced with natural fruit flavors, a stark contrast to the often harsh taste of "on-soda drinks."
- They offer ease of consumption, easy portability & storage, unlike "on-soda drinks" that require mixing. As Shuchir Suri mentioned, people might prefer the convenience of an RTD, similar to enjoying a beer after work, instead of buying a mixer, ice & garnishes!
- They offer consistency, in terms of flavor & alcohol content as compared to "on soda" drinks which can vary in strength & taste depending on how they are mixed
- Our 8% Alc/Vol variant at ₹150 is competitively priced compared to buying a Absolut Vodka (₹1900 in Bangalore) & mixing a 60ml shot of it with soda, giving you a bang for your buck in terms of price & "kick".
- As Abhishek pointed out, RTD's face huge challenges due to refrigeration needs. With more refrigeration, competition & innovation in flavor diversity, RTDs can thrive.
Lastly, he mentioned that the alco-bev industry would greatly benefit from minimal government interference, similar to the software industry, allowing for tremendous growth.
After all, we're in the business of making people happy 😀
- Krupa Shah
Founder of IST
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