India’s first PYOB (Pour Your Own Beer), The Beer Cafe boasts of being the only beer cafe chain in India to offer the largest variety of beer. With 7 operational outlets in a year and 10 more to open by the year end, The Beer Cafe is aiming for the number one spot in the alco-beverage category, according to Rahul Singh, Founder & CEO, The Beer Cafe.
How is the beer market in India growing?
In India there are two types of business: one is the ‘On Premise’ business and the other is ‘Off premise’. India traditionally has been an ‘Off premise’ business. People usually buy alcohol and they consume it at their home, but the ‘On premise’ business, which takes place in a café, club or bar, is very low – probably 20-30 percent compared to the rest of the world where it is the other way around.
According to a research, India’s beer market by sales and volume is growing at the rate of 17 percent due to factors like the country’s tropical climate that is best suited for the cooling properties of beer and the social perception of beer as a more healthy alternative to hard liquor.
Though the drinking out culture is not strong right now, I feel that since the space is really empty, it holds a lot of potential. In fact, the ‘On premise’ business is increasing at a phenomenal rate. Gurgaon alone has over 800 restaurants. People like to go out as long as they have a reason. While ‘going out’ largely involves eating out, drinking becomes a part of the experience. However, this scenario is changing and is largely seen in the metros. It is no longer taboo to just go out for a beer, though 10 years ago, it was not the case. According to an online survey the most preferred drink is beer, but if you go by numbers, then 70 percent of alcohol consumed in India is hard liquor, and a lot of consumption happens in rural regions and in tier 2 and 3 cities. But in tier 1 cities and in metros beer consumption is more than 50 percent, and in summer months beer becomes the number one choice.
Increase in consumption can be attributed to the fact that a lot of youngsters and women are now drinking beer?
This is definitely a part of it. For India’s mean age (26-27 year olds), drinking hard liquor is not cool. However, youngsters are not brand conscious as they are just initiating, but consumers in the age group of 35-37 are purists; they would like to try out more varieties and brands. The Beer Cafe fits in for both types because it is not a typical bar. We serve around 50 different brands of beer from 17 countries and want consumers to relish the drink. This is our seventh outlet and we have 10 more coming up shortly. Delhi NCR region itself will see the launch of 5 more outlets by the year end. We are looking to expand with five outlets in Mumbai and three in Pune. We are also looking at cities such as Amritsar, Dehradun, Ludhiana in North.
What is the profile of The Beer Cafe?
We want to position The Beer Cafe as a QSR where families can spend time. People do not come here to get drunk. Just like a coffee outlet, I am trying to make The Beer Cafe a neighbourhood place centered around beer. Unfortunately, we cannot have an open format because of the laws in Delhi, and have to put up a glass façade. So I am definitely not competing with the bars.
Rather than having just one marquee property in Delhi, we want to be in every neighbourhood. We want to create and nourish the Beer culture. The change is happening; consumption has increased as people have begun to enjoy beer. We get a lot of young crowd – office goers and young couples, depending on the location. Our Gurgaon outlet attracts the corporate crowd and expats. The Connaught Place outlet gets a different footfall every hour! In Kirti Nagar, consumers are value seekers, and consumption is mainly during weekends, while at the outlet in Ambience mall, we get footfalls throughout the day.
What are the operational challenges?
There are a lot of Government approvals and licenses needed to open a beer cafe. Being in a mall makes things easier, but we are still seen as a place that sells alcohol (although beer is not considered to be alcohol in a lot of countries), and for the Indian government, there is no difference between a beer drinker and a hard liquor drinker. In Delhi alone, around 12 licenses have to be procured from the Department of Tourism, the nearest police station, the pollution control certificate, MCD trade license, tax license, etc, before you can actually get a liquor license.
A beer cafe cannot have a temple or a school in the vicinity. That is why we prefer to be present in malls because malls come with approved plans. But since malls get the footfalls, we have to deliver the best too, so there is revenue sharing. The good part is that malls don’t see us as a ‘nashe ki dukaan’! In fact, many have positioned us near a food court, which was an unheard of thing earlier.
The second challenge is dealing with staff, most of whom come from QSRs. They have a different mindset, for example, there is no hierarchy at McDonald’s. We are trying to follow the same practice, and have around a 100 people, with very low attrition. We offer incentives to them for target sales on a daily basis.
Do you feel that The Beer Cafe concept will work in the long term?
I knew that there is a market for a format such as ours. People are looking for a cleaner, informal place where they don’t have to worry about dressing right, where they can be themselves, and a place where they can bring their families. With The Beer Cafe concept, I have filled this need. It was a gamble I took, but if in a year you are able to open 7 outlets I think that is a huge achievement as it means that the concept has worked. We source beer from around 17 countries. International brands are keen to be present in the Indian market but the problem is that they do not get the market space.
We have been honoured with four industry awards. We have already got a PE firm to fund us (something that happens only after 4-5 years of an opening). They believe in the concept just like we do. We have plans to increase the number of outlets to around 100, most of which will be in malls and there will be some standalone outlets as well.
How much investment goes into a format like The Beer Cafe?
Besides the real estate, we spend Rs 50 to 70 lakh on equipment alone per cafe. Out of this, around 30 percent is for the beer equipment. Then there’s the energy, staff and other variable overhead costs. We do not shut our chillers or vizi coolers at night because it is important to keep beer in the right temperature constantly.
Any reason why there are no promotional schemes like ‘Happy Hours’ at The Beer Cafe?
We do not believe in the Happy Hours concept because I think consumers are aware of the real rate of products. Usually, places charge more for the drinks and in ‘Happy Hours’ they give them at their actual prices. We do not want to do something like that. Instead of reducing my price I actually give more in the same price. For example, in our ‘The Beer Cafe fixer’, for Rs 399, consumers can have different food items and get a beer free. This offer is valid from Monday-Thursday before 4 pm.