What do exhilarating game nights, frat parties and a blazing hot day at the beach have in common? That's right, beer. Whether it’s “cracking open a cold one with the homies” or the madness of chugging from kegs at parties, beer has been a part and parcel of the culture of innumerable Western countries.
The global beer market is valued at nearly $593,024 million and estimated to grow at a CAGR of 1.8% by the year 2025.
Microbreweries
A microbrewery or craft brewery is a brewery that produces a small amount of beer with laid emphasis on quality, flavor and brewing technique. These breweries are much smaller than large-scale corporate breweries and are independently owned and cater to niche audience.
These microbreweries produce between 5,000 and 50,000 liters of beer, a day. It takes about seven hours to brew each variety of beer using imported ingredients. None of it is bottled and there are no preservatives added in the process. Larger brands can bottle their froth and sell in retail stores but craft breweries or microbreweries can only sell to bars and restaurants.
Market for Breweries in India
Most Indians are not really beer dipsomaniacs, they like their hard liquor more. But for those who are, nothing beats the freshly ‘crafted’ beer served at microbreweries. Sadly, the prevalence of the culture of microbreweries is not much popular in India majorly because of challenges such as stringent state liquor laws, licensing issues, restriction of funds and lack of skilled labor for the highly technical job of brewing.
Today, only 4-5 states have established microbreweries that are essentially resto-bars where one can consume fresh-off-the-tap beer that has been brewed in-house.
Although, Maharashtra’s craft brewery industry has seen a growth of 25% over the past 3 years driven by millennials and their fascination with this new breed of locally handcrafted artisanal brews. Recent graduates from catering colleges have moved into the craft beer industry as brewers or in sales and marketing roles.
Rules, Regulations and Licenses
One Time Permit Fee: The one-time permit fee for starting a microbrewery is Rs. 2.5 lakhs.
Excise Duty: Excise policies deal with any kind of narcotics or intoxicants in alcohol/liquor industry, for which they levy taxes on the production based on fixed set of standards and guidelines. Generally, this is done on per bulk liter for packaged beer in cartons and for microbreweries where there is no packaging involved. These taxes are put over the weekly or monthly production and also depend on the alcohol by volume (ABV), which is fixed for a tax rate and goes up with increase in ABV, but generally ABV in beers in microbreweries is not allowed over 8%.
Brewery License: A microbrewery or a brewpub license is issued by the state excise government which allows the company to start operations in its microbrewery for commercial use. The average price of this license is Rs. 25,000/ year.
Bar License: If the microbrewer aspires to outset a pub in the premise, he needs to apply for a separate bar license, so that it follows the established state regulations of the respected state where he wants to establish the brewery.
Equipment: Importing fabrication equipment from a different state in India involves some excise over the stainless steel used and in case the equipment is imported from China, or some European countries, a custom duty will be levied upon the goods from 10-30% of the total purchase, depending on the nature of equipment, the shipment location and their use. In case of imported raw materials an excise also needs to be paid for them along with the customs duty for the nature of materials that are used in the production of alcohol.
Other licenses required for the setup:
1. Commercial Electricity line
2. Commercial water line- Municipality/ underground bore water
3. Land registration/ Lease sanction
4. Company registration
5. Waste water disposal certificate from pollution control board
6. Fabricated equipment quality certificate from third party inspection (loyds, SGS, etc.)
7. Water quality testing certificate from quality control labs (SGS, etc.)
Quality Control (QC) certificate of finished beer from govt. approved QC labs, on random inspection basis.
It costs roughly Rs 1-2 crore to set up a microbrewery including licenses depending on the capacity.
Challenges
The beer industry took a major hit due to the impact of COVID 19 owing to the complete ban of the sale of alcohol. Strict lockdown restrictions cause many breweries to completely shut down and amounted to a wastage of over a 100 liters of craft beer. Unlike whiskey, wine and other aged alcohols that become finer over the years resting in a barrel, craft beer loses its brightness and flavor in about a month. This resulted in huge losses.
Overall operational costs and wastage costs are generally higher in a brewery owing to the extremely short shelf life of raw materials. This means that if you don’t sell enough fresh beer; it will all be a waste.
Conclusion
Craft beer is varied by flavors, local produce and innovations today. Despite the early monetary challenges, there exists an untapped market for craft beer. The modern-day youth who are largely inspired by western culture are now taking active interest in this niche industry.
A new idea being explored by beer connoisseurs and brewery owners is introduction of online sales. This is still under process awaiting permission from the government.
At the end of the day, it is not just about how much you can drink or chug but something experimental. Hence, there is a great scope for developing a beer-culture in the country.
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