New norms push foreign brands to pull back India stocks
New Delhi: Sonia Mahajan, an executive at a real estate firm, is not enjoying eating out these days as her favourite Hoegaarden beer has disappeared from most restaurants and pubs. She may have switched to the German brand Erdinger but hopes her preferred beer brand is available soon.
The unavailability for the last six months is related to the information that Food Safety and Standards Authority of India (FSSAI) wants on packaging of products such as beer. FSSAI, which regulates food safety norms in the country, tightened labelling norms on products, pushing several foreign breweries to withdraw stocks from India.
According to the new food labelling norms, companies must list on the label all the ingredients used in the product in the form of imprints and not stickers. As a result of the new guideline, many imported foods items, including beers such as Stella Artois, Corona, Paulaner and Victoria Bitter went missing from the market.
“Hoegaarden is among the favourite imported beers for Indians and the non-availability of some of these brands has put us in spot as the customers feel cheated,” said Rahul Singh, founder and chief executive of The Beer Cafe, a chain of close to 20 bars across cities such as Mumbai, Delhi, Chandigarh, Amritsar and Mohali.
A top executive at RJ Corp., which holds distribution and marketing rights for InBev’s brands, including Budweiser, Hoegaarden and Stella, in India said that Hoegaarden and Stella are still unavailable in the market. However, he declined to comment when sales will be resumed.
The Beer Cafe saw a 15% drop in business in the last three months because of erratic supply of imported beers such as Hoegaarden, Stella and Corona.
“Business has felt the impact of lack of imported liquor brands being available in the market. We have seen customers turn away from our business since we are not giving them what they like,” said Riyaaz Amlani, chief executive and managing director of Impresario Entertainment and Hospitality, which runs a chain of fine-dining restaurants and coffee houses under the brands Smoke House Grill and Mocha.
The sporadic supply of premium imported beer brands is driving distributors and sellers like Kaama Impex, Cerana Beverages, Hema Connoisseur Collections and The Beer Cafe, run by BTB Marketing Pvt. Ltd to tie up with breweries in countries such as the UK, Belgium and Germany to supply beer which tastes closer to brands that went missing.
To keep his customers hooked, Singh has recently introduced a new brand called Witlinger, an ale style beer from UK at his bar chain. Witlinger is being brewed especially for use in India by Anuj Pratap, founder of Kaama Impex, an importer of beer brands such as Sol, Heineken and Magners.
Beer Cafe will be seen offering two more private labels in the country. It is expected to launch a German wheat beer exclusively created for India market by January and a beer from the Czech Republic by March.
Amlani, meanwhile, is in talks with local breweries to substitute the imported style beer. The restaurant chain is installing taps of locally brewed beers in its restaurants in Mumbai.
He added that eventually, supply will drift towards microbreweries to supplement demand for certain brands. He has tied up with Mumbai-based Gateway Brewing Co. to set up tap beer at his Mumbai restaurants. According to industry experts, the imported beer category is growing at about 40% annually. The imported beer market in India is nearly half a million cases of which 40% share of the market is held by Corona and close to 10-20% by Hoegaarden.
Up until six months ago, Hoegaarden enjoyed a larger market share at 20-30%, according to industry estimates. However, the unavailability of the brand has made consumers switch to other premium beers in the market. For instance, sale of German beer Erdinger in India has increased sixfold in the last six months, claims Amit Agarwal, director, Hema Connoisseur Collections Ltd, importer for Erdinger. The overall beer market in India is pegged at $4 billion of the overall $35 billion liquor market. Currently, India’s liquor market is largely dominated by whisky drinkers but with more and more Indians experimenting with speciality and craft beers, companies are seeing a massive opportunity in this category.
Pratap of Kaama Impex, who has already invested Rs.4 crore behind the Witlinger brand, is expected to introduce a few more beers by next year. According to Pratap, educated and affluent Indians want to experiment with their beers. While these companies are trying to solve the problem of availability by developing their own labels, the move will help distributors to work with better margins too. “It is a smart entreprenuerial thing to do.
They will be fully integrated at the backend to meet the demand and they can also maximise their profit margins,” said Vikram Achonta, founder Tulleeho, a provider of beverage education and training services in India. Cerana, an importer and distributor of alcohol beverages, is also introducing its private label under the name of Beera 91, a Belgian beer that will be made available through restaurants and bars such as Beer Cafe, Monkey Bar, TGIF and Pint Room.
“Beer has today become an all day and all year round beverage and consumers are looking for something which is between the imported beer and domestic beer segment,” said Ankur Jain, director, Cerana Beverages Pvt. Ltd. Jain attributes the new launches to a gap in the market for tasty and affordable beer rather than to the shortage due to regulatory hiccups. Mumbai-based Gateway Brewering Co.’s co-founder Navin Mittal explains that there is a gap in the home-grown private labels that have a more international appeal or are more distinct in flavours. In 2014,
Mittal with his two other partners started a brewing company that supplies kegs to large bars and pubs in Mumbai and Pune. The company’s brands of beer range from Doppelgänger, a German style wheat Beer to a British Ale—Indian Pale Ale.
“We realized that there was no good Indian beer available in the market, we were stuck with commercially produced beer,” he said. Mittal, who has been brewing beer at home since 2006, currently supplies kegs to bars such as the Blue Frog and Bonobo in Mumbai. “We will service these markets for the next 2-3 years before we look at other states, as tax structures vary dramatically,” he added. The FSSAI’s stance over labelling norms being followed rigorously by food and beverage importers is unlikely to change. “Rules have to be complied by all companies, it’s as simple as that,” said K. Chandramouli, chairman of FSSAI.
He added that while there was a lot of noise in the market, companies have begun to comply and follow labelling norms as prescribed by the FSSAI. The norms require importers to spell out ingredients on the packaging at the home country, or the country where the product is being imported from. And this has to be done through imprints and not through stickers. Although multiple bodies have been lobbying for further relaxation in the FSSAI labelling norms as beer companies do not wish to take on the additional cost burden for a relatively small market like India, Chandramouli said: “These laws are not made overnight, they are put in public domain and suggestions are sought.”
