Sales at microbreweries face a dry run for the first time

Sales at microbreweries across the country have fallen for the first time ever, as the segment faced dry days during elections, a prolonged monsoon and an overall economic slump that forced consumers to cut down on discretionary spending.

About half a dozen microbrewery owners said 2019 has been the worst year so far, making them cut operational and logistic costs to keep business afloat and compensate for 20-30% loss in the past three months.

“For the first time I have borrowed money from the bank this quarter to meet the shortfall,” said Ajay Nagarajan, co-founder of Bengaluru-based brewpub Windmills Craftworks which witnessed a 12% decline in revenue in the past three months. “We have either lowered price or removed exotic food such as salmon and lamb from the menu. We have trimmed our food cost, HR budget and discretionary staff by 10%.”

The ongoing economic slowdown has forced many companies to reduce their entertainment budgets which in turn has affected footfalls at brewpubs and bars. Traditionally, summer months are considered to be the best period for beer segment, followed by October-December due to weddings and year-end parties. So far, microbreweries have seen a weak last quarter of the calendar year.

“Festival season coupled with dry days during Haryana elections contributed to low business, especially in October. We have reduced marketing spends,” said Lalit Ahlawat, who owns microbreweries including Soi 7, Adda By Striker and Striker Sky Bar in Gurgaon.

About 170 microbreweries mushroomed in the past decade as the country’s high population of millennials showed keen interest in craft beer, a niche segment that still accounts for just 2-3% of the beverage consumption.

“While it started (slowing) with demonetisation and GST implementation, sales growth has been the worst in the last three years due to online predatory pricing by Zomato and Swiggy besides Maharashtra elections. We resorted to multiple discounting and lowering menu price,” said a Pune-based microbrewery owner, who did not wish to be identified.

Competition from big beer firms United Breweries (UB) and Anheuser-Busch InBev, which control nearly three-fourths of the Indian beer market, has intensified too. AB In-Bev has launched two locally-made wheat beer variants while UB has extended its Kingfisher brand in the wheat-based beer segment.

“Consumers are also preferring cheaper commercial beer and imitation craft beer. To cover losses, we have decommissioned delivery trucks and are outsourcing it to reduce transport cost,” said Navin Mittal, co-founder of Gateway Brewing Co, Mumbai’s first microbrewery.

Packaged craft beer brands such as White Owl and Geist are feeling the impact of the economic slowdown as well.

Last quarter, UB saw sales decline in markets including Karnataka, Goa and a few other western states while sales remained flat in Maharashtra. Carlsberg, whose sales were growing in double digits, saw volume growth fall sharply to 5% during the January-June period.

Source:- https://retail.economictimes.indiatimes.com/news/food-entertainment/grocery/sales-at-microbreweries-face-a-dry-run-for-the-first-time/72393094