The New Delhi-based company has also appointed investment bank Morgan Stanley to lead another round of fundraising ahead of the IPO. – Bloomberg
NEW DELHI: An Indian craft brewer backed by Japan’s Kirin Holdings Co. wants to overtake entrenched global brands by building a US$70 million beer factory and raising fresh funds ahead of a public listing in 2026.
B9 Beverages Ltd is building a new brewing facility in the north Indian state of Uttar Pradesh, which, once completed, will become India’s biggest beer factory and expand production, founder and Chief Executive Ankur Jain (pic) said in an interview. The company currently leases six brewing units and sells an equivalent of 8 million cases of bear a year.
The New Delhi-based company has also appointed investment bank Morgan Stanley to lead another round of fundraising ahead of the IPO.
"2023 was a very tough year for us because we underwent a very drastic transformation in our sales operations, supply chain, financial checks and balances,” Jain said. "It was a deliberate decision that caused a slowdown, but we are a much stronger company today.”
The new factory will cost between US$60-70 million and will have a capacity of 50 million cases, the first phase of which is expected to become operation by next summer, Jain added.
B9 overhauled its operations last year as it fights for a greater share of India’s beer market and works to turn profitable as losses have widened. Jain brought in Accenture Inc. and Boston Consulting Group last year to improve financial controls and supply chain management to generate more cash.
India’s beer sector is dominated by mass producers including United Breweries Ltd.’s Kingfisher and labels from Anheuser-Busch InBev NV and Carlsberg A/S. In the decade since its founding Bira 91 has been credited with kick-starting the country’s rush of independent craft beer brands, luring a younger, hipster clientele with styles from a blonde summer lager to a special-edition pomelo India pale ale.
"Bira was the poster boy not just for the beer industry, but for new-age Indian alco-bev brands,” said Vikram Achanta, CEO of beverage consultancy Tulleeho Portals. "They demonstrated how an Indian brand, via a guerrilla campaign, could achieve substantial success.”
The country’s beer market was valued at 415 billion rupees (US$5 billion) as of 2023 and is estimated to grow to 781 billion rupees by 2032, according to market research firm IMARC Group. While the Indian alcohol and beverage market is among the fastest growing in the world, per capita beer consumption is significantly lower compared to the US, UK, Germany and China, Indian consultancy Technopak Advisors said.
B9 closed US$50 million fundraising in June through external loans from lead backers Kirin and Tiger Pacific Capital LP. It’s raised $290 million in equity and debt to date from investors who also include MUFG Bank Ltd. and Peak XV Partners, formerly Sequoia Capital’s India unit, according to Jain.
Jain’s goals are ambitious: He wants to increase Bira 91’s total market share from 8% to the early teens, and see a double-digit earnings before interest, taxes, depreciation and amortisation margin before listing.
But the company is still figuring out how to become a bigger and profitable player. B9 reported a 17 per cent rise in revenues to 8.5 billion rupees in the year ended March 2023, the most recent period for which data is available, down from 64 per cent growth the previous year. Losses deepened to 4.5 billion rupees compared to the previous fiscal year, as it invested in growing its distribution network, restructuring operations and the new factory. Current Ebidta is negative.
Going forward, Jain’s looking beyond megacities toward smaller towns where beer’s popularity is growing.
"It’s not just young consumers,” he said. "Beer is seen as an everyday alcoholic beverage, there is no specific occasion for it and as a result, people are willing to experiment.” – Bloomberg
