Nikhil Kamath podcast: While India loves its alcohol, the industry is a challenging, slow moving one. Even with Rs 10 crore in hand, building an alcohol brand in India is no piece of cake. As Abhishek Khaitan, MD of Radico Khaitan, says, one will need ample patience to make any headway in this industry.
Nikhil Kamath, in his ‘WTF is’ podcast’s latest episode ‘WTF, Alcohol is a $70B Business in India?’ spoke to some industry leaders, including Khaitan, Minakshi Singh, co-founder of SideCar, India’s only entry in World’s Best Bars list, Shuchir Suri, co-founder of Gin Explorer’s Club, and Suraj Shenai, founder of Goa Brewing Co.
The billionaire asked his guests if an individual has Rs 10 crore in hand, then which category of alcohol they should aim to set up a brand for, and the process involved in it.
“If you want to go all-India, you need to have 30-40 units. So if you are talking about a small amount, you can only go into a niche category. There also you have to have patience. To get the first 10,000 consumers is the toughest. That is the biggest journey that I have seen in all my brands. When that 10,000 loyalist consumers are made, they will bring you the next 50,000 consumers, and then millions will follow. It goes slow, and then it just takes off. The minute you push your brand the most important is the payment. The minute you look at your primaries, and not look at your secondaries or tertiaries you are finished,” said Khaitan.
Primary is basically giving the product to a distributor, secondary is when the product goes to the retailer, tertiary is the offtake from the retailer. “Any retailer will take your material, but till the time it does not go off the shelf, you are not making any money,” said Khaitan.
He acknowledged that alcohol is a different category altogether than beer. “If you click with Rs 6 crore, you are a god. But you should have a capital of Rs 50 crore etc,” he said.
Minakshi Singh said that the journey to set up an alcohol brand is an extremely long one. She also said given a choice, she would set up a whiskey brand, considering it is the most profitable and has stood the test of time.
Shenai said that money is the least important part of this whole matrix. “Firstly, what you want to do has to fully resonate with you, like Minakshi. You keep on doing this day in and day out and you keep getting better at it by being at it,” he said.
“One good way to observe what people are buying is to go to a supermarket and see what is flying off the shelf. Go to the bar, see the bar, see what people are ordering. Only then will you get an inspiration that you will know is differentiated from the knowledge of somebody else. For example brewing is such a collaborative effort. You only need Rs 5,000 to use a home-brewing kit. To know the product, there’s just so many learning available online also. Do the homework. It is a slow moving industry. You will have to put in your time to figure out the product,” said Shenai.
Suri highlighted that while an entrepreneur can set up a brand with as little as Rs 30-50 lakh with a co-packer, the problem is the order size. No co-packer would want to take on a small order as it would not work for them but a brand can only start off with a small number, he pointed out.
Talking of gin specifically, Suri said, “People can actually start a brand initially with a co-packer with Rs 30-50 lakh. They have to spend 10 per cent of that in creating the brand, the balance actually goes into listing fees in every state.”
