Craft beer in India is a fairly new concept with the majority of producers limited to brewpubs and a very few bottled beer brands. Market conditions are also challenging for both brewpubs and distribution/packaging breweries as licensing authorities are not supportive in amending the old laws that came into practice during the colonial era of the 19th and early 20th centuries.
However, change is underway.
About a decade ago brewpubs started mushrooming in the cities of Pune, Gurgaon and Bangalore, with this growth came the big challenge of persuading the licensing authorities of the difference between mass-produced beer brands and small-scale craft breweries.
Most state Excise departments developed their own microbrewery teams to smoothen this process, though this did not happen in all regions of the sub-continent. Some state departments refused to acknowledge the difference between microbrew and mass scale breweries and failed to recognize any difference in their production methods and distribution of craft beer.
As a result of this de-centralized approach every Indian state now has a different set of laws for brewpubs with most states only allowing beer consumption on premises.
States such as Goa and Maharashtra are viewed as progressive states with their new beer regulations. A year ago Maharashtra passed a new growler policy, allowing brewers to set up an on premise growler station for beer takeaways. Following suit, Delhi has recently passed a similar relaxation of their beer distribution laws, allowing growler sales, but with some typically lengthy levels of bureaucracy.
License in Form L-11 for beer manufactured by Microbrewery:
(a) Each micro-brewery will have to appoint a L-1 distributor for any off-premise sale. Micro-Brewery shall be allowed to supply to other bars and restaurants who have L- 15, L-16, L-17, L-19, L-20, L-21, L-28, L-29 & L-38 licenses. The orders can only be placed by the above license holders through a retail vend (L-7V/L-7SP1) who will procure the product from an L1 distributor.
(b) Draught beer shall be allowed to be taken away in bottles or ‘growlers’. However, wherever draught beer is being served as a take away, clear signage and information will be need to put up about its short shelf life and the bottles will have to mention the expiry date clearly.
(c) Draught beer manufactured by Microbrewery shall be allowed to be served at permitted events which have the P-10, P-10E, P-11, P-13 permits. The L-1 distributor and the Micro-Brewery will have the responsibility to reinforce the expiry date and ensure no product outside the expiry date is being sold at the outlets.
(d) Any L-15, L-16, L-17, L-19, L-20, L-21, L-28, L-29 and L-38 license holder found selling draught beer after its expiry date will immediately have his license revoked.
India’s craft brewers face a multi-tier distribution system to get their beer to market
This new policy, while troublesome to navigate, is a godsend for the struggling craft brewing scene which has been hit hard over the last 12 months. Where previously craft breweries were not allowed to sell beer for take-away, craft beer enthusiasts will now be able to buy back and enjoy a pint or two at home. It is also seen as a good move to significantly help reduce drink driving in the capital region. Brewers are confident growler takeaways will be a hit in Delhi.
However, despite the positives, the new sales process prescribed by the Excise department is tedious when it comes to kegging and could potentially ruin the quality of the beer and also lead to the closure of some breweries.
Explained simply, the brewery sells beer to the distributor (L1, with a 12% commission) and then to the retailors at a 20% commission and later the local zonal retailer-(L-7V/L-7SP1) will sell it to a bar or a pub. Most pubs expect to receive their beer at a price that will give them a good margin, or a 1+1 FOC deal from their zonal retailer (driven by practices started by the large scale commercial breweries).
This same system is a challenge to negotiate for packaged brands too, however in their case a local zonal retailer doesn’t exist.
The disadvantage being that craft breweries selling growlers and/or packaged product have a 4 tier system (see illustration above) each taking a margin on the product where large, mass produced lagers only need navigate a 3 tier system.
This system will limit the growth of craft breweries, stifling the profitability of the small enterprises.
Brewers in the capitol have welcomed the progress with a lot of excitement, while hoping the government takes further measures to level the playing field for all breweries to help the industry as a whole to grow.
(Credit to Ashish Ranjan for co-authoring)
