Japanese brewer Kirin is reportedly making a significant investment in Indian craft brewer Bira.
The Financial Times has reported that Kirin will be investing USD 30m for a “high single-digit percentage stake” in B9 Beverages Pvt. Ltd, the creators of Bira.
Bira’s founder and CEO Ankur Jain had publicly shared his firm was on the hunt for a “strategic investor and a separate financial partner” in August.
At the time Kirin denied it was in negotiations with Mr Jain’s firm, despite rumours.
The investment is part of the Japanese brewer’s global strategy of building out its craft portfolio globally.
Kirin and its subsidiary firms now own a range of well-regarded craft breweries like New Belgium in the USA, Magic Rock in the UK, and Emerson’s in New Zealand.
The investment in Bira potentially gives Kirin’s stable of craft brands a strategic foothold in India, while offering Bira the potential to achieve sustainable export success.
Beyond Kirin’s reasoning, Bira’s need for a fiscal and strategic shot in the arm amidst challenging business and consumer conditions is underlined by the small timeframe since their last fundraising round several months ago in April.
Furthermore, Kirin’s investment will further dilute Mr Jain and family’s stake in his brewery, which currently stands at around 30%.
The need for outside investment is not alien to Mr Jain, however. A computer science graduate who successfully sold a healthcare startup in the United States, he applied his experience from the startup world in building Bira.
Mr Jain’s successful wooing of Sequoia, an American venture capital firm, resulted in the firm reportedly not only owning around 45% of Bira but also leading multiple rounds of fundraising including their Series A.
Irrespective of Bira’s storied investors, however, India’s beer landscape has been devastated by COVID-19. Euromonitor has estimated there was a decline of around 19% in retail sales of beer in 2020.
Beyond the pandemic, India’s beer market is a challenging one for smaller players. Alcohol rules and regulations vary drastically by state: some states, like Gujarat, totally forbid the sale of alcohol, while most have a blend of formal and informal barriers to entry and sale.
The market is also dominated by a handful of large brewers, some of whom were found by the anti-trust authority Competition Committee of India found to have conspired to fix prices, lobby state governments, and engaged in other forms of monopolistic behaviour.
However, there are some bright spots. Maharashtra and Karnataka recently legalised growlers, with the former also raising maximum production levels for craft brewers.
The country is also looking at improving its tax regime, which will be vitally important for brewers like Bira to improve profit margins.
Despite the range of barriers faced by brewers in India today, thirsty drinkers in cities like Mumbai, Bengaluru and beyond are witnessing an explosion in the availability of craft beer.
Scottish brewer Brewdog will soon open their first bar in India, while breweries like White Owl in Mumbai and Biggs in Bengaluru are going from strength-to-strength.
The sentiment in Kirin’s boardroom is echoed in breweries and brewpubs around India: in spite of endless obstacles, the country can become a craft beer powerhouse.