India's economic boom fuels booze bonanza

It's Friday night at a microbrewery pub in Pune, western India, and Swapnil Dakshindas and his friends don't know which beer to choose.

The barman pours four different brews, fermented in giant steel vats just next door, for them to try.

"It's fresh, has no preservatives and I know what's gone into it," Dakshindas, a 33-year-old professional, told AFP as he decided on a wheat beer. "And you don't get a hangover."

The 1st Brewhouse, which was India's first licenced brew-pub when it opened in 2009, serves Doolally beers and has become a magnet for the young, well-travelled and affluent seeking a different type of night out.

Doolally - British slang for going mad - sells nearly 4,000 litres (7,000 pints) of beer at the pub each month, tapping in to a growing thirst for new tastes and experiences.

In the past 18 months, Doolally has brewed 25 flavours, including beers made from jaggery (cane sugar), millet and even berries - a far cry from the India pale ales popularised during British colonial times.

The start-up turned a modest profit in 2010-11 after an initial outlay of 30 million rupees ($665,000).

"We're like the Barista of beer making," said Doolally co-founder and owner Prateek Chaturvedi, referring to a popular chain of modern Starbucks-style coffee shops that have sprung up across India.

"I'm selling an experience, with a factory visible, open brick walls, conduits, tubes and barrel-shaped stool seats," added Chaturvedi, who quit his job with Proctor and Gamble in Singapore to set up the venture.

At 160 rupees ($3.50), 330 millilitres (just over half an imperial pint) of Doolally on tap costs about the same as the popular Kingfisher lager, with taxes comprising a hefty 42 percent of the price.

Microbreweries are the newest additions to India's expanding alcohol beverage market, whose growth is driven by a younger clientele willing to spend their cash in different ways from their parents.

With more than 60 percent of the country's 1.2 billion people under 30, global retailers, food and beverage giants and big-name bars and restaurants are keen to tap the country's potential.

"Nineteen million new customers enter the legal drinking age every year and 4.3 million of those are entering the (alcohol beverage market)," said Roland Abella, managing director of global drinks major Diageo India.

"We are seeing a rapid growth of upmarket, trendy bars and restaurants across India, primarily being driven by continued economic growth," he added in emailed comments.

"These new outlets influence not only what people drink but also how they drink. They also create an environment where people want to try new things."

What Abella calls "premiumisation" - customers who want to drink better, more expensive brands, often as a result of them trying them abroad - is taking root across the Indian market.

Premium scotch and vodka brands are becoming popular, as are tequilas and other liqueurs, said Sumedh Singh Mandla, whose company Aspri Spirits distributes imported alcohol to leading hotels and restaurants across India.

Mandla said his Mumbai-based company distributes premium vodkas such as Ultimat from Poland, Roberto Cavalli from Italy and US brand Skyy, with people even willing to buy bottles costing more than $200 due to heavy taxation.

Meanwhile, India's UB group, which makes Kingfisher, this month started to brew and bottle Heineken beer in the western state of Maharashtra, marketing it as a lifestyle brand.

In a Mumbai nightclub, Vikram Advani, an executive with a global financial services firm, welcomed India's drink revolution.

"How much of the regular stuff can one drink? One needs change," the 38-year-old said, supping a Corona beer.

"Even people in their 20s are trying premium whiskies like (Johnnie Walker) Black Label scotch."

India matches the world in consumption of spirits with an average of 3.9 litres per person per year, according to the All India Brewers' Association.

On the other hand, beer consumption (1.3 litres per person per year) is well below the global average (22 litres) and accounts for just seven percent of the market, while spirits take 92 percent.

But with the beer market growing at 15 percent annually, according to Religare Securities, analysts believe it could overtake that of spirits in the next two decades.

That's welcome news for Doolally's German-born brew master and co-owner, Oliver Schauf, who is formulating plans to expand operations to the southern city of Bangalore and India's financial and entertainment capital Mumbai.

"State taxes are a huge burden for the industry," said Schauf's business partner Suketu Talekar, particularly in Maharashtra, where alcohol and tobacco products are heavily taxed.

"But, unlike the traditional beer markets where growth is slowing, India is growing," he said, adding that local tastes must always be taken into account.

"All I need to do is tone down the hoppiness in the beer," he said.

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