Liquor market: Microbreweries get a fresh fund pour to scale up biz

Microbreweries like Bengaluru-based Toit and RedRhino Craft Brewery, Pune-based Big Little Brew Pub, and Hyderabad-based Ironhill are raising fresh funding to expand and scale up operations amid the growing popularity of craft beers.

   A microbrewery is a small-scale brewery that produces limited quantities of beer, typically upto 10 hecta litres per batch. 

 

These entities are doubling down on growth as they look to strengthen their footprint, either by entering new territories or opening more outlets within India’s beer capital, Bengaluru. 

Ironhill, for instance, is looking to raise ₹30 crore, which includes funds for a commercial brewing plant for kegging (the process of storing and dispensing beer in a pressurised container called a keg). 

“In the initial phase, we plan to brew about 30,000 litres per day,” said Teja Chekuri, founder of Ironhill Brew LLP, adding that plans are underway to raise ₹30 crore by the end of the year. The brand will expand with new outlets in Yeshwanthpur, north Bengaluru — with a seating capacity of around 1,300 — and another in Nagpur, Maharashtra, with 340 seats. 

Toit by pH4 Food & Beverages, a well-known brewery in Bengaluru, may consider a strategic partner over a pure-play fundraise in the future. “We would prefer a strategic partner who could bring in expertise like distribution and market knowledge for the larger play in the beer distribution business,” said Mukesh Tolani, cofounder and director, pH4 Food & Beverages. The firm has invested ₹100 crore in production and expansion since its inception in 2010. 

Toit’s fifth outlet, in Hyderabad — with an investment of ₹10 crore — is planned over the next few quarters. Currently, its Indiranagar location in Bengaluru remains the top contributor in terms of revenue and seating capacity. The brewery also operates outlets in Mumbai and Pune, with manufacturing units in Bengaluru, Pune, and Himachal Pradesh. 

India’s microbrewery sector is set for rapid growth, with the number of units expected to exceed 1,000 by 2030, from around 300 in 2024, according to Optimistic Capital, the country’s first microbrewery-focused fund, which launched last year with a ₹200 crore corpus. Bengaluru alone boasts over 80 microbreweries, many of which report profit margins exceeding 20 per cent, it observed. 

Rising consumer demand for craft beer and immersive dining experiences has lifted consumption, while regulatory changes by states have supported the industry. 

The Karnataka government has eased space requirements from 10,000 square feet to 6,000 square feet. Microbreweries are also allowed to stay open until 1 am in Bengaluru. 

Maharashtra became the first state to permit brewpubs to sell directly to customers in growlers (reusable jugs filled directly from the tap and sealed with a twist cap to preserve freshness) for on-premise consumption.  The state has also permitted growler deliveries and kegging. 

RedRhino, which has raised about ₹43 crore from non-institutional investors, plans to raise an equivalent amount over the next five years. 

“After Bengaluru and Hyderabad, we have expanded into commercial kegging, bringing our craft beers to bars and venues across the technology hub and soon in Hyderabad,” said Ashwin Nawani, head of business, RedRhino Craft Beer Co. 

Nawani added that the brewery’s bottled brews are available at leading retail outlets. The company aims to expand its brewery and taproom experiences across major Indian cities in the coming years. 

Big Little Brew Pub, which has raised more than ₹8.53 crore from various angel investors in Pune and Hyderabad, said it will continue raising funds from angel investors who can add strategic value, said Founder and Chief Executive Officer Vivek Khaire.  

The microbrewery intends to expand into Tier-I, -II, and -III cities (names not confirmed yet) through group-up formats — small, local brewpubs in different cities that support local farmers and communities. 

What’s brewing

  *  Ironhill, Bengaluru: Looks to raise ₹30 cr, which will include funds for a commercial brewing plant for kegging

  *  Toit, Bengaluru: May consider a strategic partner over a pure play fund raise in the future

  *  Red Rhino, Hyderabad: Plans to raise over ₹40 cr in the next five years

  *  Big Little Brewpub, Hyderabad: Will continue raising funds from angel investors who can add strategic value