 "Rahul Singh")
Warm and well-lit, The Beer Cafe is trying to do for the popular beverage what Starbucks did for coffee.
The beer market in India is an estimated 13 per cent (or Rs 13,000 crore) of the Rs 1 lakh-crore liquor market. But beer consumption in bars and restaurants is just 10 per cent. The rest happens in cars or on the street, near liquor stores. Drinking at home is still a taboo.
The Beer Cafe is taking advantage of this to expand at a healthy rate.
It raised two rounds of funding, including $4.5 million (Rs 25 crore) from Mayfield, in May 2013. It was among the three start-ups awarded by The Indus Entrepreneurs, Delhi, recently. The process of raising Series-B funding values the firm 3.5 times higher than the last fund raise. In the 16 months since the last funding, it has expanded from five outlets to 20. Six more are ready and waiting for bar licences, while it plans to open 14 more this year.
Same store sales grew 28 per cent last financial year. Though footfall(s) fell five per cent, it was offset by 20 per cent rise in average realisations per cover.
It's USP: Unlike other bars offering a few beer brands, The Beer Cafe sells nearly 50 brands.
"It's not a dark, dingy bar but a cafe," said Vikram Godse, managing director, Mayfield India. "We have positioned it as a relaxed place, not a happening place," said 44-year-old Rahul Singh, founder and CEO, BTB Marketing Pvt Ltd, which owns The Beer Cafe.
The addressable market for The Beer Cafe is Rs 1,300 crore but is growing fast. Globally, there are many beer chains like Belgian Beer Cafe and World of Beer. In the UK, the large bar chains are - J D Wetherspoon (over 920 outlets), Punch Taverns (4,000 outlets) and Galaxy Pub Estate (1,380 outlets).
The start and split
Industry bigwig Gidwani, along with Singh, opened the first The Beer Cafe outlet at Ambience Mall, Vasant Kunj, Delhi in 2010. Singh is a textile engineer, with experience in sourcing and retail. Gidwani is the former managing director of Carlsberg and Red Bull.
A difference in the scale-up plan led to a split in November 2011. Gidwani retained the store, rebranding it as The Pint Room.
Singh bought the rights of The Beer Cafe brand and opened five outlets in Delhi within a year. "We started making money from the first month. It's a cash-positive business, the money rotates well. You get your money upfront (from customers) and buy on credit (beer, water), pay your staff after a month," said Singh.
The Beer Cafe came back to Ambience Mall in April 2013 but is struggling for footfalls.
Scaling-up
Singh mortgaged his house for a bank loan of Rs 3 crore as seed capital for The Beer Cafe, after the split. Luck favoured his brave enterprise as Himanshu Gupta, the scion of S Chand Publishing, came on board as a seed-stage investor and put in Rs 4 crore. With his business debt-free, Singh raised money from institutional investors.
His big break was in May last year when venture capital firm Mayfield picked up a 35 per cent stake in his firm for $4.5 million (Rs 25 crore).
"The Beer Cafe is going after a large, under-penetrated market. We found Rahul to be a very good entrepreneur," says Godse of Mayfield.
"In 15 months, the business has gone from four outlets to 20. Every one of them will break even within the first quarter."
The Beer Cafe hopes to break even this year at an earnings before interest, taxes, depreciation, and amortisation level.
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Rohan Jetley
The Beer Cafe has done very well, given that the outlets are wholly owned and operated by the company, and not franchisees. The scale-up has been impressive. It's difficult to find a large real estate footprint in Tier-I cities but due to its flexibility of creating a format which can fit in both large and small footprints, the model is easier to develop. |
In beer, consumers are increasingly showing preferences for foreign brands. Beer consumers are sensitive and can at times be unpredictable. Their preferences change very often. Beer cafe sells a variety of beers, from a strong, full-flavoured Chimay, to weiss (wheat-based) beers like Edinger.
It has been able to convert consumers from commodity beers like Golden Eagle to a wide variety of imported beers. The staff is educated and is able to walk you through the range. It focuses on doing one thing and doing it better than most people. So if people going out are looking predominantly for beer, that's where they will go.
Rohan Jetley, chief executive officer and promoter, Bistro Hospitality, which runs the casual dining restaurant and bar chain TGI Fridays
