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Cracking India’s Beverage Market with Beer & Kombucha | Ishan Varshnei(Latambarcem Brewers)
11 Plays30 minutes ago
"Craft does not define size... craft is defined by technique, innovation, and quality."
This insight from Ishan Varshnei challenges the common misconception that craft businesses can't scale. His scientific approach to brewing has proven that maintaining artisanal quality while achieving commercial scale is not just possible, but profitable.
Ishan Varshnei is the CEO of Latambarcem Brewers, housing craft beer brand Maka Di and functional beverage brand Borécha. He has built a dual-brand beverage empire generating ₹30 crores annual run rate, with 80 lakhs monthly revenue from kombucha alone and 400% projected growth this year. After bootstrapping with ₹25 crores family funding for 4 years, he raised ₹12.5 crores in Pre-Series A and is targeting ₹500 crores revenue within 5 years. Ishan holds advanced degrees in Nanoengineering from UC San Diego and Materials Science from Columbia University, and previously worked as a Business Analyst at a Blackstone portfolio fund.
Key Insights from the Conversation:
👉Product-First Philosophy: Spending only 10% on marketing vs competitors' 40-50%, focusing on product excellence over promotion
👉Regulatory Navigation: Successfully operating across multiple Indian states with varying alcohol policies and taxation structures
👉Scientific Innovation: Developing patented SCOBY technology for kombucha using metagenomics and 16S rRNA sequencing
👉Sustainable Growth: Building profitable unit economics before scaling with external capital
👉Distribution Mastery: Achieving 30% revenue from quick commerce and 30% from institutional sales within 6 months
👉Family Funding Dynamics: Leveraging family investment for patient capital and long-term vision alignment
#BrewingBusiness #BeverageStartup #FermentationInnovation #IndianEntrepreneurs #StartupJourney #BootstrappedToFunded #QuickCommerce #FounderStory #FounderThesis
Disclaimer: The views expressed are those of the speaker, not necessarily the channel.
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Transcript
From Hobby to Business
00:00:00
Speaker
you know, I used to brew beer just as a passion. had tiny apartment in New York where barely had space to store my clothes. What is kombucha?
00:00:09
Speaker
So kombucha is essentially a fermented tea. I think the the secret to that is not the popularity of the word kombucha as much as it is the product.
00:00:20
Speaker
No matter how much money you raise, you're still going to always run short. So what we believed in, one thing that we can do better than a big brand is make ah an amazing product and make it consistent.
00:00:30
Speaker
What are the states you would not enter because of an unfriendly beer policy? um At this moment, it would be...
00:00:48
Speaker
Mishan, welcome to the Founder Thesis podcast. um You know, the last time I had a guest from the alcohol industry was from a very established business. And the one key takeaway i got from that is this industry is incredibly hard to enter. There are a lot of restrictions, things which D2C brands only take for granted, be it distribution, be it marketing, are all things which you kind of have to figure out and crack in very unique ways.
00:01:21
Speaker
So I'm super curious to learn how you decided to enter this incredibly hard industry and what's been your journey. you know Give a quick introduction and tell us about what led up to you deciding to become an entrepreneur.
00:01:38
Speaker
Absolutely. Firstly, thanks, Sakshay, for having me on your podcast, Founder Thesis. I think I'm really excited to be here and maybe share some insight to your audiences.
00:01:49
Speaker
So just to give you a little
Passion and Inspiration
00:01:50
Speaker
introduction, I'm Ishan Varshney. I'm the CEO and co-founder of Latam Varsan Brewers, which houses two primary brands, Makadhi, which is a craft beer brand, and Borecha, which is our functional non-alcoholic beverage brand.
00:02:02
Speaker
So to get to your question, Akshay, you know, this business, even though, as you said, is like completely plagued with all sorts of red tape and difficulties in terms of licensing and distribution, all sorts of that thing. it it was a purely passion driven project. Right.
00:02:19
Speaker
So my my journey sort of began back when I was in New York. I was working at a fund over there. And what's your native place? Like where where do you belong to it? So I belong to North India. I mean, my family is originally from UP, but I grew up in Gujarat till I was 14 because my dad was living there for his family. His family business was scattered across the country. So he was out of Gujarat. So I grew up there.
00:02:45
Speaker
But then I went off to boarding school to Ooty in Tamil Nadu when I was 14. And then from there directly to San Diego for my undergrad when I turned 18. And then to New York for my master's when I was around 22. And then stayed on to work for like three years or so ah before the the big moment when I decided I'm going to quit quit everything and move back to Goa.
00:03:06
Speaker
Move to Goa, in fact, not back to Goa. to start this business, right? And it was like i told you, was a purely sort of a passion driven move completely like, you know, serendipitous, I would say almost because, you know, I used to brew beer just as a passion in my apartment, my tiny little apartment in New York where barely had space to store my clothes. I used to literally make batches of beer and put my fermentation tanks in there.
00:03:30
Speaker
My roommates always being frustrated because so the smell of the fermentation used to spread throughout that tiny 700 square foot apartment as you know the the brewing was happening and the fermentation was taking
Strategic Foundations
00:03:40
Speaker
place. But honestly, it was like the most fun thing I could take up as a hobby.
00:03:45
Speaker
So, you know, my day to day. What got you into this brewing at home? I believe in the US, it's a fairly, it's like a cottage industry of people brewing at home. right In India, not so much. But like, how did that happen?
00:04:01
Speaker
So again, like, you know, I think it was ah circumstantial, right? Because I spent four years of my life during my undergrad in San Diego. And during those four years is when the entire craft beer revolution was taking place in the U.S., right?
00:04:14
Speaker
Literally to a point where in that one tiny city, there were 200 breweries that popped up overnight. And not the kind of concept or what you would see in Bangalore where people are opening up restaurant restaurant-based microbreweries.
00:04:26
Speaker
It was literally people in their backyards buying equipment, setting up shop and literally making world-class beers and selling it out of their garages, right? And was to a point where like, you know, we would go to someone's backyard, we'd be drinking this amazing beer for extremely low cost.
00:04:41
Speaker
And, why yeah yeah you know, I remember the scenario where this guy is like playing the Beer World Cup live on television at his microbrewery and he's winning gold awards. Like, so across the world, he's winning the best beers and we're sitting in his garage and drinking them, right?
00:04:57
Speaker
So that made me realize that, you know, beer making has really, really evolved over the years and it's no longer about that one perfect commercial beer that that massive brewery is pumping out but it's about it's an art form right people are doing what what they enjoy and taking it to the world and now there is platforms to showcase that artwork to the world right and that really inspired me right and i never thought of it as a profession i just thought of it as a hobby right like why not showcase it People like to showcase it in different ways, whether it's sports or whether it is, you know, painting or or playing an instrument. For me, beer became that, right? But I was like, let's just make something that that follows what I enjoy or what my taste profile makes me want to do.
00:05:40
Speaker
ah So, yeah, that's how it sort of kind of began. And, you know, um and and but I was doing this on a regular basis while I was in New York. And then um I,
Kombucha Journey
00:05:50
Speaker
at that point, really, really started hating my job.
00:05:54
Speaker
in the US and not my job particularly but more so the the the monotony of life in New York right where you just be working for the weekend where you're looking forward for the Friday and Saturday nights and then you're back to your routine on Monday I wanted to be a little bit more creative a job that required a little bit creativity a job that like that made you meet the world, travel the world and all of those things. Right. And that's when I'm like, this is the perfect thing to do.
00:06:20
Speaker
um I think back then, back in 2016, 17, only a few sort of brands that started budding up, up and about, but there wasn't much going on um in the whole beer scene. And I was like, this is the perfect opportunity to really create something that is not brand focused, but more product focused. Right.
00:06:39
Speaker
So what that sort of meant is that you know, we don't first start by creating a brand, but we first start by creating an ecosystem and infrastructure around high quality beer making. Right. So our first investment was in our brewery and in the product. Right. So we spent almost three years to set up up land our plant, our R&D labs,
00:07:02
Speaker
our product development and then we launched to market. So that's you know how the whole idea came about. And we began in 2017 and we launched to market by 2020 when all of that was ready and set up.
00:07:14
Speaker
but i mean This sounds like something which needed a lot of but upfront investment. ah How did you fund it? and and so Because you needed physical infra first, right?
00:07:26
Speaker
Yes, that's correct. So, you know, so that was the the only thing that was, you know, initially a deterrent because it was not like a standard startup where I could just, you know, raise some capital with ah with a partner and then, you know, get going, create a proof of concept and then raise money.
00:07:41
Speaker
This required money upfront. But luckily for me, my family really supported the idea. So they had helped out with the initial investment into the plant and machinery. And that's how we got going. And, you know, we did the investments all through the family.
00:07:56
Speaker
We got the ball rolling. we We launched to market. We were in the market for about three to four years. And then last year is when we raised our first round of capital. and So we were bootstrapped for four years through family funding and, of course, some bank funding as well.
00:08:11
Speaker
And then we went on to the next stage, which was now taking on external capital to really grow the brand once we were able to develop a proof of concept, really create infrastructure of what we said and now we just had to go out to the market and really grow ourselves.
00:08:25
Speaker
How did you choose Goa? for um setting up? So two reasons. Of course, so actually my family had decided to move to Goa while I was in the US. So I already had sort of a base there. my my My mom and dad were already sort of living there.
00:08:41
Speaker
ah But to top that off, that was not the primary reason. The primary reason being the fact that to today, Goa was the most ideal place to set up alcohol manufacturing, right? And couple reasons, right?
00:08:52
Speaker
One, of course, the the ease of licensing. Today they were the most supportive in terms of setting up of a an alcohol facility. So the excise licensing and all the paperwork and all of that stuff was much, much more straightforward and quicker ah to do in Goa as well as cheaper.
00:09:08
Speaker
um And there are a couple other primary reasons. One is the source of water. right Water is a big, big resource that is required in the process of beer making. Today you almost require anywhere from seven to ten times
Industry Challenges
00:09:20
Speaker
the amount of water as the amount of beer you make. So if you make a liter of beer, you require around seven to 10 liters of water just to make that, right?
00:09:27
Speaker
So a high quality water source was very, very important and Goa has some of the best water in the country, right? And with the with the huge monsoons in our stayed every year water supplies are always great and you know abundant as well and finally also access to big cities around you you know Hyderabad, Bombay, Bangalore all being close by cities you know ah transporting alcohol is a huge cost right because today it's bulky today the liquid is bulky the glass bottles are bulky
00:09:57
Speaker
So being close to to sales
Synergies and Growth
00:10:00
Speaker
hubs is very, very important. And then being close to a port, right? We are a very, very export-focused company as well. We already export our products to about seven to eight countries. So having easy access to a port.
00:10:10
Speaker
So all of these factors sort of lined up and, you know, Goa ended up being just the most perfect place to set up a brewery, essentially. Okay, interesting. um Did you give your family like a business plan with the pitch or was it more like, go, son, live your life? Yeah.
00:10:26
Speaker
so So not really like ah what you would call something I would share with investors. Definitely not something like that. um To be honest, my dad got really excited about the idea and proposition as well. So I think his excitement sort of What was the proposition? did you but have some numbers in your mind that, okay, this is what this is how the business case for his work works out? I'm trying to understand that.
00:10:51
Speaker
Are we very honest? Not at all. Like i told you, it was a little serendipitous, right? we We went out with a plan of something much smaller um and and much more sort of contained. However, as we saw the markets... microbrewery?
00:11:04
Speaker
Not a microbrewery. We wanted to do a bottled... beer plant, but of course primarily focused just on the Goa market and like you know slowly sort of grow that out. But you know as the setup came together and as we saw the the intrigue for our brand and as well as the popularity that we were able to
Manufacturing and Expansion
00:11:20
Speaker
build in the Goa market, we saw that why inhibit ourselves, right? and And side by side, as I mentioned, we have another brand, Burecha as well, right?
00:11:28
Speaker
And while brewery was sort of getting set up, we had a lot of free time in my hand right because construction's going on we're waiting for the paperwork to sort of come through um i started making kombucha at home as well and that was nothing to do again with with a business proposition in mind it was primarily because i used drink kombucha every day just because i really liked it and was good for health for my health so i used to drink one bottle a day when i was back in new york and i couldn't find anything in the markets when i looked when i came back to india especially back in like 2018 there was nothing there
00:12:00
Speaker
So I started making my own kombucha and I made my first batch. It came out okay, nothing you know special. And my brother being a chef, he's like, Ishaan, I can make this better for you. like Let me give it a shot. right So he took so he did some research and he made a batch of kombucha for me.
00:12:17
Speaker
And it came out phenomenal to a point like whoever came home, we'd give them a glass and they'd be like, what what is this? right Because at that time, nobody even knew what kombucha is. So we just kind of started, you know, had all this free time in the world. So we just said like, let's bottle a few bottles. You know, we're talking about like maybe like 100 bottles or so we'd make and we'll stock it in a fridge.
00:12:36
Speaker
I'd be like, let's go start selling this to restaurants and see how they respond. And back in that time, nobody had any clue what the product was. Right. So we would literally pack six bottles manually with like, you know, some plastic wrap and we'd like take it and we'd go to a restaurant and be like, oh, do you want to try this out? And they'd be like, no.
00:12:51
Speaker
We're like, OK, how about you keep it You sell it. if If it does well, then you pay us and you order more. And that way we sort of get got going. We sold about like, you know, maybe 10, 15 cases of product in the first month and kept that going until sort of COVID came.
00:13:07
Speaker
And then everything sort of shut down, right? Even our construction sort of went to a halt. Our sales of ORECHA that we had, the few cases kind of stopped. And during that time, we were like, no, we have to sort of continue this. And we can't stop because, you know, people are responding well to this.
00:13:24
Speaker
And we, you know, we've we just quickly made a Google form. We um hired a few drivers who were at our construction site at that point and were stuck and they had nothing, nowhere to go. And we started taking orders through, you know, Instagram ads and, you know,
00:13:37
Speaker
and and through WhatsApp groups and in a matter of a week we got two three hundred orders from all across the country right and we were shock we're like okay what do we do now and we really came together figured everything out in the peak of COVID and with just like one or two people we started making batches and batches of kombucha and started hand delivering it ourselves. We got like special permission from the government to be able to deliver this product to them. They allowed us and me and Anish used to personally go and deliver these packages.
00:14:05
Speaker
And just because of that, we started getting inquiries from across the country, from places like Modern Bazaar, At that point, there was this, you know, e-com delivery company that I started in Bombay. They placed our first 250 case order and we were in shock. we We didn't even know how were going to make this.
00:14:19
Speaker
And this spiraled into such a big sort of business with so much popularity that we're like, okay, now we have two businesses at hand and we need to sort of figure both out. And Borecha just had so much potential that, you know, at that point,
00:14:32
Speaker
were like, we cannot let this go. And the non-alcoholic space was just absolutely growing like crazy. so So, you know, a lot of, like I said, though I keep repeating the word serendipitous things kept happening where it ended up becoming into what it is, which was never sort of part of the plan.
00:14:48
Speaker
um What is kombucha? Let's start with understanding fundamentally the product. So yeah, so I think that's a good question. So kombucha is essentially a fermented tea, right? So what we do is we first make a sugar tea, right? We make up, we we brew a black tea, we add a lot of sugar to it because sugar is the main food for Eastern bacteria. So then what we do is we take something called a scoby, which is a symbiotic culture of bacteria and yeast.
00:15:14
Speaker
And these are probiotic bacteria, right? it The same bacteria that exists in your gut to sort of break down food and it's really healthy for you. So we take this culture of bacteria and yeast and we put it into the sugared kombucha, a sugar tea, which and then these strains of yeast first convert the sugar into alcohol.
00:15:34
Speaker
And then the bacteria breaks down the alcohol and converts into a acidic acid. So what you're left with is this vinegary tea with probiotics in it. right so It's extremely healthy for you. So it's basically like a low sugar tea with a ton of probiotics in it.
00:15:49
Speaker
and right And if you make it with the correct sort of ah cultures of bacteria and yeast, you end up getting a really good tasting beverage. but extremely low in sugar. So it's a great alternative for like, you know, sodas and like juices, which today in the market contain anywhere from 12 to 13% sugar.
00:16:07
Speaker
This product sits at around 2.5% sugar and gives you the same sort of satisfaction as you would in a um in in in that sugary beverage, essentially. Okay, interesting.
00:16:17
Speaker
um So I believe kombucha is also like sparkling, right? That happens naturally because of the breakdown of alcohol. Correct. Yes. so So what happens is, yeah, when the when the sugar is getting converted into alcohol, the second byproduct that comes out is CO2, essentially. So it should naturally creates that effervescence and carbonation in the product.
00:16:37
Speaker
Similar to what happens in beer as well, essentially. Just that in beer, you don't have the bacteria in there to break down the alcohol into that. It's just the first part of the step, essentially.
00:16:48
Speaker
okay Okay, got it. So you launched Kombucha first and you ah i mean and then you're also running a beer company. It seems a lot ah to be in two very different spaces. See, one one space, the Kombucha space is more FMCG where you would be competing against the Coke.
00:17:11
Speaker
ah And the other space is a completely different beast of its own. Correct.
00:17:19
Speaker
like Do you have any regrets on doing both together or is there some synergies between them which I don't see? so si know a lot of people say that. right like A lot of people believe that our hands are completely full with doing so many different things. But you know what we have been able to do is, because now we've been doing this for five years, plus what we've realized is that there are synergies in certain areas and there aren't in certain right The synergies lie in the side of manufacturing and operations. right These are the two primary areas that we have tremendous synergies right because we operate out of one plant with two different buildings.
00:17:54
Speaker
One is for alcohol, one non-alcoholic. So today I have the same team operating both. So today I have huge synergies in that. Second, I have one operations team that takes care of all my dispatches, my entire supply chain and logistics and warehousing. right So today these and it's even marketing. right Today i have the same team.
00:18:11
Speaker
sitting together and marketing for both my brands. So we've basically been able to create an in-house agencies catering to just two brands, right? So these are the three areas where we found tremendous synergies. And now the areas where the synergies don't exist is just sales, right? Because you have two different channels.
00:18:27
Speaker
So we've built it as two different departments. we have a sales department for alcohol, we have a sales department for non-alcoholic. right so if you're able to identify your synergies and your areas there are complete differences you just add another department and you treat them as an extra cost but you're also getting that extra revenue so we've been able to quick create a company essentially with one extra department which is two sales departments essentially and we are operating um like any other company so we don't really feel that burden anymore because today ah it's as if I just have a few extra team members starting one more department essentially
00:19:01
Speaker
so I think identification is important of what the requirements are. Hmm. See, uh, Typically, it's sales which determines diversification. So if, ah like, say, ITC was selling cigarettes, so it was present in every paanwala. So it made sense for ITC to also sell candies because paanwalas also give you candy in return instead of change or to sell chips because people often buy snacks or to sell biscuits. go Again, you buy all of that from the same paanwala. So it made sense for ITC to expand into those areas.
00:19:35
Speaker
Yeah. Because, you know, the synergy of manufacturing is an illusion, right? If instead of manufacturing 100 cases of two products, you're manufacturing 200 cases of one product, it's the same thing.
00:19:48
Speaker
Like, that's not really a synergy as such. It's just how you define it. Right. And like kombucha in itself is a massive opportunity, right?
00:20:03
Speaker
ah Because as you said, lower sugar option for fizzy beverages, tastes are changing. And so have you seen that opportunity in kombucha?
00:20:16
Speaker
like Or do you feel that it is not big enough to bet the company on? ah Do you think there is and like a bet the company opportunity in kombucha space? So, you know, I'll be honest with you, when we started out Kombucha, I did not think of it to be a massive play at that point because awareness was almost zero, right? When we started out um to a point where where even some of the most sort of exposed parts of the country did not have a awareness for this product.
00:20:42
Speaker
um So initially it was very low. And I'll be honest with you, the projection, I had made a five year projection ah for a Kombucha business back in 2019. And what I projected as my revenue for year five, which 2025, for the entire year, I did it in one month.
00:21:02
Speaker
Oh, wow. Right. and so So that just makes me say that i basically completely did not expect what kombucha can go to. And I think the the secret to that is not the popularity of the word kombucha as much as it is the product.
00:21:22
Speaker
Right. So what our takeaway was and what we did different. Right. know, we studied a lot of the kombucha brands that were playing in the space at that point. and what was causing them to not be able to make a mark.
00:21:33
Speaker
And that was the fact that they identified kombucha as a health product, right? They positioned it like a health product. They marketed it like a health product. What that meant is that today now you're only catering to the audience that is looking for a healthy beverage.
00:21:47
Speaker
Right. Something that will help you soothe your gut, something that will help you fix your gut issues. And that is not the angle we took. So just look at our camera. Right. If you look at it, it looks like any other beverage. Right. It does not look like something that's going to help my gut.
00:22:00
Speaker
And that was our focus. Let's take kombucha. Let's make it into a beverage that firstly helps you quench your thirst. Secondly, craves your satisfaction of drinking something fizzy and sugary. Right.
00:22:11
Speaker
That is the primary focus. Anybody drinks a beverage. Right. So we're like, let's do that. Kombucha is secondary. The health aspect is secondary. Let's just make a damn good tasting product and put that in the market. And that is what is what helped us break that barrier that was there in the word kombucha.
00:22:27
Speaker
Right. And I think if we keep continuing in that manner, then kombucha comes in the forefront. Then people start associating kombucha not with a health but beverage to solve a purpose, but something that's just damn delicious. And it can also serve a purpose, right?
00:22:42
Speaker
A secondary purpose beside hydration and thirst. So I think if you keep taking that angle, then the opportunity is massive. you know, we're talking billions, not millions. multi-milliaries, right? And then you're talking of like Coke, Pepsi kind of scale, right?
00:22:54
Speaker
Exactly, exactly, right? So I think it's all about consumer perception and mindset. If you're able to play with that, then kombucha can really, really come in the forefront. And I think that's the angle we are playing on. And, you know, it's helping us a lot, right? Like today, we were the first kombucha brand to sort of be served on an airline in economy class anywhere in the world.
00:23:12
Speaker
Right? Today Qantas was the first airline that but bought upon a kombucha in business class. ah We were the only kombucha brand in the world that got introduced in economy and that to in a budget airline to be served and that to in the India market. Who would have who have thought, right?
00:23:29
Speaker
so So I think that is the angle that we need to continue on and I think it can become a household brand and product also, so to say, if we continue in this this direction. Okay. ah How much revenue did you do last year for kombucha?
00:23:44
Speaker
um So our run rate currently sits at about 30 crores. So we do ah an average revenue of about two and a half to three crores a month of which about 30% of our revenue comes from kombucha.
00:24:00
Speaker
About 20% comes from our other non-alcoholic beverages and 50% comes from our alcohol division. Okay. So So two and a half, 30%. So roughly like 80 lakhs, something like that in that range from kombucha. Okay. ah So the kombucha market... Sorry, sorry, go on.
00:24:19
Speaker
No, no, no, you finish. Yeah. And so this year already with the new deals that we have signed, we are looking at almost a 400% growth this financial year in our revenue, right? Because today, you know, we have now started really, really going and tying up with...
00:24:33
Speaker
big, big ah institutions like you know hotel chains to be served in in in-house menus. And now we're tied up with three airlines. We just recently signed a deal with the fourth international airline as well, which I can't disclose yet because the contracts are still under process.
00:24:49
Speaker
so So, you know, these are the big tie ups where we are really, really expecting to go big with with our kombucha presence, primarily, essentially. Okay. Now, how much, what's the distribution split in kombucha? Like, ah do you sell through quick commerce? Do you sell ah through general trade offline? ah Do you sell through modern trade?
00:25:07
Speaker
And of course, institutional like the airline and hotel and restaurant segment, what's the split? Yeah. So our biggest, of course, channel is now become now has now become quick commerce. And that's happened in the last six months, right?
00:25:20
Speaker
um And then our second largest channel is institutional, which is the airlines, the hotels, cruises. What is the percentage for quick commerce and institutional? If I look at the entire Borecha universe, if say Borecha is 100, about 30 comes from quick commerce, another 30 comes from institutions, 20 comes from GTMT, and 10 comes from other sources essentially.
00:25:46
Speaker
Okay, Burecha is only kombucha. You said you also have other non-alcoholic drinks. They're also under the Burecha brand name? Yes, under Burecha, we have basically we have kombuchas, iced teas and functional sodas.
00:25:57
Speaker
So iced teas are, and so we have basically a range of three iced teas, three different flavors, sparkling iced teas. Then we have kombuchas which contain our zero sugar kombuchas as well as our low sugar probiotic kombuchas.
00:26:09
Speaker
And we just recently added a functional soda range, which is, uh, we've sub-branded it as Banta. Um, and that's a very interesting sort of take that we have done where the whole idea behind this subcategory is to create vintage and nostalgic Indian sodas, right? like so we've taken our first two flavors that we've launched in masala cola and soda shikanji right and and um what we've done is we made them zero sugar um and we made them probiotic right so each each can contains about two million uh two billion cf use of probiotics and it's completely zero sugar but now taking a nostalgic indian beverage and giving it that modern clean look with the health benefits and the requirements of a modern day consumer so that's a very new category which we have just introduced in the market in the last six months
00:26:56
Speaker
What do you mean by functional soda? Like what what does that word imply? So essentially, basically, functional just implies that adding some sort of value to your life, right? Like today, it has it solves a purpose, right? Today, when I drink a ah regular soda, it's adding no value but thirst and hydration, right? So functional has the probiotic, that's why you call it functional. The probiotic, the touch to it, the the zero sugar attribute to it, right? So today is serving a purpose, essentially.
00:27:24
Speaker
Got Okay. Understood. and Understood. Interesting. Okay. ah And so, okay, quick commerce, you said 30% and 30% through hotels and airlines and the remaining ah would be, I guess, what, modern trade?
00:27:39
Speaker
Modern trade and GT 20% and then 10% through other sources, essentially, which would be um e-commerce and other undefined sort of categories of sale. And now vending machines are a really fast growing category for us as well.
00:27:54
Speaker
Okay, interesting. ah who What's the price point and who who are the compet competitors at that price point for the kombucha beverages? the Just kombucha do you want me to define the price points of our entire non-alcoholic range?
00:28:08
Speaker
ah Yeah, like burecha as a whole, like what are the price points and whom do you compete against in those price points? So actually we have a very wide distribution of pricing right now because we're also catering to the mass market, right? Because now we're starting on the railways and like, you know, a lot of massy channels. So our price points start as low as 35 rupees and it goes all the way up to 160 rupees, right?
00:28:29
Speaker
So our 35 to 69 rupee range is where our sort of mass products lie. And then 99 and 160 is where our more premium sort of product categories lie essentially. um if you What is mass and what is premium?
00:28:43
Speaker
So our functional sodas fall in the, in the mass market category, right? So that pricing ranges from 35 to right? That's the sweet spot. So we have a flexible packaging model also for our functional sodas, which is in the 35 rupee price point.
00:28:58
Speaker
And then have the small cans at 49 and the bigger cans at 89, right? And then our iced teas and our zero sugar kombuchas lie at 99 and our probiotic kombuchas are the most expensive in the category at 160 rupees.
00:29:10
Speaker
Okay. And whom are you competing against now? Like say at the 35 rupee categories, of course, like more mainstream sodas. Mainstream, yeah. Coke's, Pepsi's, but Paperboard, your bigger sort of brands sort of lie in that category.
00:29:25
Speaker
Now, when I look at the 99 rupee category, I'm... basically ah competing against all the other sort of class craft sodas and craft iced teas and kind craft brands that are there. id Like Jimmy's and... Yeah, correct. The the thing with them is that they're more of a mixer brand, right? So we are more of a...
00:29:45
Speaker
even though our products can be used as a mixer, we don't market them as a mixer product, right? We target we market them as a standalone, whereas their marketing is more as a mixer. So I don't see them as an exact sort of competition because... Who's the closer competition then? Like who's also...
00:30:04
Speaker
So it's it's very regional, right? It's very regional because today what's happened is that I've noticed that our competition in the 99 rupees and 160 rupees space is not consistent across the country, right? Because a lot of the kombucha players are very focused regionally, right? So today if I look at the Bangalore market, have different people competing against me.
00:30:23
Speaker
um Delhi is different. Calcutta is different. And today, even when I study our QuickCom data, I can notice that our competing brands vary significantly based on regions because they all have created that sort of regional cloud and sort of focused on their regions, right? So my my mass products are more consistent Pan-India, whereas these are more regionally focused essentially.
00:30:47
Speaker
so And your premium products are Pan-India or do you also have a like more strength in one region over another? No, definitely Pan India. We've always gone for ah a more Pan India approach than a sort of regional holding as a company because that is our ultimate goal, right? We don't want to just be a region-specific brand. We want to be a Pan India brand.
00:31:09
Speaker
And I know that it requires a lot of time and effort, and that's what we're going towards, right? So we have distribution, gt distribution already in about 17 to 18 cities across the country, you know, stretching from Andaman to Kerala,
00:31:22
Speaker
to Assam, Jammu Kashmir, of course your metros are all covered, Calcutta, Delhi, Bombay, Hyderabad. So we have we always wanted to go Pan India and Big, so we didn't want to just focus in one region. Of course we have a good presence in Goa market, but otherwise we're spread across throughout.
00:31:40
Speaker
And of course our institutions automatically place us everywhere, right? Today, whether it's airline or whether it's your vending machine companies, they always spread us across the whole country wherever they go essentially.
00:31:53
Speaker
Why would your competitors be reasonable on quick commerce? I mean, quick commerce is like the you can decide to sell throughout the country once you get entry into quick commerce company, right? It's just about handling the logistics or is there also something about brand presence, brand awareness,
00:32:13
Speaker
Yeah, so they don't always onboard you for the whole country, right? So today they start you off regionally and based on how well you perform regionally, they sort of grow you to a pan India level, right?
00:32:24
Speaker
So it really, really depends, right? So today, for example, even for us, we're pan-India available on Zepto and Swiggy Instamart and Flipkart Minutes, but currently on Blinkit, we're only in South India. So now we're just adding on North India markets with Blinkit at the moment as we speak. So so so so because now, you know, Quick Commerce suddenly has such a boom that every company is sort of trying to enter it and their dark stores are very small. So today,
00:32:49
Speaker
uh entry has become a big big challenge what it didn't used to be back in the day right so uh so and they're very quick to delist you as well so today if you don't do well somewhere you're instantly out so you have to be very you have to be on your toes to be listed in every part of the country with them as well what are some best practices of scaling up quick commerce yeah you know How do you get entry into quick commerce companies? How do you ensure that you don't get delisted? How do you ensure that you cover more regions with them?
00:33:22
Speaker
Do you have any ah insights that you can share? Absolutely. I mean, firstly, if you start out with the listing part, I think it's persistence, right? I think that every team member in quick commerce companies are overworked because they're growing at a space which I think even they can't handle.
00:33:37
Speaker
so So, you know, just getting their attention is one of the most challenging things. um It took us about a year and a half of persistence to get into each of the channels, right? from From the day we started approaching them to the day we got listed, it's on the dot a year and a half of all the three channels, right?
00:33:54
Speaker
so so What is their checklist? Things that they would check off before getting you on? um I think primary is they do a study on your brand awareness and the potential to sell and the uniqueness of the product offering and the popularity and growth of that category in particular.
00:34:12
Speaker
These are the main factors they look at. I think category is first. Once they approve the category, then they look at the brand in itself and how much of a reach that brand has regionally and then they start you off with those regions. So I think those are the main things. But I think more than that is getting their attention first.
00:34:29
Speaker
Right. I think once you get that, then the rest becomes much easier. ah But it is an up uphill battle to sort of first get on board it. Right.
00:34:39
Speaker
um And then once you get on board then the next big challenge starts, which is the supply chain, right? Because today they have thousands of deliveries coming to them on a daily basis.
00:34:51
Speaker
You have to be able to, and the POs last for exactly one week or maximum 10 days, right? And you have to deliver to around 30, 30 to 40 years. What does that mean, POs last for one week? So the purchase orders are valid for about a week to 10 days, right? So the day you get your purchase order issued and you get purchase order from across the country, right?
00:35:08
Speaker
So you're talking about like 15 to 20 delivery locations across the country. And now you need to deliver all your product to all of those locations within that timeframe. Otherwise the POs expire, which means now you have to now which means i have to get that product back, which is a huge cost.
00:35:23
Speaker
Right. So, so figuring out your supply chain is of key, key, key importance, right? Today, in the early days, we burnt a lot of money trying to figure that out. We lost out a lot of closed POs, not getting appointment dates, and we burnt a lot of capital in that. And now finally, we have a supply chain in a place to a point where today we don't miss a single PO at all.
00:35:45
Speaker
Right. So that's another battle that you have to figure out. And then last comes... You deliver to a central hub in a city or to every dark store in the city? So depends on the cities. ah no No, we don't deliver to every every dark store, but we they have hubs in each city. But the bigger cities, they have multiple hubs, right? I think Bombay, Bangalore, Hyderabad usually has has two to three hubs.
00:36:06
Speaker
The smaller cities usually have one delivery points. And because they have over a thousand dark stores, right So today we are delivering to maybe 20, 30 locations and then they sub-distribute from there essentially, which is then their headache after we get get it to their DCs. And and how did you crack logistics? Was it through a partnership with a logistics business? or ah Lots of trial and error. right Lots and lots of trial and error. And we are still sort of improving on that.
00:36:31
Speaker
So we, have of course, partnered with delivery partners. We have about three to four delivery partners who regionally supply products for us. Now we are onboarding super stockists for ourselves as well, who will be stocking goods for us and up so sub-distributing it.
00:36:45
Speaker
So as the cities grow larger and larger, we are importing stockists and then they hold our product and then they bill and then they forward the product to them. So we're enhancing it day by day, right? Up until now, we were doing all the deliveries ourselves.
00:36:56
Speaker
Now the big cities we have given off to stockists, then eventually the smaller cities also we will hand over to stockists and then they take over the logistics aspect of it. Okay, so a stockist is... Like an infrastructure provider on commission.
00:37:10
Speaker
Like he will stop in his warehouse and he will provide the last mile logistics to the hub. Exactly. In exchange, you will give him a commission on the value of being sold through him.
00:37:22
Speaker
okay Correct. and the And the main advantage for that is that today, see today, if I... say get a purchase order from the Delhi hub today right it's gonna take me five days to get the product there so and they have a formula in which the product gets delivered right which is they have say maybe three days stock left so let's issue a purchase order but today if my products getting to them in six days I'm out of product for three days right So today a stockist can deliver it within 24 hours.
00:37:47
Speaker
So that margin that you give up to the stockist is almost worth it because today you are never getting running out of stock. So these are small, small things I think you have to fine tune over time because even getting a set of stockists across the country takes a lot of time and getting the terms right, making sure they are doing the work correctly. So it's a lot of, ah I think um it's it's it's a big picture. you have to paint over a period of time until it comes to perfection essentially, right?
00:38:13
Speaker
And that's still not the entire battle, right? Then comes discovery on the platform, right? Today, advertising on the platform, giving promotional offers because everybody is advertising, everybody is giving offers.
00:38:25
Speaker
So how do you plan that out without burning too much capital, but at the same time, enough to get ah get yourself out there on the platform, essentially, right? So it's a lot of different steps, I think, which you need to perfect to really, really pay the game. What is the average...
00:38:42
Speaker
cost per sale on quick commerce? So and in terms of the advertising cost, like if you are selling 100 rupees worth of product, how much ad spend would you have done to deliver that 100 rupees worth of products, to sell that 100 rupees worth? on average brands are selling i' mean doing almost 40 to 50 percent of their gmv gross merchandise value on ads but we are spending under 10 percent so we we we try to average anywhere from seven to to nine percent or ten percent on our marketing on quickcom platforms um which has been a really really good thing for us because we've been able to keep uh a profitable uh
00:39:23
Speaker
picture of for ourselves in this site just because we are building our brand to other means, right? Which is driving people to us, right? We have we've created a lot of unique propositions for our product. So we we set ourselves apart in terms of product differentiation that allows us to really, really get organic purchases.
00:39:41
Speaker
So we are able to control it within 10%. But I think if I was to cross that, that's when you start losing profitability in this channel, essentially. But it is getting harder and harder as more and more brands keep entering the space essentially as well.
00:39:56
Speaker
This 40 to 50% cost of advertising include discounts also, so like discounts plus advertising combined? Correct. Yes. Yes. Okay. Okay. And do you also do discounting? No. So we never did. we have started started it out recently, um but not on like a continuous basis. We do it based on seasonality um to acquire new customers. We will run promotions for new customers.
00:40:22
Speaker
And we do have discounts that are like right now a summer months. So we're definitely having discounts running right now. But we don't keep it on an ongoing basis. It really depends on the time of the year and what occasion it is. And then we we do it run promotions on these platforms as well.
00:40:37
Speaker
Okay, interesting. And then the question of expanding beyond one region, so that's just about consistent sales and consistent supplying capability. Correct, yeah. i think I think, you know, the two things you really, really need to have under the control if you're looking to expand Pan-India is, of course, your manufacturing capabilities because once you're in and you can't supply, that's ah that's a big blow, right? Today, you're to lose that business going lose your name in the market as well, right? So,
00:41:02
Speaker
for us as we expand our first step is to invest into CapEx into making sure we can manufacture that product right because we have always like I told you right our entire principle was to be manufacturing first right that's what helps us differentiate ourselves right today there are so many brands in the market who are not just in the beverage space like you know you can look at any food and product space who are just contract manufacturing out of facilities.
00:41:25
Speaker
And today what happens is that, you know, the product category becomes popular, or the same manufacturer will bra start making the same product for 10 other brands, completely losing identity of the product in itself. So for us, the the main thing is to make sure that if you're planning to go to 30,000 cases next year, I should have capabilities of 50.
00:41:43
Speaker
Why? Because I'm not giving out of manufacturing to anybody else. That is what my my true value is in the company, is my product. And today I know that if somebody wants to ah copy my product, it's a two-year it's a two- year turnaround for them.
00:41:56
Speaker
By then I'll have five new things in the market that's already setting me apart again. so So I think getting your manufacturing ah on track, your supply chain on track, knowing that you have the capabilities of getting the product there without it getting damaged and consistency. right Today, if my product tastes ah certain way in goa in 2020 it should taste the same in 2028 in delhi or in the us it should not differ right that is i think one of the key takeaways which i think is very important to sort of build a brand is the trust in the customer that when i open this can i know exactly what to expect which is what your major brands have done today why does somebody um open buy a ah particular brand because they know what they're going to get the experience is predefined
00:42:41
Speaker
right And that is what creates loyalty. and So I think that is the the key aspect that we need to maintain and make sure never no changes ever. You know so so i think you plan to ramp up capacity within Goa only or do you also want to go closer to markets like say have one plant in North India to cater to North Indian markets and you know like that?
00:43:05
Speaker
So eventually, yes, we will have to. um I think for the next one to two years, we have enough capacity within Goa itself to sort of scale. um Post that is when we are going to be looking at sort of you know setting up facilities in other parts of the country as well.
00:43:19
Speaker
ah Possibly one in North India is going to be the next move if we were to do so, because um i mean, at theday beverage transportation is very, very expensive. um Right now we absorb that cost and make it part of our offering by averaging out our delivery cost in India.
00:43:35
Speaker
But I think beyond a certain volume which I anticipate in two years, we will look at building a facility in North as well. Okay, okay. And do you want to go more mass or do you want to be like a premium beverage?
00:43:48
Speaker
Specifically about Goreycha. So Borecha has always been with the outlook of being more commercial and massy as opposed to your niche focused sort of brand. We've always wanted to take products that always were in a niche and make it accessible to the mass masses, right? So when we started out, of course, our price points were higher, but now we plan to sort of either lower the price points or keep it consistent with inflation in place.
00:44:15
Speaker
and make it more and more accessible as the day goes by right so today when we launched we only had 160 rupee products now we're having products with the same usps even come down to 35 rupees right why is that because we want to be that accessible functional beverage brand right how do we bring the same benefits that today people spending hundreds of rupees on ah on a niche beverage how do we bring that to the masses that has always been porecha's ideology right and make it accessible and and um what's the word i'm looking for that um It's not just about the price accessibility, but also the understanding and the the adaptability to the product i think is very important when you're bringing it to the masses, right? Which is like the taste of it, the flavors, all of that has to be massy as well, right?
00:44:59
Speaker
Today, why is the reason the first kombucha we came out was mango? We didn't come up with something really fancy like, you know like a masala hibiscus or something like that. Why? Because we wanted it to be massy, right? We wanted to get to the masses, not just by the price, but also by the flavors.
00:45:14
Speaker
Okay, understood. Understood. ah How does modern trade work? Which all modern trades do you sell at? So modern trade is a little bit shaky at the moment, if I'll be very, very honest with you, because I think WeCom has really, really um sort of turned the entire model upside down, right? Because a lot of traffic that was going there is now sitting at home and ordering things that's getting delivered to them in 10 minutes. Right.
00:45:40
Speaker
Right. So, so, um, modern trade used to be a big channel, I think three to four years ago. And, um, now it's no longer as lucrative of a channel, right? So today, of course we are listed in your main ones, like an ages basket, your're seven eleven your um, your, food stories and all of those big ones, but they're in all of them. Right.
00:46:00
Speaker
But, um, it's no longer a big focus point for us, uh, primarily because the numbers that you can drive from them are much lower. Um, but I believe that there could be a revival of the modern trade channel as they make it a little bit more experiential. right i think I think that is what is required to bring back customers there.
00:46:20
Speaker
Product tasting or product discovery, you know something that is out of the box needs to be done for modern trade to sort of be able to revive itself. Or, you know, maybe like bulk purchasing or, you know, bulk discounting, like, you know, maybe a Costco model, you know, something different is required to revive modern trade.
00:46:36
Speaker
And I think as I would like to believe that that's probably in the works because people have probably seen that need and are probably working on bringing that to customers. Right. So today, I think if you look at the the store food stories, I think they are the guys who took over the your food hall, and that the stores of food halls. Now, when you walk into that store, it is to a certain extent experiential, right? Because they have all of these food counters and tasting areas and and unique product offerings, which you would never probably find in quick commerce because they have have some very slow moving products, but something for everyone, right?
00:47:08
Speaker
so So I think that is the model um which I believe stores are going to start taking up. The channel is never going to die. It's just going to evolve. um So we have to, as a brand, keep investing in that space as well, because yeah we cannot just disregard a channel just thinking that it's dead. No, there's going to be evolution in it and we have to still support it and make sure we are there.
00:47:29
Speaker
Okay. Okay. I guess modern trade would either end up being experiential or a place for bargain hunters, right? Like, I guess, like a yeah Reliance retail kind of stores are more for bargain hunters and ah got it. Okay. Interesting.
00:47:44
Speaker
Yeah. Even like Lulu today coming about, it's all about the bargain and the and the variety, right? I think those are two key focus points that they have. And and freshly prepared stuff right today i think the uh i think one big usps you know whenever i um enter a lulu store in india what i noticed uh on a sunday there hordes of people there they have all of these pre-prepared like vegetables and and like other dishes which people just fill up into uh plastic boxes and they wait and then they buy it you know that's something you know a quick comp
00:48:16
Speaker
not be able to c sort of cater to any time in the near future. So all of these things is what's going to, I think, start driving it. and so And you can see the ones that are successful today are offering these unique propositions to the customer. Okay, I haven't experienced Lulu yet. Is this what South India based? or I think the first one was in Kochi.
00:48:33
Speaker
I think they've opened up, I think, 11, 12 across the country right now I'm not sure which cities exactly, but they're but they're scaling really fast. And they're investing heavily in the India market currently.
00:48:44
Speaker
Okay. Interesting. Interesting. Okay. Okay. Got it. Okay. um Okay. So, ah you know, at about... ah 80 lakhs to 1 crore of monthly revenue. What do you think this could go up to?
00:48:57
Speaker
What's the market potential given the current price points which you have for Borja? yeah So like I said, just this financial year, we're expecting a 4x growth, right? We're expecting that 1 crore to almost hit 3 to 4 crores just this financial year. In the next 5 years, I'm... im My forecast sits at over a 500 crore revenue, right?
00:49:19
Speaker
So, so ah of course, annual revenue talking about, right? so How much does Paperboard do? Do you have any idea? like what is ah they not on the top of my mind, but it is in the hundreds of crores as far as I'm concerned. Hundreds, right? but I don't think even they've crossed 500.
00:49:34
Speaker
So, you know, which is what makes me wonder about this category that Even Paperbot has not crossed 500 as far as I know. maybe it has. I think they are above that number.
00:49:45
Speaker
They're above that number. but Yes, yes, yes. I mean, in this category, I think the entrenched players have a massive advantage of distribution. And distribution is king in this category because I think for a Coke to get into kombucha would not be that hard. like I mean, they would for all you know, they already have kombucha selling in some other countries just about bringing that brand to India.
00:50:11
Speaker
um And for them to outprice you would be relatively easy. And, you know, so I'm just wondering if this category is startup friendly. So I'll tell you one thing about that. Right. so So one thing that, you know, I've noticed trends of what Coke and Pepsi sort of do globally um is that they very rarely choose to bring a product from another country and launch it unless unless there is no other brand in that category big enough for it. Right.
00:50:38
Speaker
So Coke and Pepsi has a huge tendency to acquire brands that have made a mark for themselves and grow that. Right. Firstly, They're too large to innovate, right? They're not a company that's going to sit around and be like, let's create a kombucha and launch it. That's not going to happen. Okay, got it. Right?
00:50:52
Speaker
That even if they try to do that, that's a five-year time frame for a company like Coke, right? So for for them, they they don't want to, right? For them, it's cheaper to just buy out a brand that's established themselves. So right for that...
00:51:03
Speaker
They're going to wait for a couple brands to first create the category, see how the category is doing, and then make a bid for the top two or three and then buy one out, right? ah So Coke and Pepsi always go that route.
00:51:15
Speaker
um Coke did bring iced tea brand to India from the US, which is Honesty, but I believe they did so because there was no other big enough player in the market for them to acquire at that stage, right? Something that would some, a company that was Coke ready, right?
00:51:29
Speaker
There was no brand Coke ready at that stage. And they did see that as a growing category. Hence they bought it, right? And the ones playing in that space were already big brands, right? They were not brands that could be acquired by by a Coke. Like Lipton with HUL. Yes. Lipton is a, you know, a Pepsi brand. So so today that's a sort of, okay.
00:51:48
Speaker
So that's out of the picture. and so yeah so so they don't really have ah ah many options. So I think that's why they chose to bring one. But now today, I believe if if one of us players is able to make a mark in kombucha space of all ah all of us together is able to create a category, I believe they're going to come to us and make offers to sort of buy out the brand.
00:52:12
Speaker
I think that's the route they would choose, right? Because they want the easy way out. They did that in Australia as well. They bought a kombucha brand there. I highly doubt they would plan to bring that from ah Australia to India essentially.
00:52:25
Speaker
ah Coming to beer. So... Your beer is called Makadi and the kombucha is called Borecha. Tell me about these names first. Like what's the origin story of these names? so So the idea was always simple, right? We wanted to be true to where we started out, right? Which is Goa. We wanted the name to be extremely relatable,
00:52:44
Speaker
to to a Goan and considering we come from here, but at the same time, extremely marketable, two to three syllables, easy to say across the world, and as well as almost a little mysterious in terms of its origin, right? So so both are Goan.
00:53:00
Speaker
origin names, borecha translates to good tea in Konkani, like boori cha, right? Okay, cha is universal. even Even in Japan, ocha is green tea.
00:53:12
Speaker
yeah Yeah, exactly. so So when people hear the word cha, they automatically know it's tea-based, right? And bore means good in Konkani. So the idea i was good tea, which is, a you know, like a good beverage, which is tea-based, right? That was the ah the vision behind the brand.
00:53:27
Speaker
and then comes Makadi Makadi is also Konkini for give me right so if you ask for a beer in Goa you'd say Makabeerdi right so that is the idea behind the name and also to create this whole identity behind it which was Makadi always believed in creating a variety of beers and the the whole vision behind it is what what it was is that today a consumer should not have to drink what the what the company decides but they should drink what they identified with, right?
00:53:58
Speaker
What they identify with, right? Like today, how you wear certain clothing or you you choose to go on a vacation based on what your personality is, you should be able to and identify a beer that relates and resonates to you. And hence we have that variety of six six different kinds of beers. There's something for everyone, right?
00:54:14
Speaker
So the whole idea of Makati is like, give me, right? Because I identify with this beer. So that was the whole idea and vision behind the the brand for Makati essentially. Okay. And ah again, tell me about the beer categories, price points. What are the offerings there? What kind of SKUs you have?
00:54:31
Speaker
Right. Yeah. So in beer, we have essentially two categories, right? We have our ah craft beers, uh, and then we have one other product, uh, which actually now has become a hero product and is also our top selling product in the whole company is our 15% ABV, uh, sparkling wine, right?
00:54:50
Speaker
So, um, it's a sparkling wine that is positioned and marketed like a beer and has the taste also, uh, like a beer, but it, it, by definition and uh a manufacturing process is a wine right so so today our craft beers have a we have range of about eight craft beers that range in koa in price price from 79 rupees again up to 160 rupees um our rice lager being priced at 79 our shandy at 99 um our belgian blanche which is our wheat beer and our
00:55:23
Speaker
ah German style lager at 110 and then our stronger ales, European style ales like our Belgian triple and our honey ale at 160. And then our 15% ABV product sits at about 110 rupees, which is more mass market essentially.
00:55:41
Speaker
Okay. Okay. ah These are prices in Goa. Goa. So the price varies state by state, right? So ah depending on the taxation, but to give you an idea, our 15% always lies in the mass market price point.
00:55:55
Speaker
Our rice lager also sits in the mid segment price point in terms of pricing. And then our other craft beers are all in the premium segment of pricing, which is a but a little bit above always the standard beer pricing.
00:56:08
Speaker
Okay, okay, understood. ah Tell me about the excise in India. Like you said, ah it varies from state by state. What are the... So this is basically like how you sell beer in India.
00:56:23
Speaker
ah You know, so that's my question. How do you sell beer in India? What are the rules for each state? How much does the government take ah in the price of a beer? Yeah. What are the rules which determine through which channels you can sell, how you can sell, etc, etc? Just help me understand that. Like, how do you sell alcohol in India?
00:56:42
Speaker
So see each state is a completely new ballgame, right? Like today, the entire model of distribution, retail, sale, taxation, everything changes any state you go to, right?
00:56:54
Speaker
So I can start out with Goa as an example, right? So today, if I look at the Goa market, it's private distribution and private retail, right? which Which makes it sort of one of the easiest states to sort of operate in with the lowest tax structures as well.
00:57:06
Speaker
So in Goa, the tax, for example, excise tax on beer is approximately 50 rupees a liter so per bottle you're looking at about 16 rupees of taxes of excise duty and then topped that topped away the 22 back right so so quite uh a small tax compared so like i told you how today distribution as well as retail is private in goa so if you were to sell beer um once you have manufactured our beer we say we onboard a private distributor who agrees to buy our product.
00:57:37
Speaker
So we first pay excise duty to the state. We get something called as a permit made, which then allows us to dispatch our product from our warehouse to the distributor's warehouse. um So now what lies there is excise paid product and then the distributor then supplies it to private retailers who, of course,
00:57:53
Speaker
we have to convince them to purchase the stock um in the form of a sale. right We go and take orders from them and the distributor sort of supplies the product to them and then they sell it to the the end consumer and that's the channel to sale and to market.
00:58:05
Speaker
Now, when I take an exact opposite market into picture, which is like, say, for example, the Kerala market, right? one One question on Goa first. Yeah. but So private distribution means anybody can sell or this is also like you have to get a license from the government that you can sell alcohol? Yeah.
00:58:22
Speaker
So you have to get a license, right? Today, private just means that um any individual can go apply for a license. Of course, if you fulfill all the criteria, but you have to get the licenses to be able to wholesale alcohol in the state, right?
00:58:34
Speaker
um And that's a different set of licenses. Same with the retail, right? Today, you have to get the license to be able to sell alcohol, but anybody can go and apply for Okay, understood. so Now let's come to Karnataka. And the reason i'm now and I'm going to Kerala because it's the exact opposite. So I think it's a good ah good comparison where in the Kerala market, there's no private distribution or sale.
00:58:57
Speaker
Today, the entire distribution channels as well as the retail channels are completely state-owned. so So there's a department known as the KSBC, which is the Karnataka State Beverage Corporation.
00:59:07
Speaker
which essentially distributes your product which means you initially first uh build the product to the state uh they procure the products in in their uh warehouses across the state um and then as this the the the retail that there's about 280 retail shops across the state of kerala as you convince them to buy the product they place orders with the uh with the warehouse of the government they get the product into the stores and And only once the product sells to the customer from the store, does the government pay us for it.
00:59:38
Speaker
Right. So so everything is state controlled um and they don't take responsibility for everything, anything. Right. Today, they first, we have to if you want to enter the state, we need to first put in a tender. Right. Which means that today we have offered them these products at a certain price point.
00:59:55
Speaker
and they have to accept it right they'll do some variations in the pricing and negotiations and then they will set a price once that price is set and approved then you go to the excise department and get your get your labels and your brand registered once that is done now the case you can tell the case we see to purchase an x amount of stock from you Right.
01:00:14
Speaker
Once they purchase the stock, the stock goes there. Then you go to the stores and tell them to buy it from the warehouses. And once that sells, then you get paid. So it's a it's a full state control thing. But at the end of the day you decide what you want to do. Right. Today, I can decide I only want to sell 100 cases.
01:00:29
Speaker
I can decide I want sell a thousand. But at the end the day, you get paid once you're able to at the end, fulfill it to the customer. Okay. In Kerala, the retail is also government owned?
01:00:41
Speaker
or Yes. i was Okay. So the point of sale where people are buying is like that. I grew up in Delhi and I remember Delhi used to have this government-run thekas where you had to queue up to buy and there was jail where you had those rods in front. and So, Kerala is like that still.
01:01:04
Speaker
Yeah, so even Delhi is back to the same. okay. Yeah. Okay, okay, okay. Yeah, so Delhi in between had permitted sale through private stores, which happened about two, three years ago, but then they reverted back on the old policy.
01:01:19
Speaker
So now the state of Delhi, you can only sell alcohol through the the government shops. Okay. There was some excise scam also, right? I vaguely remember something.
01:01:30
Speaker
that ah There was a lot that sort of had took place, I think, um not to go into too much detail also, because even I don't know the exact and sort of thing that happened. But essentially, they claimed that the government sort of colluded with with certain brands to curate policies that favored certain brands over the others.
01:01:50
Speaker
And sort of that got and uncovered. And then, you know, a lot happened and a lot of people went to jail and a lot of investigations happened and hence sort of uh they reverted back to the original policy um until they create a new one so they're they're they're expecting a new policy to come out this year which might be a bit different and they might start rolling out private stores again this year but it's all a speculation we'll find out uh in the coming months essentially Okay, okay, okay. So like how you would curate policy to favor players would be like if you say with 14% alcohol, you pay lower excise duty because there would be only one brand which has a 14% alcohol product or some um like like some manipulation like that you could do to favor one player over another. Right. And players, it could also be to favor maybe a distributor or certain brands.
01:02:39
Speaker
You know, so there's a lot of like very fine-tuned curations that can happen, which on the face level might not show that it is curated, but it could be, right? so So, yeah, so I i don't know. i have to I don't have too much detail into exactly what happened, but that is what they say sort of took place where um the government just didn't trust what really happened. And then there was an investigation and then they sort of...
01:03:02
Speaker
put everyone who was suspected in jail and I think now it's all resolved. I don't know what the conclusion of the matter was to be honest but I think now they're finally working on a policy that might improve things. So so basically Delhi took a few steps back with their excise policies which actually took a big hit on them. right Today ah The Haryana government and the UP government progressed their policies quite a bit.
01:03:27
Speaker
So sales through those their outlets really, really went up and they Delhi sort of fell through because and now when you go to a store in Delhi, you'll find extremely limited brands because even entry is extremely challenging, right?
01:03:39
Speaker
Like I'll just give you an example, right? Like today, if I was to register ah one beer, one beer label in the state of Goa, it costs around 22,000 rupees per year.
01:03:50
Speaker
to register that that same label in Delhi market cost me 17 lakhs per year. Right? so so So the cost of entry, the barrier to entry is so massive that today even the number of brands that are available are so limited, which is quite unfortunate because, you know, Delhi being one of the most sort of cosmopolitan and eclectic markets in the country has huge market potential, which is sort of being inhibited by the old policy at the moment. But I'm hopeful that, you know, that changes and progresses in the coming year.
01:04:20
Speaker
You know, interestingly, in my like growing up days, I remember people from Gurgaon would come to Delhi to buy their alcohol because Delhi had lower excise duty. It was cheaper in Delhi as compared to buying in Gurgaon.
01:04:35
Speaker
and Yeah, so that's the exact opposite. In fact, Gurgaon imported liquor is cheaper in Gurgaon than it's in Goa as well now. Oh, wow. Okay. So you said that UP and Haryana have improved their excise policies. What does that look like? ah What's the difference between a poor policy and a good policy? what are What's your wish list for the government like in terms of things to be improved? so flexibility right like see being from the beer industry I can sort of curate this answer more from the beer side right so one thing you will notice is right in most countries across the globe alcohol is taxed not based on ah volume of liquid but on volume of alcohol right so so naturally a five percent beer one liter should be taxed much lower than 40 percent vodka of one liter right
01:05:25
Speaker
But in in India, it's the other way around. Beer is taxed much higher than sometimes even spirits and and stronger alcohols. So beer ends up becoming the most expensive way of getting drunk, if I was to sort of put it in a cool manner.
01:05:39
Speaker
right so so So what that does is today in an economy like ours, where people are still um extremely price sensitive, beer consumption has just not been able to increase.
01:05:51
Speaker
right Why? Because drinking one beer, the the drunk however drunk you get from that is much more costly than me taking a shot of vodka. Right. So I think the first thing that needs to be done is that alcohol needs to be taxed on the on the quantity of alcohol and not on the volume of liquid.
01:06:09
Speaker
Right. So that is, I think, would say where the first step towards a fair policy would be taxation on the actual volume of pure alcohol. Right. That would be one. Second is I think there needs to be a differentiation done between spirits and and soft alcohol, right? Or like lighter alcohol, which is wine and beers.
01:06:28
Speaker
Today, in most of the world, ah i but even if you look at Europe, beer and wine is not even considered alcohol, right? It's just considered something that you can have anywhere and spirits is then controlled.
01:06:39
Speaker
I'm not saying we have to go as far as that, but there needs to be some discrepancy between milder drinking versus hard drinking. right what kind of difference are you asking for are you asking for easier selling routes like anyone can sell beer like what this maybe anyone but a little bit more flexibility right like today say in a state like Delhi where alcohol is only sold say through a government store maybe permit beer and wines to also be sold through a grocery store like a convenience store right and the reason being what I think okay
01:07:12
Speaker
Right. Because today, think about it, right? When you're going to do your grocery shopping, like, you know, anyone who's lived abroad, and and you would know this, is when do you want to buy a beer? When I'm buying my groceries, I want to pick up a six pack of beer, which I could make go home and casually drink and not have to go to like a government theka just to buy six beers.
01:07:29
Speaker
Right. So so these small differentiations, I think, can go a long way in promoting a more sort of healthy form of consumption of alcohol, teaching the right practices. right because I don't believe, um you know, alcohol control comes through complete restriction, but by the correct.
01:07:49
Speaker
education behind it right and the less control i think the less abuse also that takes place right so so I think that form of education around alcohol is more important than just completely restriction restricting people because people who want to drink are going to find their ways of drinking it right today you go to a dry state alcohol is still being consumed very openly why because today that is not the solution right the solution is education around it Okay, interesting. interesting um okay so
01:08:20
Speaker
o like We spoke of the two extremes of Goa and Kerala, where Kerala has, or even Delhi for that matter, has government wholesale, like a government distributor and government retail.
01:08:32
Speaker
so Which means that in Kerala and Delhi, There are no, uh, like convenience stores or any of these modern chains, which are allowed to sell alcohol at all. Everything is through the Theka.
01:08:43
Speaker
Okay. Okay. Interesting. But of course restaurants and bars can sell it, right? So they have a different license. They have a different restaurant and bars can purchase it from, uh, the correct channels, right? So in Kerala, they have to purchase it from the state distribution and the rest, and in Delhi is different because the Delhi, the distribution is not by the state, right?
01:09:02
Speaker
In Delhi, the distribution is private and it is in the name of the manufacturer, right? So each state is like, that's why I said, i ah if I go into each state, the nuances vary quite a bit.
01:09:13
Speaker
so So that changes. But yeah, but restaurants and bars allow it. now Now Delhi, the policy for sale of alcohol through restaurants and bars is a lot more relaxed than it is in Kerala, right? because in kealilla You can only sell alcohol through a restaurant that is attached to a hotel, right? Like a five-star hotel. So that rule exists. Now in Delhi, that rule does not exist. Anybody can apply for a license. so so So it's very, very complex and you have to understand each state quite deeply and create and build your strategy of sale around those policies if you want to be successful in that particular state.
01:09:52
Speaker
Okay, okay. I believe there's also some rule, I remember in Kurgaon, that if you're hosting a party, you need a license to serve alcohol in your party at home.
01:10:03
Speaker
ah So, see, a lot of these rules exist in a lot of states. Like, you know, you even for example, in Maharashtra, as per law, each person consuming alcohol needs to have a permit. Right. Okay. Right. So each one needs to have a permit that's made. But today, i these are certain, I think, laws that are just sort of grandfathered and like are existing, but nobody really follows them anymore. Right.
01:10:25
Speaker
so So there might be, um to be honest, particularly not aware of this rule in Gurgaon, but it might be there, just not sort of practiced anymore. Okay, understood. Okay.
01:10:37
Speaker
So now, you know, what is the average? ah So you said you still have to generate the orders yourself, even if the distribution is to the government, your immediate customer is like the distributor, which could be a private party or could be the government. but The order from retail, you have to generate that. So what does that cost you?
01:10:56
Speaker
Is it about having a sales force? Is it about giving discounts and offers? You know, like and in quick commerce, we've spoke of how you can advertise on the platform and you can do discounting to generate orders.
01:11:09
Speaker
What is the equivalent in the beer space? How you generate orders? so there's two things that you have look at right like so when i first look at the uh the monetary incentives of course there's usually always a built-in margin so whatever your mrp is there's a built-in margin that goes to your retail channels regardless um of course now depending on how aggressive you are in the market you can offer additional schemes right so the schemes could be could be slab based where you give them discounts based on how much volume they're looking to buy buy and based on the sort of the visit the the the visibility that an outlet gives you you can offer them higher incentives and higher schemes to sell your product more so those are your two primary costs one is your retail margin and one is your added schemes uh that you may may or may not give to your retailer based on your your model and how aggressive you are uh in your route to market and then second of course comes is your sales force right so today there's two formats right either you could uh
01:12:02
Speaker
a brand could have its own sales team which goes out to market and gets orders and gives it to the distributor. Or you can have a separate deal with the distributor where you give him an extra margin and he takes care of your sales cost for you ah in that market, right? So even for us, we operate in different formats in different states. So ah for example, Goa being a home market,
01:12:22
Speaker
we don't rely on our distributor to get sales but we have our own sales team of about five to six people who go out and cater to the entire market um and then we control that margin and we get that margin to deploy to the sales team now in the kerala market we have an established player who is doing our distribution when i be but when i say distribution in kerala not the logistics aspect because that's taken care by the government But the promotion aspect the field force of getting the know the field force is provided by a third party company who then charges me a commission per case.
01:12:53
Speaker
um And that covers his cost and profit margin for selling my products to the the store level in Kerala, essentially. And ah when you give this cashbacks, etc., those are not coming from the distributor, right? Because the distributor, if it's a government entity, they would have a fixed price of selling, and let's say they sell at 60 rupees a case or whatever, X rupees a case.
01:13:15
Speaker
So you would have ah like a more direct way of... giving the cash back to the region. So we we deal directly with the distributors, right? So he sort of bills us for everything, right? um And then then on the ground level that he takes care of ah all of these things, right? So today for us, when it's a government model, the the reimbursements and everything takes place through the distributor who has established networks of sort of tackling that.
01:13:41
Speaker
And when it comes to like, you know, in in a market like Goa, where it's all private, it's very straightforward, right? Today, if we were to sort of give an extra discount to a certain retailer, the distributor would just give a discount on the bill and then he would carry forward that debit note to us and then we would account for it and not he would not pay us for that bid. So it's a much more straightforward process through the billing as aspect as well in in the private markets, essentially.
01:14:08
Speaker
Got it. Okay. So can you break down like 100 rupees of sales? What is the, how much does it cost you to generate that sale? What is the cost of logistics? What is the cost of the product?
Financial Insights
01:14:18
Speaker
Right.
01:14:19
Speaker
So so to to break it down completely, but if 100 rupees is the product, 50% is, our I'll do a blended average approximately, right? 50% is my gross margin, right? So 50% goes into the making of the product.
01:14:33
Speaker
In that 50%, maybe about, 25% is your cost of your packaging, 10% is the cost of the liquid, and 15% would be ah your direct expenses, your factory overheads, labor, utilities, and all that stuff.
01:14:49
Speaker
So that covers your 50%. um The remaining gross margins, maybe 15% goes into marketing, 10% goes into sales and distribution expenses. Marketing means what, like the brand building activities?
01:15:01
Speaker
Brand building activities, you know, working with influencers, events, you know, social media, all of that stuff, right? Visibility um is about 15%. 10% goes into sales and distribution expenses, which is managing your team, your distributors, all of that stuff.
01:15:19
Speaker
um And then you're sort of left with another 25%, 10% ah twenty five percent ten percent goes into your rest of your overheads, your finance costs, all of that. And I think that and pretty much 10 to 15%.
01:15:30
Speaker
And that leaves you with maybe like at the moment for us, maybe a 5%, 5 to 10% margin for us at the moment, 5%. How much is logistics in this? Logistics is I've included in the sales and distribution cost of about 10%. Yeah.
01:15:45
Speaker
Okay. yeah So it's not that high than the sales and distribution cost. Okay. and Yeah. Because see, in the the reason being is because today we are pretty much selling our, we sell our beers in bulk, right? So each, we send our truckloads of 1500 cases at a time.
01:16:00
Speaker
So today that helps you substantially bring down your S&D cost, right? Today, in fact, it's higher for us in the non-alcoholic space because our distribution is more spread about everything. and scattered, right?
01:16:11
Speaker
Like for example, like today when I'm shipping out product for the UP market, right? I send out one big truck at a time and then it gets sub distributed by the distributors, right? So there's there is more distribution. I mean, there's more e logistics costs that is already layered into the distributors cost.
01:16:27
Speaker
ah But me directly, I'm not spending as much more. But in Borrecha, because we are we're not sending it to a stockist and then having it spread, we're doing it ourselves. It's much, much higher than that.
01:16:38
Speaker
Okay. What is your margin for Borecha? Like for the beer category, it's 5 to 10%, which is left with you. What is the comparable number for Borecha? So I did like sort of a blended average for you in the whole thing.
01:16:51
Speaker
But if I were to give you a breakup between the two, my beer has a gross margin of about 40%, whereas my non-alcoholic has a gross margin of almost 70%. Right? So there's a huge sort of difference. Non-alcoholic has a lot more gross margins because making the liquid to make beer is a lot more expensive than the liquid to make non-alcoholic products right so that's where the main sort of difference sort of comes about and yeah and then plus the process also right so the direct costs involved in making beer like all we do almost 25 days of fermentation in tanks at temperature controlled
01:17:26
Speaker
uh tanks which is usually maintained anywhere under 10 degrees to sometimes at zero degrees for maturation and so that's where the costs sort of go up in in beer making essentially hence lower margins so beer industry is always known to be um a low margin high volume business whereas non-alcoholic does not require that much volume to sort of become profitable Okay, which also explains why 70% your top line is alcoholic and 30% is non-alcoholic. Okay. No, no. sin that so no So actually, kombucha was 30%. So alcohol is 50%.
01:18:00
Speaker
And 20% is the rest of the non-alcoholic products. So we are actually, a very coincidental way, we are at 50-50. That's no plan that was made to be 50-50 in revenue. But that's how we've been ending up in the last, at least last two financial years. That's what the numbers that's been coming out, essentially.
01:18:17
Speaker
Okay. Okay. Interesting. Interesting.
Beer and Brewing 101
01:18:20
Speaker
What is beer? You know, let's let's talk about the process of how do you make beer and why is ah why is craft beer different from, let's say, a Kingfisher? Like what is the difference here?
01:18:32
Speaker
Yeah, absolutely. So I'll start out with what beer is, right? So I think there's only one thing that, and this is like a way, usually not a common known fact, but it's a very interesting fact, is that there's only one thing that differentiates beer from wine.
01:18:45
Speaker
And that is the source of fermentation. that you use, the source of sugar for your fermentation, right? So today, wine is always a natural sugar source that is fermented to make a wine, so which is which could be fruit, grape, honey, ah which is direct sugar sources that convert into an alcoholic product.
01:19:03
Speaker
And on the other hand, a beer is a starch source, which is first converted to sugar and then fermented to make a low ABV beverage, right? so So starch being, of course, primarily wheat,
01:19:16
Speaker
barley, barley malt and oats and all of these forms of starch which we do one extra step is where we sort of first crush the grain which opens up the thing and and today your grains naturally have an enzyme in it which helps convert the starches into sugars, right? So today we activate these enzymes by putting them to different temperature zones and allowing the enzymes to naturally convert these starches into sugars before we take it into processing and fermentation essentially.
01:19:47
Speaker
So that is the main difference between beer and a wine. And one distinct characteristic of a beer is, of course, the addition of hops, ah which initially came about just to preserve the beer.
01:19:59
Speaker
But then it became so iconic and known to the taste of beer that it became a standard practice to add hops to your beer, which today bring about the bitterness and aromas in your beer.
01:20:11
Speaker
Right. So that's, I think, the main sort of distinct points about of what beer is. What is hops? So hops is a flowering plant. It actually comes from the same plant as, as a same sort of species of plants as cannabis, right?
01:20:23
Speaker
But this one, of course, does not have THC in it or a a CBD in it. It's a non-psychoactive sort of flower, flower ah which is very, very heavy in oils, right? They have these oils in it, which are very aromatic and bitter.
01:20:38
Speaker
and they act as a natural preservative right so today during the boiling process of the liquid when we when we've extracted the sugars from the grain uh converted extracted the starches converted into sugar and now we have this malty sweet liquid we add the hops to it during a boiling process which then make add the bitterness to the beer so there's actually two types of hops one is a bittering hop and one is an aroma hop Aroma hops were never used back in the day.
01:21:04
Speaker
Back in the day, we only used bittering hops, which your commercial beers use today just to add the bitterness to your beer. All the hops that you add at the end of the process, prior to the fermentation, after the boil, is just for the aroma purpose of it, right? So today, all these IPAs that you consume has this really fruity and like tropical aromas on the nose, all come through these hops, which are primarily used just for the aroma aspect of the beer.
01:21:28
Speaker
right so so And to break it down also, right like if you take a beer, and I'm not talking about some specialty beer, just like a standard beer, they are usually made using just four ingredients. right Hops, water, malt, and yeast. Nothing else is required to make a standard beer.
01:21:44
Speaker
Malt is he's a the sugar which comes from the grain. Malt is basically... can be can be any sort of grain that has been slightly germinated and then the germination is prematurely stopped right so today you can have barley malt you can have wheat malt uh and basically it's so when you when you harvest barley right there's raw barley grain uh for it to be ready to to make beer you have to put it through a maltering What the maltree does, it it takes those grains, adds water to it and allows the germination process to begin.
01:22:18
Speaker
Why they do that is that the beginning of the germination process activates the enzymes that will be later required to break down the sugars. But we don't want them to start consuming those starches and start flowering.
01:22:30
Speaker
right So that's when they stop the germination process by roasting it. Right. So now you have these grains which have not yet budded out, but we have just germinated it enough for the enzymes to activate itself.
01:22:45
Speaker
Right. And now you have these ready molds which are roasted, um which have these enzymes activated and so the the starch is intact. So that is your raw material for making beer, which we call malt, essentially.
01:22:56
Speaker
So barley that has gone through this process of... What happens with these roasted grains? So then these roasted grains are the raw material that we purchase, right? So the malt tree has done the work for us where they have activated these enzymes, retained the starches, and roasted them to stop the germination process, right? So now these grains are stable for years, right?
01:23:15
Speaker
So we buy these, we crush them to expose all the starches out, put them in water and allow and heat them up at different temperature zones to allow these enzymes to then convert these starches into sugar essentially.
01:23:30
Speaker
So that's the process we do, right? So so the malt is step one. The maltery does step one for us ah because again, for a maltery to be profitable, you need huge economies of scale, right? So there are massive malteries across the country that basically do this for different breweries across the world, right?
01:23:48
Speaker
And today the roasting ah can be done at different grades. Today if you do a light roast, you have like golden color malt, which is what's used for your traditional beers.
01:23:59
Speaker
Now as you roast them more and more, the color gets darker and darker. And those are what help create your different styles of beer. Today a Once you go past golden, and you can go into red and brown and then it goes into black, right?
01:24:12
Speaker
So those are the different styles of beers using different kind of roasted malts, essentially, right? So ah just using these four ingredients, you can make hundreds of styles of beer, right? Today, whether it's a beer like a Guinness, which is like a dark malty beer,
01:24:27
Speaker
stout or a crisp light golden lager you are essentially using the same four ingredients but making two completely different beverages and that's what makes beer making so interesting is that you have all of this variety with such limited ingredients that that it's quite interesting and intriguing to be honest so okay you ah boil these malts at different temperatures then what what's what's the next step in the process how does that convert to alcohol Yeah, so ah step one, like I told you, we get these molds, we crush them, expose the starches, um take them to different different temperature zones to activate the enzymes that then convert all of these starches to sugar.
01:25:06
Speaker
Now you have all of this slurry of grains and water, but now we need to get rid of the husk and the proteins that are left, right, which are no longer required. So then we put them through a massive filtration process where all the grains are removed and only a sugary liquid is left.
01:25:22
Speaker
Right. Then these grains that are left over are high in fiber and protein, which is sent across to sort of as sent across as an animal feed. Right. So we no longer need that anymore. So now you're left with this sugary liquid.
01:25:34
Speaker
Now this liquid also has a lot of protein in it, which we don't want all of the protein in the liquid. right? And now it's very sweet. We need to balance the flavors with the hops. So now we put it through a boil, like a one to one and a half hour boiling process, which sort of coagulates all the proteins.
01:25:49
Speaker
And this is when we add the hops as well. And we boil it for an hour. Now you have a bittersweet liquid, uh, which now you need to get rid of all the solids that are in there, right? Which is your, uh, hop cones and your proteins that are coagulated. So you put it through a whirlpool process, which takes out all the solid particles.
01:26:07
Speaker
And now you quickly cool down this liquid to 20 degrees Celsius. Why? Because right now after the boil, it's close to a hundred degrees. Now between 100 to 20, there's a hot zone where it is very, very susceptible to catching bacteria, right? So you have to, we have to within 30 minutes, cool down the liquid from 100 to 20 degrees so as to not ah contaminate the beverage. So it goes through like ah like a plate heat exchanger to quickly cool the liquid, gets added to the fermentation tanks. That's when you pitch the yeast.
01:26:39
Speaker
And now your yeast needs oxygen at the beginning, right? Because first your yeast needs to multiply. So first we infuse oxygen into the beer. So first the beer goes through aerobic of the activity of the yeast where they are basically multiplying and consuming the oxygen.
01:26:58
Speaker
The moment your oxygen depletes, that's when the process of fermentation begins, right? So when now when your yeast is consuming the sugar with the lack of oxygen, it is called fermentation where it's instead now producing carbon dioxide and alcohol and there's no reproduction happening of the yeast anymore and once the process of fermentation is complete we know all the sugars have been consumed and now we have the right amount of alcohol we pump out the yeast from it put it through a filtration process add a little bit more carbonation to stabilize it filter it and then bottle it okay fascinating yeah fascinating yeah oh and this is you said it's it's like a 20 to 30 day process
01:27:36
Speaker
So, so yeah, so the, the, the brewing process in itself is about an eight hour process. Then the fermentation can last anywhere between a week to two weeks, depending on the style of beer, week to 10 days usually. And then after the fermentation, you remove the yeast, you drop the temperature down to zero degrees and you let the maturation process begin where you allow the beer to sort of clean itself up, get rid of some of the bad aromas in it and just make it bring out its flavors in the beer itself, right?
01:28:05
Speaker
so So today, that's the maturation process. The maturation process, again, can last anywhere from 10 to 20 days, depending on the style of beer that you're making. Once your beer is matured, that's when you add it to the final tank, which is called a bright beer tank, where you add more carbonation to bring about the right right level of carbonation that you need in your beer, and then put it through a filtration process, depending on the style.
01:28:27
Speaker
Some beers, we keep it unfiltered. Certain beers are filtered. you After you're done with the filtration process, it's sent to the bottling unit where then it gets filled into the bottles.
01:28:38
Speaker
And after bottling, we put it through a pasteurization tunnel. So the bottles, when the beer gets bottled, it's at about 0 degrees, 1 to 2 degrees Celsius usually. And then the pasteurization brings it up to 70, 75 degrees Celsius to kill off all the live yeast that might be remaining in the beer.
01:28:53
Speaker
And then drop it back down to room temperature when it then gets labeled and boxed and ready for shipping. Okay, okay. What does maturation do? Like, how does...
01:29:04
Speaker
Yeah. So I'll explain what happens in that. right So even though we've removed most of the yeast from the beer after fermentation, there's still yeast in the beer. Right. So what we do when we drop the temperature down to zero, ah the yeast has a tendency to consume its own byproducts. Right. So during the process of fermentation, yeast also produces a lot of unpleasant byproducts which don't taste as good or smell as good.
01:29:28
Speaker
But the yeast has a tendency to consume all of that in the process of maturation. So it cleans up your beer, essentially. and right So it's a process of just cleaning up and and making your beer just taste crisper and better, right?
01:29:40
Speaker
Which if you were not to do, you'd have a lot of off aromas or a very, a lot of funky aromas in your beer, which you wouldn't want. Okay, okay. Fascinating. So there is a very iconic, sorry, there's a very iconic style of beer which we also actually make. It's called the Bavarian Keller, right? And it's known for its low much maturation, right?
01:30:01
Speaker
where Where you mature the beer intentionally for a lesser period of time to keep that little bit of funkiness in the beer. right so you get a lot more beer esters right so if you have a regular lager you'll notice there's no aromas in it it's very crisp and clean and clear because you've allowed the the yeast to eat up all of the byproducts so the keller beer is known because you don't let it mature for that long so you have a little bit of the yeast funkiness and the esters remaining in the beer giving it a very unique sort of taste profile and a know aroma profile to the beer Okay, okay. Fascinating.
01:30:31
Speaker
So how is this process different for mass produced beer versus craft beer? So I think, you know, how I would like to best describe the difference between ah craft and and commercial is not more so in the not as much as in the process as in the mindset, right? It's almost if you think about the difference between ah fast fashion and slow fashion, right? Like today, one one thing is more thought about, more curated and left to the personal touch as opposed to something that is perfected, machine made and optimized.
01:31:06
Speaker
right That's the main difference. right Today, a craft brewery, my brewer has more flexibility in what he can do to from batch to batch as opposed to what they would in a commercial brewery. right today Today, we we can take consumer feedback and make tweaks to our recipe as long as it's improving, but but not enough for the consumer to be like, oh, the product is tasting different. He won't know the product is tasting different, but you might find an incremental improvement or a slight variation from batch to batch, which is iconic to craft beer making, right?
01:31:36
Speaker
and And the selection of the the ingredients to the the process and the control that is given to the craftsman as opposed to the machine, essentially. That's the primary difference between craft beer and and commercial beer, right?
01:31:49
Speaker
We don't trust machines as much as we trust our craftsmen, which is vice versa in a commercial brewery. so Inherently, craftware would
01:32:05
Speaker
like Is not as scale friendly then? ah so So that's actually the biggest misconception, right? Today, craft can be scaled as much as as a commercial brewery, right?
01:32:17
Speaker
Today, there are craft breweries in the US which are larger than commercial commercial breweries across the world, right? so So like I said, it's about perception and mindset, right? How much freedom are you giving your craftsman, which is your brewmaster, as opposed to not, right? A commercial brewery does not give any...
01:32:35
Speaker
creative freedom to the brewmaster. Everything comes down to what the numbers and the machines say and what has to happen. So there the brewmaster's role is to ensure that the machine is doing its job.
01:32:46
Speaker
In a craft brewery, you could have the same level of equipment, the same scale, but you give a lot more creative freedom to your brewer. Right? So I think it's a mindset difference as opposed to a process difference, in my opinion.
01:33:01
Speaker
Okay. Essentially, in craft, you can have unique batches. Like every batch could potentially be unique or you could have small run batches. You don't necessarily have to mass produce everything. You can experiment, ah release limited editions. These are some of the things which craft beer can offer.
01:33:20
Speaker
Yeah, and also to to make it more fun, right? Like it's not just business, but it's also passion, right? Like today, you know, I was actually in a trip to ah to Taiwan just last year.
01:33:32
Speaker
and you know I dropped by one of the breweries and you know I became really good friends with the with the owner of that brewery and you know, we were just having a few beers and we're like, let's do something fun together. You know, I don't think anything has happened between a brewery in Taiwan and India.
01:33:45
Speaker
So I invited his brewer to come down to Taiwan and told him like, think of one ingredient, which you think is very unique to Taiwan. And he said like the Oolong tea. So I was like, let's take our most iconic beer or our most top selling beer, which is the Belgian Blanche and let's make an Oolong Blanche and let your brewer come into it in our facility along with my brewer.
01:34:04
Speaker
So they both sat down. We didn't even get involved as as brand owners or ah company owners. We had no involvement in this. We told it's up to you two. They sat down, they came up with the recipe and they brewed a batch of Oolong Blanche.
01:34:16
Speaker
And then that beer was only released for a single batch in two markets, such as Goa and Taipei, right? So that's the kind of uniqueness and creativity we talk about, you know, when it comes to a craft brewery, where we give a lot more creative freedom to our craftsmen and allow them to be an to play around, have fun, and create something different from time to time for the consumers
Creative Marketing
01:34:35
Speaker
as well.
01:34:35
Speaker
so So experimentation, making beer making into a passion and not just a business is I think what craft is. Now, one of the challenges with the the alcohol space is marketing and brand building.
01:34:48
Speaker
um You cannot use the traditional mass media channels. I'm sure Facebook and Google don't allow you to advertise alcohol, ah print media, electronic media, TV, etc. All of that is out of the question, right?
01:35:02
Speaker
Right, right. So how do you build a brand ah when especially you're a new and upcoming brand? um So see, social media can be leveraged in ah a lot of interesting ways, right, today, which has actually made it much easier than what it was in the past.
01:35:16
Speaker
Right, today, in today's day and age, influencer marketing and putting out the right content, right, you're able to build following in a much, much easier and robust manner, right? As long as you put out relatable content to your target audience, you're able to quickly build a good following, quickly target products. them Like today, with the advent of reels, you know, TikTok bought reels into Instagram. And today, if you make engaging content, things that are funny, things that go viral, you can very easily connect to audiences, right? Without even having to advertise, right? Like today,
01:35:47
Speaker
For example, Supermaka, which I told you is our 15% ABV drink. Today we are we are putting out a lot of unique content out there and you know, without any marketing spends or any advertising, we're getting two to three million views on just ah those reels just because they're going viral and people are seeing it.
01:36:03
Speaker
so So I think today, in today's day and age, it's much easier to build out, in fact, an alcohol brand than what it was before the social media era because today we have a lot more tools to do so.
01:36:15
Speaker
and Right. So I think that is what we've always leveraged. And today, one of the other advantages that we have had as a company, and what I told you initially is that we have always been a product first company.
01:36:26
Speaker
And what that means is that today we believe a lot more in word of mouth marketing than we do in actual ah print or media or any forms of other marketing. Right. Because today, ah firstly, when we go that route, it's a lot of money.
01:36:41
Speaker
secondly now you're you're trying to compete in marketing dollars with big players which you never can as a startup right no matter how much money you raise you're still going to always run short so what we believed in one thing that we can do better than a big brand is make ah an amazing product and make it consistently so today why now do we have such robust numbers in the goa market is because we have been there giving the same quality and consistency for the last five years so now we have this whole group of consumers that know what Maca is and and and keep drinking Maca and keep talking to people about Maca, right?
01:37:12
Speaker
So it builds over a period of time and we plan to do that in each and every market. And of course, as we grow bigger and bigger, our deployment of capital will increase ah and that's when we start marketing a little bit and going out there to the people people a little bit more over a period of time.
01:37:27
Speaker
so So yes, of course, there's a lot more restrictions today. We can do a lot more with Borecha. We can literally take a cart and go out on the street and hand cans to people of Borecha if you wanted to, which we can't do with Maka. So does add a little bit of restriction. We just, I think, have to be a little bit more creative in that in that that case.
01:37:44
Speaker
What is your Instagram following like? um So we are still quite like like like young, right? So we have around 12,500 followers on Makadi and about maybe Super Makadi is very young, right? That page started about six months ago, but Super Makadi we've done really well. We're almost touching 5,000 followers in a period of like six months.
01:38:05
Speaker
So still very, very little, but But even though the following is less, if you put out good reel content, you get millions of views, right? So it's about more about viewership. It's very hard to get a person to follow a page, especially a brand page, but it's very easy to get them to get access to content or discover content that we put out, right?
01:38:24
Speaker
So I think the more important part is the views you get on your content as opposed to how many followers you have on your page, essentially. Do you invest more in creating your own reels or in ah working with influencers, sponsoring them, ah making them do place product placements, whatever.
01:38:40
Speaker
I think it's a good mix. But you know, what we have realized is they both work for different reasons. Influencers work well ah to to spread the awareness of your brand. Your own content helps in creating a brand identity and a relatability and a visual for your brand, for your customer, right?
01:38:58
Speaker
So the content that we put out from our side more focuses in creating relatability with your target audience. And okay, this is our look, this our feel, this is what we're going after. And influencers helps put across what your brand is right so you have to do a combination of the two the influencers bring people to your page your content then showcases what we are about so i think you have to have a good balance between the two You create these viral reels in-house or you are they done with an agency?
01:39:28
Speaker
So we don't have any agencies we work with on retainership, but we work with a lot of content creators, right? So today we independent, so like I told we have an in-house team which acts as an agency.
01:39:39
Speaker
So essentially all the strategy and plans are created in-house and then we deploy content creators from across the country to make content for us and then we push that forward to consumers ourselves from our side. How do you build creativity in an organization?
01:39:54
Speaker
Like, you know, both your brands have creativity as one of those USPs, both in terms of the product creativity and the way you market it. So how do you build that into an organization DNA?
01:40:07
Speaker
It's actually one of the hardest things to do, in my opinion. Right. And I think it took us a lot of trial and error to sort of get that going. And I think we still have a long way to go in what we can achieve in terms of getting, you know, perfect creativity out of our team. I think, you know, some of the biggest companies have done very, very good job jobs at at sort of achieving that.
01:40:25
Speaker
um But, you know, it's it's ah it's a double-edged sword, you know, whatever step you take in doing Bringing about creativity in your team also can take away a lot of discipline from your team. right So you have to find that balance right because structure takes away creativity. right ah Fixed work hours where you have to sit at your desk, do this, do that takes a away creativity.
01:40:45
Speaker
Now giving an employee freedom of thought or freedom of process and letting them ah go a little wild in their process of figuring things out allows to bring about that creativity, right?
01:40:56
Speaker
So finding that balance, right? So today our marketing team in our company has a lot more leeway, so to say, than our other teams because today now if you look at operations and manufacturing, that's extremely process driven and extremely disciplined, right?
01:41:10
Speaker
The hours you come into work, the the the way you work is extremely like You know, it has to be systematic and and and perfect, even finance for that matter. Marketing, on the other hand, has to be given that freedom to go around, explore, you know, interact with our consumers, think, you know, ah be on Instagram, you know, all of those things. So I think giving that little bit of lack of structure to your marketing team allows to bring out that creativity to a certain extent.
01:41:36
Speaker
um I'm sure there's a lot more ways, which we also keep trying to discover. But I think exposure is very, very important. So whatever gives exposure to your team is, I think, what brings about that sort of creativity. Because people are doing crazy things around the world all the time.
01:41:50
Speaker
And I think you have to learn from that and build from that and and and and gives you a lot more ideas from that or get more ideas from that as well.
Market Expansion and Challenges
01:41:57
Speaker
Does being in Goa help? um Yes, to a certain extent. um Of course, I think Goa still, I wouldn't say is the most exposed place in the world because there's a lot more things happening across the globe.
01:42:09
Speaker
um I think there's there are the pros and cons. The pros is the fact that that you are getting to interact with people from across the country and sometimes even across the world. um across the world not so much across the world but enough so so you have a larger target audience to play with in the Goa market but there's not as much happening so to say in the marketing space in Goa where my team is discovering a lot new things like that you could do in metro cities across the world or even across the country where you're seeing exposed to a lot more advertising exposed to a lot more new products a lot more new things which doesn't happen in Goa but the the exposure to people is a lot more I would say in in the Goa market
01:42:49
Speaker
How much of your alcohol sales is from Goa? At the moment, it's changed a lot. right Up until last year, December, about 80% or so of our alcohol revenue came from Goa.
01:43:01
Speaker
Now it's dipped to almost, I would say about 40% because we've added a lot more states. Okay. What's the next biggest after Goa? Our second biggest now has actually become the Kerala market.
01:43:14
Speaker
which we just started out like a, like a month and a half ago has it really, really done well for us. And then following that would be the UP market. And then the, market and now we are you know sort of uh adding the export markets also quite robust you know us being our largest export market but still i would say in terms of revenue india markets are much larger at the moment because in the export markets we're still a niche product whereas here we are trying to break past that niche right at that in certain markets at least so yeah but i do believe that a couple of our export markets might uh start almost competing with our domestic markets, especially the US and Australia markets for us.
01:43:57
Speaker
So when you decide to enter a new state, what's on your checklist? Like if you decide you want to penetrate Kerala, one of course is you need the government approval ah and you need a distributor and ah you need either an agency or your own sales force. Probably an agency would be the prefer preferred option.
01:44:15
Speaker
But besides that, how do you actually generate buzz, awareness, generate orders when you're entering a new state? So I think step one is ah is a ah supportive channel partner who really understands the needs of your brand and your business. I think that's for us always step one, right?
01:44:32
Speaker
More than the policy, I think if you find a distributor or a promoter who really understands your brand, and is passionate about it is actually the primary sort of determining factor for your success in that state right because today if i say that tomorrow i just tell myself that no i really really want to enter the maharashtra market no matter what and out of desperation i had sort of onboard three four distributors who sort of agree but don't really know what our what kind of work our brand requires it's very very possible that we might fail in the market right because today
01:45:03
Speaker
We are the brand, right? But at the the the face of a product in the market and every day out there is our distributors. So today, if they don't really understand what we are about and how we need to focus our brand, we we we are bound for failure, right?
01:45:15
Speaker
So today, I think sub-step one is the right channel partner, right? People who believe in our brand as much as we do, right? So only once that is in place, do we even consider that market? right So our strategy is more driven by supportive channel partners.
01:45:30
Speaker
Then comes policy is the policy supportive of a path to profitability in that market. right Because in the Alcovep space, you have to burn a little bit in the beginning and get a certain volume in that state to start hitting profitability.
01:45:44
Speaker
So a path to profitability is also very important, which in certain states, because of the taxation on beer, almost seems impossible at our scale, right? Sometimes, if and and you need much, much larger scale to sort of achieve that.
01:45:57
Speaker
So, you know, those are states that we won't even touch, even if you have a successful channel partner. right So part two profitability and and and and and aligned channel partners, I think are the two main things that we look at.
01:46:08
Speaker
And then everything else sort of falls in place, right? Like then you just focus on good robust marketing, localized marketing in those areas. And then I think, you know, with our strategy of organic growth, then it's an easy path forward essentially.
01:46:22
Speaker
What are the states you would not enter because of an unfriendly beer policy? um At this moment, it would be primarily Maharashtra, right? If I were to pick one primary state and and the reason being not that they are not favorable to beer, but they have policies that favor local manufacturing a lot more.
01:46:40
Speaker
um So, for example, you know, if I give you an example of beer today, domestic. Any beer that is made within the state of Maharashtra and distributed only has 50 to 60 rupees of tax per liter, right? Which per bottle works out to maybe, ah you know, 16, 16, 20 rupees or so per bottle.
01:46:58
Speaker
Now, when I send my beer from out of state, I have to pay 150% excise duty on my product. So if I'm selling it for 50 rupees, my duty is 75 rupees on that beer, right?
01:47:10
Speaker
plus a 55% VAT on the 125 rupees, which is another like 60 rupees. So I am paying almost like, what, $10.
01:47:21
Speaker
10 times the amount of tax almost as what the other guys are paying. so So today, that makes it not not just challenging, but not ah we don't we we have a kind competitive disadvantage than the local players.
01:47:35
Speaker
So you know those states become very difficult to sort of even consider entering because you're already coming in with a massive disadvantage, especially in in a state where there is so much local manufacturing already happening.
01:47:46
Speaker
So so so that's the that those are states where we sort of steer clear from in the beginning. ah where we maybe in the future might consider setting up a small plant there or doing a tie up with someone where we go in and manufacture beers there for us to launch it then it makes it more more viable for us in the long run Okay, got it. Is Gujarat still a dry state? Does it have like zero alcohol?
01:48:09
Speaker
It is a dry state, but we do supply our products there through permit shops. So there's about 90 permit shops in the state of Gujarat and the only people allowed to purchase alcohol is the permit holders, right? So the permit holders are people with special permits who get ah get it. people So some people can get it who live there.
01:48:27
Speaker
um through different means or for different reasons. Or if you're ah an outsider. and not Medical reasons. like but like prescrib yeah I don't know what what medical purpose it solves.
01:48:42
Speaker
I won't dive into that. But yeah, so for medical purposes. And if you have an outside person traveling into the state and you can prove that you're not only here for a visit, then you would get a permit. But it's restricted by quantity, right?
01:48:55
Speaker
So you get a certain units per month of purchase that is permitted and you can go buy it from these permit stores. So we supply it to Gujarat as well through the permit stores to these 90 stores across the, scattered across the state essentially.
Funding and Growth Strategy
01:49:07
Speaker
Okay, interesting. ah Tell me about your fundraise journey. So you bootstrapped until you raised the round. How big was that round? So we raised around just ah in July, June of last year.
01:49:20
Speaker
It was a 12 and a half crore round, approximately $1.5 million dollars round, which we raised from angel investors based off the US and one investor from India, essentially.
01:49:33
Speaker
Okay. Which seems like a very small round, right? For somebody of your vintage, ah like this is typically like a pre-seed round, whereas you would probably be more series A stage as a business.
01:49:50
Speaker
So we we wanted to do a small round initially. Right. like so So like i told you, right. One thing I've said that's you know a little different about us is that we are not um a company that likes to burn a lot of capital and grow extremely fast.
01:50:01
Speaker
we We do want to grow fast, but in a sustainable manner where where we can show a bottom line. right So today we are already an EBITDA positive company. right last ah Last quarter of last financial year was EBITDA positive, even though we closed the year at very little profitability, but we did manage to bring profitability to our books and we plan to do so moving forward as well, which means our capital requirements now is not as high.
01:50:27
Speaker
as it would be for a company that's burning through tons of capital. right Most companies at our stage are usually putting in 50% of the revenue into marketing, whereas we are at like 10 to 15%.
01:50:37
Speaker
ah So our capital requirements are more focused towards capex and working capital, right which we can get through the banks as well. so So we are very conservative with our equity dilution as well.
01:50:48
Speaker
um And plus, ah um That time we were still a little early stage in terms of our revenue. So we didn't want to take a large round. So this year we might go for a series A, which we are ah in the works with right now. And we might end up raising one round by the end of this year, which would be a series A round. Still not as big, right? We would still probably go for a two to two and a half million dollar raise. So like 20 to 25 crores.
01:51:10
Speaker
ah re is Because like I said, for us, we're not burning through that capital on a month-on-month basis just to grow ourselves much faster. yeah um yeah Our goal is to always stay sustainable and robust where we don't have to be dependent on our marketing to get our numbers in, right?
01:51:26
Speaker
That's just to grow the numbers, essentially. ah Wouldn't you be constraining your growth by taking on such less funding, like,
01:51:37
Speaker
Why not? ah See, the thing is that typically there is a but pre-PMF stage and it doesn't make sense to ah take too much money at that stage because you're not sure yet. But you you found PMF, you're now at a growth stage.
01:51:53
Speaker
So why not raise more, grow faster? See, the thing with the alcohol space also is that it's extremely risky to sort of do that, right? Like it's very easy to sort of generate revenue by pumping in money, right?
01:52:05
Speaker
But that's not necessarily sustainable, right? Because today if I do that, there's going to 10 other brands coming in after me and doing that. ah Customer loyalty has significantly reduced in the market and people go towards whatever is new, whatever shiny, whatever is ah better, right?
01:52:19
Speaker
So for us, we want to build that loyalty. We want to build a consumer pull in the market that is not dependent on reading our name and and finding our name, but because they relate to our product, they find our product extremely excellent in the market and they want to keep consuming that product because they just love it, right? So that's always been our focus point, right? I feel pumping in money is not necessarily always the solution because today,
01:52:44
Speaker
you will get those numbers till you're pumping in that money. Will it sustain after you stop pumping that money? Because at the end of the day, that has to be the goal, right? That you at some point bring down those spend, but those revenues sustain.
01:52:56
Speaker
ah A lot of the companies in the Alcovec space have done that. And the moment the numbers of spends have dropped, so has the revenue dropped, right? Which means no path to profitability. And I don't see that.
01:53:08
Speaker
I see that almost as a gamble in my opinion. um Of course, I am inhibiting my growth to a certain extent when I do so. But I believe i am paying playing a less riskier and a more sustainable game with a higher probability of success ah choosing this route for growth essentially.
01:53:30
Speaker
How do you get sales through pumping in money? Is it by giving more discounts to the retailers? discounts, just, you know, sponsorships today, your distributors, your retailers get more excited saying that, oh, I'm spending this much money in the marketing, let's buy a lot more product.
01:53:43
Speaker
ah So, you know, it's basically ballooning the system, right? Like, let's let's let's say that, okay, I'm giving you this much discount, let's take 100 cases instead of that. Oh, you're doing this marketing, okay, I'll buy this much more cases from you than this.
Shark Tank Experience
01:53:55
Speaker
And then to a point as, till your customer is seeing those ads, they're like, okay, yeah let's buy it, let's buy it, let's buy it. But will that sustain once the customer doesn't see it tomorrow? Right. So so today if I go in and putting 10 crores into sponsoring an IPL team or whatever that amount might may be, my customer might buy that product till he sees the ad.
01:54:18
Speaker
Will he remember my product once I'm not sponsoring it, right? That's my question. That can happen if my product is excellent and top-notch and has ah has a differentiator to it.
01:54:28
Speaker
If it doesn't and I'm just a run-of-the-mill product, tomorrow I'm not going to get that. So I would rather take that money and deploy it in making a kick-ass product, which... The consumer needs to see it once, but he loves it so much and is's so different that he will go and buy it regardless after that.
01:54:44
Speaker
So, of course, today, this comes down now to sort of almost what your business mantra is. What is it that you believe in would or would not work? And I'm not saying what the route I'm choosing is probably not possible, might not be the best possible route, but it's what I believe will give me the highest probability of success in just a little bit more time.
01:55:05
Speaker
and You've been on Shark Tank also, right? Yeah, so we we did get we did go for a shoot and we did do the whole thing, but we did not get aired.
01:55:16
Speaker
ah Okay. why Why do you think that happened? So I believe it's because of the alcohol business, right? I think they they limit the amount of alcohol episodes they put on on TV. So um I'm guessing that that may be the reason, but they usually don't disclose the reason as to why they don't do that.
01:55:36
Speaker
but What was the feedback you got from the sharks? Typically sharks give very brutal feedback, right? In fact, it was the exact opposite. you know we We did not hear back hear even a single sort of negative comment ah from any of them. In fact, they actually might put out the episode on the unaired episodes they put up on YouTube.
01:55:56
Speaker
ah after the season is done. So maybe in this month or next month, it might come up, but you'll notice that this is something even we were taking a back by, but you know we did expect to get some backlash in terms of the spread that we have as a as a company, but none of that was there. right And we even went in with a very hefty valuation and not a single shark even commented on the valuation, right?
01:56:18
Speaker
um In fact, the sharks who backed out, the major reason was they don't invest in alcohol or two, because we were offering very less equity in general, which means and being a capital intensive business, they would just get diluted out to a few point percentage points.
01:56:34
Speaker
not even under a 1%, which, you know, takes away the incentive for a lot of ah people to invest. So because we're at a more sort of mature stage than what a lot of startups go to Shark Tank at, I think that was a little bit of a deterrent. But um the the what we were taken aback by is the fact that we didn't get a single negative point or feedback from any of the five sharks.
01:56:56
Speaker
Why not offer more equity? You can look at it as influencers spend, right? Right. um in ah or To the sharks, you mean? Yes, yes, yes. Like like the the reason for not investing was equity was too less that you were offering, right? so See, we already had um a benchmark valuation that was done... um but just in our last round.
01:57:18
Speaker
So that was just not possible, right? Because we couldn't go for a down round just for the sake of getting a shark on board. And so we had already a benchmark valuation in place. and And you know, there's a ideal ticket size on Shark Tank. You can't ask for more than that amount. Otherwise, the probability of, you know, them even grabbing that is very low.
01:57:38
Speaker
So when we we went for that ideal ticket size and even set the base valuation as the last round, the amount was working out too little for in general, essentially.
01:57:49
Speaker
So, uh, any highlights of that experience? What do you remember about it? Um, I mean, I think, I think the most unique part was, you know, like today, you know, I've done, done pitches of my, uh, my company to like hundreds of people, ah behind closed doors, usually always. Right. And it's, uh, it's a whole different thing, right. You have this level of confidence and you have this, uh,
01:58:14
Speaker
It's almost in the back of your mind, right? Because you have think about it. Like today when I go into a pitch, sometimes I could be thinking about something else and still giving my pitch, right? Because it's it's just so second nature to you. But the moment you're put in on that stage with a hundred lights and a hundred crew members and those five sharks sitting there, it's a whole different ballgame, right? Like it's you you forget everything and it's like, and so it's an eye-opening experience. You know, you and as an entrepreneur never think that you're going to be put through such a test and I truly took that as a test and I think it's a great learning experience because you know it's a new skill you're developing to really ah put yourself out there and pitch something you're really passionate about in front of so many people and it gives you that confidence boost to really talk anywhere you know.
01:58:55
Speaker
And then to add a layer of complication, you have to do that in Hindi, which does not make it much easier because you're always so used to pitching numbers and your company in English that, you know, Hindi just like ah takes everything for a toss. and And the funny part is that if anytime you talk in English, ah they correct you. They're like, please talk in Hindi now. Okay.
01:59:18
Speaker
so So it's definitely a really... um uh did you have a like a hook like most pitches they start with some hook to engage the sharks like something humorous or yeah so so so so the thing is that we we you can come up with you can try coming up with your own ones but at the end the shark time team sort of curates your uh your opening pitch and everything so what they did for us so because i mean there's three core members right it's my it's me my brother and my mom who are running the three major verticals in the company.
01:59:50
Speaker
So ah they made my mom the judge. They made me the advocate for Borecha and they made my brother the advocate for Maka. And essentially we went on stage and I am putting forward my case for why Borecha is the best brand.
02:00:06
Speaker
And he, my brother had to put forward the case to why Marka is the best brand. And then she was the judge who basically said, okay, you both are really good. So let's come together and form one company, which is Latam Basam Brewers and it brings Marka and Willitra together. so So that was our old sort of hook and our pitch, which was ah quite quite fun and interesting yeah in a certain sense.
02:00:24
Speaker
um Hopefully you get to see it if it comes out on YouTube. I'll definitely share across a link. For sure, for sure. Awesome. Thank you so much for time, Mishan. I had a lot of fun.
02:00:35
Speaker
No, absolutely. Same here, Akshay. was a pleasure being on your on your show and and your podcast and really looking forward to what comes out of it. And and hopefully it was helpful and useful and to you as well as to the people who come on your channel to see it.