Ab InBev, IHCL opens their first microbrewery, 7Rivers, in Bengaluru

Bengaluru: Anheuser Busch Inbev (Ab InBev) and Tata-owned Indian Hotels Company (IHCL) have jointly opened their first microbrewery, 7Rivers Brewing Co, at the Taj property in Bengaluru, after a delay of six months due to Covid-19 led disruption that led to shuttering of bars till it reopened in September.

The microbrewery was in the making since the fourth quarter of last fiscal and original plan was to launch it in peak summer season which overlapped with the nationwide lockdown. Now, the world’s biggest brewer and country’s largest hospitality chain are banking on this pre-pandemic project to revive sales as both sectors have been hit hard amid travel curbs and negligible socializing.

Kartikeya Sharma, president-South Asia at AB InBev said, “People are sick and tired of being at home and drinking beer by themselves or virtually with friends. As government is easing the lockdown and more consumers aching to go out again, it was the right time to open up the venue.” Instead of selling draught versions of existing bottled beer brands, AB Inbev will brew new styles of craft beer at the brewpub.

To be sure, IHCL runs popular hotel chain Taj and Ginger among others in India. AB InBev is among the world’s top brewers that sells brands such as Budweiser, Corona and Stella Artois. The next 6-9 months are critical, said the beverages company. While there could be initial consumer reluctance as Taj is perceived as a luxury brand, trust factor would help drive consumption when safety is paramount.

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“Brewpubs have not been a stellar example of consistency of quality. That is not a challenge for us. A brewpub in a city like Bengaluru with a mature palette for craft beer will be a good test to see what consumers like that we can retail in commercially packaged form. Consumers who come to the brewpub will also buy the packaged format later,” said Sharma.

The plan, conceptualised by AB InBev’s innovation and investment group ZX Ventures, is to open about 15 outlets at Taj’s marquee locations over five years. Under this partnership, AB InBev will handle the backend such a brewing and beer recipes while Taj will run the outlets in a revenue sharing model unlike IHCL’s other global tie-ups such as Starbucks and Tesco which are joint ventures to operate the stores.

“It would be nice to see people getting back into our facilities because I never saw our hotels as haunted as in the last six months due to the lockdown,” said Puneet Chhatwal, managing director of IHCL.

The second outlet from this tie-up will open in Goa followed by Mumbai or Hyderabad 3-4 months later. Plan is to subsequently open in Delhi and one more in Bengaluru. The partnership between the two companies is estimated at Rs 150 crores.

“We are aiming for Rs 7-10 crore in sales per outlet which amounts to our investment of Rs 150 crore across 15 outlets. This is a high margin business which can help us fuel growth,” added Chhatwal.

With both AB InBev and IHCL having a global footprint, the tie-up could be extended overseas, hinted Chhatwal. While there are no ongoing talks, properties in London and New York could be good options after establishing foothold in India, he said.

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Pre-pandemic, India was one of the largest beer markets and consumed about 340 million cases per year (at 7.8 litres per case). Hospitality has also been a key contributor to the country’s gross domestic product (GDP) in the last decade up till pre-Covid era.

Both the sectors have delayed their expectations of a quicker recovery.

Chhatwal said, “I am hopeful that Q3, driven by festive and wedding season, will be a good test to predict full recovery. Till we don’t know what the policy makers are going to permit, forecasting will be difficult.”

After reopening of liquor trade in May, excise data sourced from officials indicated that volume sales of beer from May to July declined 37% to 62% in five states including Telangana, Karnataka, Rajasthan, West Bengal and Madhya Pradesh. Several states had increased the tax on alcohol, by up to 75%, to boost their revenue that had plummeted during the lockdown.

AB In Bev had also told ET in July that the segment saw demand plummet 60-70%, unlike Indian Made Foreign Liquor (IMFL).

“If the industry achieves about 80-85% recovery in Q4, it will encouraging for the peak season next year. Vaccine is imminent in Q1 and Q2 next year. We have six months from now to gain consumer confidence,” said Sharma.



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