Kirin-backed Indian brewer B9 Beverages seeks more clout with new factory

By Advait Palepu

An Indian craft brewer backed by Japan’s Kirin Holdings Co. wants to overtake entrenched global brands by building a $70 million beer factory and raising fresh funds ahead of a public listing in 2026.
 

B9 Beverages Ltd is building a new brewing facility in the north Indian state of Uttar Pradesh, which, once completed, will become India’s biggest beer factory and expand production, founder and Chief Executive Officer Ankur Jain said in an interview. The company currently leases six brewing units and sells an equivalent of 8 million cases of beer a year.

The New Delhi-based company has also appointed investment bank Morgan Stanley to lead another round of fundraising ahead of the IPO. 

 

“2023 was a very tough year for us because we underwent a very drastic transformation in our sales operations, supply chain, financial checks and balances,” Jain said. “It was a deliberate decision that caused a slowdown, but we are a much stronger company today.”

The new factory will cost between $60 million and $70 million and will have a capacity of 50 million cases, with its first phase expected to become operational by next summer, Jain added. 

B9 overhauled its operations last year as it fights for a greater share of India’s beer market and works to turn profitable as losses have widened. Jain brought in Accenture Inc. and Boston Consulting Group last year to improve financial controls and supply chain management to generate more cash. 

India’s beer sector is dominated by mass producers including United Breweries Ltd.’s Kingfisher and labels from Anheuser-Busch InBev NV and Carlsberg A/S. In the decade since its founding Bira 91 has been credited with kick-starting the country’s rush of independent craft beer brands, luring a younger, hipster clientele with styles from a blonde summer lager to a special-edition pomelo India pale ale.

‘Poster Boy’

“Bira was the poster boy not just for the beer industry, but for new-age Indian alco-bev brands,” said Vikram Achanta, CEO of beverage consultancy Tulleeho Portals. “They demonstrated how an Indian brand, via a guerrilla campaign, could achieve substantial success.”  

The country’s beer market was valued at Rs 41,500 crores ($5 billion) as of 2023 and is estimated to grow to Rs 78,100 crores by 2032, according to market research firm IMARC Group. While the Indian alcohol and beverage market is among the fastest growing in the world, per capita beer consumption is significantly lower compared to the US, UK, Germany and China, Indian consultancy Technopak Advisors said. 

B9 closed $50 million fundraising in June through external loans from lead backers Kirin and Tiger Pacific Capital LP. It’s raised $290 million in equity and debt to date from investors who also include MUFG Bank Ltd. and Peak XV Partners, formerly Sequoia Capital’s India unit, according to Jain.

Jain’s goals are ambitious: He wants to increase Bira 91’s total market share from 8 per cent to the early teens, and see a double-digit earnings before interest, taxes, depreciation and amortization margin before listing.  

But the company is still figuring out how to become a bigger and profitable player. B9 reported a 17 per cent rise in revenues to Rs 850 crores in the year ended March 2023, the most recent period for which data is available, down from 64 per cent growth the previous year. Losses deepened to Rs 450 crores compared to the previous fiscal year, as it invested in growing its distribution network, restructuring operations and the new factory. Current Ebidta is negative.

Going forward, Jain’s looking beyond megacities toward smaller towns where beer’s popularity is growing.

“It’s not just young consumers,” he said. “Beer is seen as an everyday alcoholic beverage, there is no specific occasion for it and as a result, people are willing to experiment.”