Pankaj Aswani will have a real cool story to tell his kids and grandkids if his current obsession turns into a rip-roaring success. After acing his Chartered Accountancy course in 2011, Aswani started off as a banker with Citibank. In his own words, that was his ‘first and last job’. Come 2016, he got married and flew off to New Zealand for his honeymoon. There he discovered beer, the kind without alcohol, and got hooked. Soon after his return, he decided to chuck his cushy job to start his own beer company as India had very little in the name of non-alcoholic beer or ‘0.0’ as the nomenclature goes. This was March 2016. Over the next 10 months, Aswani invested Rs.5 million and learnt how to brew, bottle and sell his brand of 0.0. Inspired by Carlsberg’s ‘Probably The Best Beer In The World’, Aswani christened his own creation ‘Coolberg’. He must have got something right because biggies such as United Breweries and AB InBev soon followed with Heineken 0.0, Radler and Budweiser 0.0, respectively.
Ever soaked grains for too long? They get all frothy and smelly. Well, you are halfway there to making beer. Yeast feeds on the grains, produces alcohol and burps out CO2. Do this well enough, throw some hops in the mix, and you have about the same stuff that the Heinekens and Hoegaardens of the world come from. You can distil the alcohol out, flavour the remains and serve it to a teetotaler. That’s how the pricey Heineken 0.0 and Budweiser 0.0 are made. Or, you can stop brewing before the yeast produces alcohol, add flavours and trick the taste buds into thinking you have the real deal. That’s how you get Kingfisher’s Radler and Coolberg’s seven variants — cranberry, ginger, strawberry, peach, mint, malt and java malt. Aswani has also brought clever positioning into the picture. “Those who like beer will have beer no matter what. The idea is to cater to the category that does not have access to alcohol and to also introduce beer to the teetotaler,” says Aswani.
To keep capex low, he partnered with third-party bottlers and by end-2017, Aswani’s little bootstrapped variant was clocking Rs.5 million in revenue from three cities — Mumbai, Ahmedabad, and Aswani’s hometown, Jaipur. In August 2018, he picked up an undisclosed seed round from India Quotient and Indian Angel Network (IAN) Fund. Soon after, United Breweries launched their non-alcoholic offering. “Sales truly began only in March 2019,” says Ramesh Viswanathan, chief new business officer, United Breweries, which dominates the Indian beer market through Kingfisher. In July, AB InBev introduced Budweiser 0.0, and in November, Aswani bagged another $3.5 million from IAN, Singapore’s RB Investments and Ashish Goenka, chairman, Suashish Diamonds. Right on cue, Indian supermarkets had new shelves to fill.
the big bet
This shift in India towards 0.0 piggybacks on a few factors, explains Viswanathan. One, the carbonated beverage consumer is willing to experiment. Second, carbonated drinks have always got flak due to their high sugar content. “Non-alcoholic beer is 69 kcal per can versus 140 kcal per similar serving of your regular cola,” points out Viswanathan. Internationally, 0.0 isn’t new. “Since 2015, our aim has been that no- or lower alcohol (sub-3%) products make up at least 20% of our beer volume by 2025,” says Kartikeya Sharma, South Asia president, AB InBev. Viswanathan says that Heineken, which controls United Breweries, is shooting for 10% of sales to come from low- to no-alcohol beer in the same timeframe; its current volume stands at 4% globally.
The Indian carbonated drinks market stands around four billion litres (See: Full of hops). The beer market, as per Viswanathan’s estimates, is one-third that size. Hence, for the big names, a 0.0 increases their market potential manifold. So, while the likes of Heineken and AB InBev are entering the realm of FMCG, why are investors betting on a newbie such as Coolberg? “From the investment point of view, Coolberg has home ground advantage. It is the first Indian brand to penetrate this market segment. This gives it plenty of room to scale and grow. In addition, the team has displayed good unit economics with higher gross profit margin and focus on positive cashflows,” says Digvijay Singh, COO, IAN. While Aswani refrains from divulging whether they are profitable, he says revenue is estimated to hit Rs.600 million in FY21.
At Rs.69-110 for 300 ml, Coolberg expects to expand its reach to 50,000 outlets by end of 2020. Currently, it retails out of 15,000 outlets. Its competitors, too, are upping their act. Heineken taps into the budget end with Kingfisher Radler at Rs.45 for a 300 ml can. The Radler is aimed at those who pick up canned Coke at Rs.40. Meanwhile, Heineken 0.0 retails at Rs.75 a swig and caters to those willing to spend more for an ‘almost authentic’ beer experience. Viswanathan claims that the 0.0 variant already makes up 8% of Heineken sold in India. At Rs.80 for a can, AB InBev’s Budweiser 0.0 takes on Heineken’s 0.0 and Coolberg with its premium pricing. “Our focus right now is to understand the consumer, and learn from what we are doing,” says Sharma.
The biggest advantage that 0.0 has over its alcoholic counterpart is reach, given that it can be ordered online and bought at supermarkets. You can spot Heineken 0.0 and Radler in retail chains, such as Nilgiris in Bengaluru, and at airports. Aswani though believes this is an offline game for now be-cause of limited awareness about the product. He bets on sales to pick up both online and offline once people get familiar with 0.0 beer. But with beer majors entering the fray, is Coolberg threatened? On the contrary, Aswani is happy. “Big brands coming into the segment actually helps build the category, validates the concept and helps market penetration,” he says.
The 0.0 label allows the brands to enter grocery shops, restaurants, multiplexes and office vending machines. However, there’s always a however. “We are using alcoholic mother brands to build brand perception. So, when you go to the market with a non-alcoholic product, the consumer still thinks ‘Is mein kuchh hoga’,” explains Viswanathan. While IAN’s Singh feels that the 0.0 category will need to bypass the stigma associated with alcohol, Sharma expects the non-alcoholic beer category to not even account for decimal percentage of India’s beer market. This is also the reason why Heineken and Budweiser import their 0.0s as the current volume does not justify local manufacturing.
That said, there’s much to look forward to. “The popularity quotient associated with non-alcoholic beer makes this product enormously conducive for growth, especially in a youth-intensive economy such as India,” says Singh. AB InBev’s research pegged India’s non-alcoholic beverage category at $6.4 billion in 2018. There’s clearly plenty left in the vat, if you may. To grab a slice of the 0.0 pie, Coca-Cola brought Barbican, its malt-based drink to India in August 2019, but Viswanathan expects more competition to enter in the coming days and is lining up expansion. For every Heineken 0.0 sold, it sells 2.5 Radler. By end of 2020, the group intends to ramp up volume for both by 2.5x. An equally ambitious Aswani is also working on the next round of funding. With opportunities galore to capture market share, his backers would be more than happy to bet on him.