Tag Archives: alcohol industry

AIDA races to meet blending 20% of petroleum products by 2025

After the Prime Minister’s call to blend 20% of blending of petroleum with ethanol from 2030 there is an urgent rush to ramp up the capacity and increase the type of feedstock required to boost production to meet the required amount of ethanol needed to blend up to 20% of ethanol. In an interview with Ambrosia V. Raina, Director General, AIDA outlines the roadmap to achieve this along with the newer distilleries planned in the next few years.

What is the current production capacity of ethanol in India?

The total ethanol production capacity is 473 crore litres that includes grain-based ethanol, molasses based and others sources. Alcohol production capacity out of molasses is 693 crore litres whereas grain based capacity is 258 crore litres. This production capacity is expected to increase further with nearly 15-20 new distilleries coming in the next few years with the help of the Indian Government. In order to boost the growth the govt. has provided financial assistance on interest subvention.

Can you tell us more on the new Distilleries that are upcoming in the next few years?

The new distilleries are grain based only with 15-20 new ones coming into the market and approximately 25-30 existing distilleries expanding their capacities. Also with the change in the guidelines you can now put up a new distillery with more ease. Earlier it would take longer time to get permissions and clearances. But now the Government has allowed all permissions, all guarantees up to the capacity of 200 KLPD for grain based and 100 KLPD for molasses based can be given by the State Governments. Since ethanol and high alcohol (above 95%) comes under the purview of the Central Government putting up an ethanol distillery doesn’t have any challenges unless liquor is produced.

Where are the new distilleries now being focussed in UP and Maharashtra or elsewhere also?

There is no grain distillery in the state of UP. Primarily it is in Punjab but now they are coming up. The grain is there. Other distilleries are resisting. UP will come over, Bihar will come over new one. Even Odisha has a new distillery.

Beside grain what other sources are being experimented on?

Apart from grain Maize and Rice are being experimented upon since these are considered as damaged food grains which are not edible for human beings. However, these are currently in short supply. We have introduced good rice also because you have to purchase it from Food Corporation of India (FCI). The basis of these purchases are on rates that are already determined/fixed based on the feedstock. For instance the rates are fixed at Rs. 20 per kg. or Rs. 2000 per quintal by the Food Corporation of India (FCI). If you purchase it from sugar cane juice the rate is Rs.62.65 per litre of ethanol. If it is molasses because sugar supply is in surplus it is Rs. 57.61. The rates for General Molasses is Rs.45.69 whereas damaged food grain that includes rice, maize, jowar, bajra etc are priced at Rs.51.55.

What are the benefits of manufacturing Ethanol?

The benefits of manufacturing ethanol is that there is no limit to the supply. The more you can supply the better it is. For instance if you can supply 1000 litres or 1 crore litres the government welcomes that. The rates are fixed for purchase by petroleum companies, which includes – Bharat Petroleum, Hindustan Petroleum and Indian Oil. Also your payments are assured to be given in 15 days, which has reduced from the earlier timeline of 30 days.

Will this short supply affect the liquor industry?

The ENA prices have also gone up with the availability at Rs.50-52 per litre from where you produce alcohol. The prices have already increased by more than 5%. ENA is Extra Neutral Alcohol which is used for the production of better quality of alcohol and normally not used in the production of country liquor. The total requirement of alcohol by the year 2025 is 1350 crore litres. Out of these for liquor and other purposes we need about 334 crore litres. For liquor and industrial purposes like chemicals etc. and the balance 1016 crore litres will be for ethanol. Out of the total estimated requirement of 1016 crore litres the sugar industry will give 684 crore litres and ethanol from grain will be 666 crore litres by 2025.

What are the challenges that distilleries face for increasing the targeted alcohol production?

The biggest challenge is to achieve the target of 20% by 2025 since originally that plan was to achieve it by 2030 which was upped to 2025. The only downside is that if we achieve these numbers then there might be a shortage of feedstock.

How much of this target can be achieved realistically?

We can achieve about 75% – 80% of the target. There won’t be any short supply for liquor production because the governments are strict. Nowadays’ the government is not giving molasses which is under State Governments. The moment molasses is produced they will make a reservation and allot it for the country liquor. Even if there is shortage of total supply I don’t see any difficulty for the liquor production because the State Governments are taking care of that thing.

Greater Than Gin, yes, what can be?

In the last couple of years, there has been a count of nearly 15 new gins entering the market, reviving the gin spirit, so to say. Of that 11 are from Goa. “It started off as a fluke as we decided that Goa had the best bottling partners for us. Since then, it seems quite a few others have taken that to be the precedent set and got to work,” that is Anand Virmani, the founder of Nao Spirits, manufacturers of Greater Than and Hapusa – premium crafted gins that are making waves in the markets available.

Virmani has his own take on how the crafted gin segment is evolving. He believes that Goa is not any more liberal than many other states in the country when it comes to excise policies. He dismisses it as a factor for launching Greater Than in Goa. Similarly, for the availability of botanicals, he states that the main ingredient for gin has to be either imported our sourced from the Himalayas in the north and that Goa is no different than any other part of the country when it comes to sourcing botanicals. As regards to water quality which Goa touts about, he is of the view that since all water in the production process has to be demineralised, the oriGinal water quality should not really matter.

But when it comes to Goa as the watering hole, he believes so that it is a great marketing tool. “The spirit of trying out new things is certainly important, especially since so many tourists come to Goa and take back gin bottles with them.”

Ambrosia: What is the reason for resurgence of gin which had taken a beating when vodka entered the Indian market?

Virmani: Vodka did this to gin in the 1950s globally. Gin has come back primarily because of the resurgence of cocktail bars which propagate classic cocktails, many of which just happen to use gin as their base. Ambrosia: There is a talk about uniqueness of the botanicals that goes into gin making. From a consumer perspective, what does botanicals signify?Virmani: Botanicals are what separate one gin from another. They are the main flavour components in any gin. Also, only high quality gins like ours use actual botanicals as opposed to artificial flavouring used by the cheaper, cold-compounded gins.

Ambrosia: What kind of growth are you seeing in the overall Gin market in India?

Virmani: The premium+ gin market in India (which excludes the low-end mass produced gins) are growing phenomenally well; easily around 30%+ CAGR. Ambrosia: We see a lot of premium brands being launched, is it because they are not meant for the masses?Virmani: Craft gin can only ever be premium. A low-priced gin, will not ever be a craft product. Even so, we aim to make our gins as accessible as possible.

Ambrosia: Could you tell us about the spark that led to the creation of Greater Than?

Virmani: The spark was quite simply the growing disbelief that India was not able to produce a single brand of gin that we could proudly call our own. It did not make sense to us, especially since India was the birthplace of the Gin & Tonic as well as the heart of the world spice trade.

Ambrosia: Which are the markets it is presently available now and what are your expansion plans?

Virmani: Our gins are present in seven different states across India currently as well as in over 15 countries outside India. We continue to grow as far and wide as we can without over-stretching ourselves. Assam has been our newest addition within India while New Zealand has become our most recent export market to come online.

Ambrosia: How is Hapusa different from Greater Than?

Virmani: Hapusa is a very small batch produced gin. It is primarily made with Himalayan juniper along with other botanicals found and sourced from across the country.

Ambrosia: Which are the markets it is present in – how do the two compete with each other – what is the USP of both?

Virmani: Greater Than is a classic London Dry Gin and is ideal for making cocktails or Gin & Tonics. Hapusa however, is far more characteristic and best enjoyed as a sipping gin or included in stirred cocktails like the Negroni or Martini.

Ambrosia: What next from ‘Nao Spirits’?

Virmani: Lots more

Stranger & Sons eyeing top bars of the world

Craft brands in India are currently redefining the perception of premiumness. It is now much more about authenticity, craftsmanship and embracing innovation to produce something uniquely groundbreaking. Today, we see a lot of Indian consumers are excited to try a good homegrown product without it being a compromise and brands like ours are able to communicate and ensure our high quality standards. Moreover, with India’s growing cocktail culture, we see that a lot of Indian consumers are open to trying new, atypical cocktails as well as local, homegrown products which have indeed contributed to the rise of craft producers in the country. That is Sakshi Saigal, the co-founder and director of Stranger & Sons. In an email interview, she maps the journey of crafted gin which has just embarked upon an exciting phase of spirits in India.

Ambrosia: Could you tell us about the spark that led to the creation of Stranger & Sons?

Saigal: It goes without saying that we individually are not just cocktail enthusiasts, but also had access to observe the beGinnings of the Gin Revolution first hand. I was working towards my MBA in Barcelona, while Vidur was studying in the UK and Rahul had just set up his craft brewery in Mumbai. While we were tasting and drinking a variety of gins every day – whether in London’s cocktail bars or the Gin Tonics of Barcelona, we were getting well acquainted with the gin landscape. That’s when it piqued our interest as to why India wasn’t up to speed with gin although gin manufacturers all over the world looked to India when it came to sourcing botanicals and we kept encountering brands based on a vision of India that we knew very well had never been a reality. This made us question why products with these botanicals are made everywhere but here. To add to this, there wasn’t any other quality homegrown product then that was conveying the story from our perspective; so we decided to change that and embarked into a lot of research before setting up Third Eye Distillery.

Ambrosia: Could you give us insights into the growth journey of Stranger & Sons?

Saigal: It’s honestly been a phenomenal experience so far! Right from the start, we wanted to build a truly Indian gin that would stand out on the shelves of top bars in the world but fit in just as well in the colourful and vibrant bars in Panjim. Made from inherently Indian botanicals, Stranger & Sons Gin captures the essence of contemporary India in every bottle for a curious and discerning consumer. What makes Stranger & Sons interesting is how we celebrate our diverse, unique and complicated history while recognising India in its current context instead of the stereotypical version with just palaces, elephants, and so on. Embracing this wonderful strangeness inherent in the contemporary India we live in today through our gin allows consumers to connect with the story and the brand in a very organic manner. Creating this emotional connection with our audience has always been at the core of our thought process and that’s where we believe that it’s not just what our gin is made of that matters, but what it represents.

Starting out as a home-grown gin brand from Goa to being declared one of the 8 best gins in the world by the International Wine & Spirit Competition in 2020, to winning the highest honours at The Asian Spirit Masters 2021, we’ve managed to put Indian gin on the world map and continue to work towards showcasing India’s diversity to the rest of the world! We’ve had an action-packed and eventful journey so far and the terrific response we get from our consumers at our international and domestic events is backed by an exciting, entrepreneurial team, all of whom feel very strongly about the brand. With regard to sales, we sold 25,000 nine litre cases in our first full year of operations, which was extremely exciting for us and was mainly attributed to being available in just two Indian cities and one international market. This year, despite the pandemic, we will be focussing on domestic and international expansion.

Ambrosia: How much has the pandemic hit production?

Saigal: Being absolutely aware that it has been an extremely tough phase for the hospitality industry and brands including ours, thanks to our team’s sheer creativity and persistence, we never lost sight of our consumers, favourite bars and bartenders. During the pandemic, we launched ‘Strange Times’ bottled cocktails in Singapore as an initiative to support the trade, made in collaboration with some of the best bars there to help keep the spirits up amidst the pandemic. We also got selected as the first Indian brand for the Craft Gin Club and shipped bottles to over 70,000 homes across the UK. During the lockdown, we launched India’s first distilled cocktail with local, seasonal pink guavas – Perry Road Peru, in collaboration with The Bombay Canteen, a high-end Indian restaurant which was a massive success in the market! Regardless of the digital shift, we continue to prioritise innovation, crafting immersive experiences and strengthening our relationships with consumers and trade alike.

Ambrosia: Which markets are you present in and what are your expansion plans?

Saigal: We launched Stranger & Sons from the shores of Goa and expanded to Maharashtra, Delhi, Karnataka and Rajasthan within India and UK, Singapore, Thailand and the UAE, internationally. We will indeed be exploring various domestic markets including Telangana, Uttar Pradesh, Assam, and more. In terms of international expansion, we look forward to increasing our global footprint through our upcoming launches in Australia, Mauritius and more, very soon. Each new market brings a unique, diverse consumer base which makes the experience, well, let’s just say thrilling!

Ambrosia: What are the challenges – regulatory and distribution network – faced in India?

Saigal: In the spirits world, India has always been known for the sheer volume of alcohol we produce over anything else. The distilleries here are mostly large-scale, daunting structures and it’s difficult to contract distill small quantities here which is often a great way for craft distillers to beGin their journey. Adding to the challenge, India follows a federal system of laws and when it comes to alcohol and so, the guidelines and regulations vary across states in India. Access to good quality equipment and adequate space also pose a challenge, particularly once companies start expanding.

Ambrosia: Tell us about the botanicals that make your gin unique?

Saigal: Indian botanicals and spices that are indispensable to every Indian household and form the backbone of India’s culinary heritage. Among India’s most fertile states, Goa was a natural choice for us for its lush expanse of spice farms. The mace, cassia bark, licorice, black pepper and nutmeg that perfume our gin are sourced from spice farms surrounding our distillery making Goa the beating heart of our narrative. Our unique citrus peel mix of Indian Bergamot, Nimbu (Indian Limes), Nagpur Oranges & Gondhoraj have also been put together to represent different parts of our country and each of these citrus’ are extremely integral to the region they represent and make their way into local cuisine, juices, pickles, jams, preserves and more. By making use of all the wonderful spices available to us, we built a three-dimensional Gin that is proudly Indian and true to its oriGin. Our signature serves include fresh, flavourful Gimlets & aromatic, layered Gibsons which are also homage to India’s pickling and cordialling culture.

Ambrosia: What next?

Saigal: Third Eye Distillery was never built as a one-product-company right from the get go. There doesn’t go a day when someone from the team isn’t trying to answer this same question and one up the other. There are so many things that we’re working on at the moment when it comes to innovation and new product releases, no thought goes untested and no idea wins without a fight! We are also constantly trying to do our bit to make our distillery more responsible and sustainable while exploring new extensions and experimenting with various ideas. The one thing we know for sure, whichever product we release next, it won’t just be another bottle on the shelf, but will truly be adding to the conversation and be integral to taking our cocktail culture to the next step.

‘Black Jewel’, Goa’s first Craft Gin

One common thread among all the craft gin makers is that they are kind of globe trotters and well-heeled. And these journeys make them richer (I am not talking financially here). Take for instance, Cedric Vaz, Director of Global Spirits and Foods and the creator of the arguably the first craft gin from Goa – the Black Jewel.

It was on one of his trips to Europe between 2010 and 2012 that he noticed that gin was becoming popular and blooming in some of the European markets. “I could see it coming to India very soon which motivated me to work on creating a brand of premium yet value for money, which will appease those customers who really have a craving for a good Gin and are ready to pay a reasonable price for it. After a lot of work, research and sleepless nights, we zeroed down on the concept and creation of our gin brand which we named ‘Black Jewel’. Our first batch was manufactured on December 18, 2018. Our gin was first amongst the gins produced in Goa as well as first amongst crafted Gins.”

Hand-picked Junipers

Black Jewel Gin is meticulously hand crafted from hand-picked juniper berries that are grown in the highlands of Italy. These berries along with other botanicals such as Cilantro, Wild Celery, Carum Carvi etc. are infused into the premium grain spirit through a double copper pot distillation. The result is a gin with distinct and remarkable zesty citrus flavour.

For gin to be called gin it needs the juniper as one of its ingredients that is what makes gin unique from vodka. From the perspective of a consumer, herbs other than juniper are a personal preference and palate-friendly. A manufacturer is compelled to compulsorily add Juniper to call it gin, but is free to add the herbs and flavours of their wish, making gin a diverse drink; and this allows the customers to be choosy about their taste and style of gin.

Superior quality of water in Goa

Mac Vaz of Global Spirits and Foods which manufactures Black Jewel Gin states that, besides friendly excise policy, Goa has the perfect water quality for spirit manufacture. “Coming under the Dharwad super group, largely dominated by the laterite rock as its soil which is highly porous and permeable, the quality of ground water is clean and sweet. This, with the heavy rains of nearly 330cm, makes Goa a region with good amount of potable water. We believe water of Goa has its own brand equity.”

On Black Jewel’s reasonable pricing, Sanath Bharne of Sales says, “While there is a general perception that premium pricing has a pull factor with certain Indian consumers, we resisted that suggestion from the trade and came up with an MRP of `675 for 750 ml as we were clear that we wanted Black Jewel to be within the reach of the consumers who are accustomed to regular molasses-based flavoured Gins.”

Allied Blenders & Distillers appoints Mr. Shekhar Ramamurthy as Executive Deputy Chairman

Allied Blenders & Distillers Private Limited recently announced the appointment of Shekhar Ramamurthy as the Executive Deputy Chairman of the company with effect from the 1st of July 2021. He replaces Nick Blasquez, who has left ABD Private Limited to pursue other professional interests. Mr. Kishore Chhabria, Chairman has expressed his gratitude to Nick Blasquez for his contributions and the transformation journey that he had guided during his tenure.

Shekhar Ramamurthy, has spent over three decades with the UB Group in various leadership roles, the last of which was as the Managing Director of United Breweries Limited. He is well recognised within the alcobev industry for his leadership skills, ability to identify opportunities and drive growth and value. As the country and the industry unlocks from the effects of the Covid 19 pandemic, ABD is poised to continue its growth through building successful brands, winning with consumers and creating value for all stakeholders. Shekhar Ramamurthy will spearhead this journey.

Goa, the Gin Capital of India

No, we are not saying move on Feni which is unique to Goa and mind you growing in its own way. Suddenly, in the last two years, despite the pandemic, about 15 brands of Gin have been crafted and launched across the country and 11 of them, yes a full team of brands, have their oriGin s in Goa. What is brewing over here in this beautiful coastal state? A lot ! And what warms the cockles of the heart is that young entrepreneurs, in their 20s and 30s, are the craftspeople. Cheers to this young brigade.

And it was a Goan – Cedric Vaz, it’s in his genes, right, to launch the first truly crafted Indian Gin by the name ‘Black Jewel’ and believe you me crafted Gin has turned out to be a connoisseur’s delight, irrespective of the brand.

There has been a resurgence of sorts for Gin . No, the pandemic has got nothing to do with it. Though the British East India company created the drink in the 1700s, it was a military cocktail, devoured by the troops to stay healthy. The British residents in India added Gin , sugar, ice and citrus and thus was born the Gin and Tonic. The witty statesman Winston Churchill words remain for eternity “The Gin and tonic drink has saved more Englishmen’s lives and minds, than all the doctors in the Empire.” Somewhere along the way, Gin lost favour and it was perceived as a ‘ladies drink’ and everyone with some knowledge has some reasoning for that. Around the same time, vodka and tequila captured the imaGin ation of the world and these spirits kind of drowned Gin. It was circa 2016 that in the United Kingdom there was growing interest in Gin which reportedly grew 44% year on year with about 100 home grown brands hitting the market. India is the fifth largest consumer of Gin after the UK, USA, Germany and Spain, but within the country Gin accounts for just about 1% of spirits consumed.

Young entrepreneurs driving craft Gin segment

But it is growing. In the recent past, it has caught the attention of the Indian spirit maker and consumer. The young co-founder and director of Stranger & Sons, Sakshi Saigal says “Though its presence in its current form is limited to the main metro cities, Gin is going through an extremely exciting phase and still transcending into the mainstream. There aren’t just new consumers every day but new Gin s too! As people travel, they have slowly started to understand India’s rich history when it comes to Gin and agricultural bounty when it comes to ingredients, so it has become an obvious choice for Gin makers alike.”

There are several reasons for this resurgence, one of which certainly is the drinking culture which is getting nuanced, thanks to the new generation which likes to explore, experiment and be expressive. The Chief Operating Officer of Radico Khaitan, Amar Sinha states “The Gin market appears very promising in the country as over the years people have been open to move beyond the regular brown spirits. They have started developing and appreciating the fine taste of the white spirit for the botanical infusions. There are many factors behind the popularity of this category such as increased exposure to global culture, the growing trend of cocktail culture, and Generation Z’s inclination towards experimentation with white spirits.”

Craft Gin comes with a price and why not?

If one looks at the drinking profile, these crafted Gin s seemingly are not for the hoi polloi. Almost all of them (Stranger & Sons, Greater Than, Hapusa, Samsara, Jin Jiji, Pumori, Jaisalmer and a few others) are priced in a way attracting the upwardly mobile. This is the segment that these manufacturers are looking at and not for nothing most of them are produced in small batches. “Craft Gin can only ever be premium. A low-priced Gin , will not ever be a craft product. Even so, we aim to make our Gin s as accessible as possible,” states Anand Virmani, Founder and CEO of Nao Spirits and Beverages (creators of Greater Than and Hapusa).

However, Mac Vaz of Madame Rosa distillery and the founder president of the Goa Cashew Feni Distillers and Bottlers Association, has another take on it. The first craft Gin , Black Jewel, from Madame Rosa stable is reasonably priced as to make Gin drinking accessible and affordable. All of them in some way or the other are working in that direction, coming up with a distinct touch of their own. It makes sense in a market which is slowly opening up, thanks to the many bartenders who are peppered across the country and ever open to experimentation.

Botanicals are at the core of this revolution

Botanicals are coming into that experimentation while Juniper is the predominant botanical ingredient in Gin , there are other accompaniments, most of them sourced locally. States Sakshi Saigal “Our botanicals are crafted together, taking inspiration from India’s culinary heritage which is centred around spices. Spice boxes are commonly found in almost all Indian kitchens and for centuries, they have been manipulated in different ways to create flavour in food, liquid, sweets and scents. Our Gin goes beyond the customary juniper and highlights inherently Indian botanicals and spices that are indispensable to every Indian household and form the backbone of India’s culinary heritage.”

In an article in The Hindu, Anoothi Vishal cites Dr. Anne Brock, master distiller at Bombay Sapphire, “I believe it is important that juniper remains the core, but we may need to relax and encourage difference. Gin is a global spirit with different botanicals and styles, and consumers are interested in the people who make their Gin , its provenance and story.”

Goa, India’s watering hole has friendly policies

And it is all happening in Goa, India’s watering hole. That is good enough a reason for many of the distillers to descend upon Goa, an investment-friendly state in the hospitality industry. Mac Vaz emphasizes “Goa being the apex tourist destination of the country gives smaller players a cost-effective advantage due to the consumer watering hole ! Also unlike in most other parts of the country, in Goa there is no hypocrisy and taboo quotient connected to liquor consumption in moderation. Lastly, Goa has a brand, has a natural USP in perception. Everything that is produced within Goa has its exotic positioning – Feni is a classic example of this.”

Why Goa? And Sakshi Saigal has the perfect answer for that going beyond the friendly excise policies of the state which has been eulogized at various forums. “We often hear a lot being said about Goa having more liberal excise laws and so on, making it easier to start brands there but honestly, that undermines what Goa truly has to offer. A former colony, Goa adopted a lot of the Portugese way of life which adds to its own unique charm. The roads wind through green fields, the people speak Konkani with as much ease as they do Portuguese; colonial bungalows and local spice markets all co-exist with some of the most progressive hospitality and restaurant establishments. Further, the Goan way of living life to the fullest inspires us every day to strive for innovation and keep experimenting with various spirits and expressions of our Gin .”

She adds “A truly special place for most Indians where you’ll find the cuisine, architecture and culture of India & Portugal come together, Goa is home to Stranger & Sons. Tucked away in a corner of South Goa, you’ll find us, hunched over our still, throwing iconic Indian botanicals into our Gin , while the local women peel fragrant Indian citrus outside. Goa indeed has its own strange ties to Gin , having been the heart of spice trade for centuries. Our wonderfully strange roots in Goa where cultures, societies and spiritual beliefs stand united under a liberal approach to life translates into the invisible essence in our bottle. When we aren’t distilling, you’ll find us sitting on a porch sipping on some Gibsons made with our pickles! “

Strange it may sound, can you believe it, there are over 3,000 registered micro distilleries in the coastal state and they have enough capacity and more to allow for manufacturing of any spirit. If you have an idea, some capital and a good recipe, just head to Goa.

ASCI bans surrogate advertising in IPL

The Advertising Standards Council of India (ASCI) banned surrogate advertising of liquor during India’s showstopper event – Indian Premier League 2021 which however, got truncated, due to some players and franchise staff testing positive. Talks are on to hold the unfinished spectacle in the United Arab Emirates, like it did in 2020 without crowd attendance, to be viewed on a broadcast platform.

It was during 2020 IPL that surrogate advertising was active on television and digital medium, particularly OTT (over the top), the latter in the absence of clear guidelines. “The IPL broadcaster for TV has confirmed to the ASCI that all advertisements are checked for CBFC clearance so that they are not in violation of the Cable Television Networks (Regulation) Act, 1995 (CTNR). Keeping that in mind, the ASCI processed complaints on advertisements appearing in OTT, digital and print media,” ASCI said. The association suo motu took up 14 complaints and some of the advertisers withdrew the ads.

Brand extensions have some leeway

The CTNR rules prohibited the direct or indirect advertising of cigarettes, tobacco products, wine, alcohol, liquor or other intoxicants in 2009. The Information & Broadcasting Ministry, however, allowed advertisements of products even if they shared a brand name with a liquor or tobacco product so long as it wasn’t a manifestation of the prohibited product. Advertisement of brand extensions of liquor and tobacco products is permitted under CTNR, provided the product sold under the brand extension does not make direct or indirect references to the prohibited product, it is distributed in reasonable quantity and is available in a substantial number of outlets, and the proposed expenditure on the advertisement of the brand extension product is not disproportionate to the actual sales turnover of that product.

ASCI guidelines for brand extensions

The Advertising Standards Council has ‘Guidelines for qualification of brand extension product or service’ wherein for an advertisement to qualify as a genuine brand extension advertisement (by implication, not surrogate), the in-store availability of the product sold must be at least 10% of the leading brand in the product category or sales turnover of the product must exceed `5 crores annually or `1 crore in the state where the product is distributed.

Age-old question, whether to allow liquor advertising or not?

However, the question that keeps raking up is an age-old issue – whether to allow liquor advertising / surrogate advertising or not? And the topic is universal leading to unending debates. Across continents, there are countries where liquor advertising is allowed and then there are as many countries that have banned / restricted advertising of alcoholic beverages. In the United States, spirits advertising has self-regulatory bodies that create standards for the ethical advertising of alcohol. In the UK, advertising for alcoholic drinks follows a code enforced by the Advertising Standards Authority, while the packaging and branding of the products is subject to self-regulation. In Thailand, alcohol advertisements are allowed but with a warning message. In South Korea, public advertising is allowed only after 10 p.m. In the Philippines, alcohol advertising comes with a disclaimer ‘Drink Responsibly’. In India, liquor advertising was banned after the Ministry of Health found that cigarettes and liquor had adverse effects on a person’s health. However, advertisements for liquor brand extensions can run on television only if they have a certificate from the Central Board of Film Certification. That led to the companies (manufacturers and also advertising agencies) becoming innovative with ‘surrogate advertising’ wherein unrelated products with the same brand name is manufactured / advertised and sold, only to ensure that the liquor brand name stays right on top of consumers’ minds. Unrelated products include mineral water, music CDs, soda, sports accessories and anything that can be advertised.

Active on digital media

The question here is when liquor companies are active on social media which is a major influencer, an indisputable force and not to mention its enormous reach, the whole idea of banning on OTT and television smacks of hypocrisy. It is indeed paradoxical that excise which is one of the top revenue earners for most states, going up to 15 % of the overall revenues, is not allowed to be promoted. There is a school of thought that believes if a product is allowed to be manufactured and sold, it should be allowed to be advertised, but that is over simplification as it will certainly be like opening up the Pandora’s Box.Gokul Krishnamoorthy who worked with an agency that handled United Breweries in an opinionated article in the Financial Express says “While ASCI banning surrogate ads by liquor brands during the curtailed IPL 2021 was a welcome move, it prompted a question in many minds. What explains the existence of a team called ‘Royal Challengers Bangalore’? One can’t help but remember that the current captain of the team Virat Kohli is idolised by a young boy in a health beverage commercial, among many others. Royal Challenge is a brand of whisky owned by United Spirits, which also owns the Royal Challengers Bangalore cricket team. If scale of presence, volume of advertising, market share and the likes are the key metrics by which one decides whether or not an alcohol brand can advertise its extension, then Royal Challengers Bangalore has no problem at all.” He goes on to add “The only seeming solution then, albeit rather simplistic and overarching, is that if a brand is present in a category where promotion is banned, it should not be allowed to promote itself in any context. It should be denied the right to promotion, whether for its shared corporate brand, for its extension, for its event, for its cricket team or whatever else.” Since such conundrums exist, there are those who feel that we need to shed this hypocrisy and accept that people do drink and reaching them is a legitimate part of a company’s business plans. The companies should be allowed to promote safe, moderate and responsible drinking. In states where there is prohibition this issue does not crop up at all. With digital media coming into play, some players have been advertising brand extensions as the CTNR does not apply to advertisements over the internet. This is changing as we have seen the government bringing social media under control. The digital medium is pretty nascent and governments are grappling with policies to rein in the medium. Indian liquor companies have been using social media to promote their brands. The UB Group recently tied up with a digital content company which produced a web series titled ‘Pitchers’, a five-part series on four friends trying to launch a start-up. With over 10 million viewers, the show got a rating of 9.7 out of 10 on internet movie database website, making the new concept of advertising, going beyond surrogate advertising. As rules become stricter, liquor brands will look at different channels – events, experiential, branded content and in-film, like ‘Pitchers’. As manufacturers need to advertise, one way or the other as to get their products sold, they have been innovative in how to get the message across.

Opportunities for beer in 2021 & beyond

Beer suffered quite heavily during 2020, primarily due to its reliance on the on-premise. Beer markets in Italy, the UK and Colombia were amongst those particularly hard hit due to lockdown restrictions. Traditional inbound tourism hubs continue to hurt. Some brewers also faced legislative issues, notably full bans on the sale of alcohol in South Africa and India, and a ban on domestic brewing in Mexico. Changes in consumer purchasing behaviour in the off-premise, such as a tendency to purchase multi-packs and less time spent browsing, meant some players had to adapt to new packaging offerings and/or new distribution channels as well. Overall, the industry will likely see an approximate 9% decline in beer consumption across 19 key markets (2019 to 2020). Amidst the challenges, however, there are bright spots:

Market recovery

IWSR research shows that some beer markets will emerge from 2020 relatively unscathed: beer proved remarkably resilient in Japan, for example, especially in the face of a strongly-advancing ready-to-drink (RTD) category. Although beer in China will see an approximately 7% loss in volume in 2020, the decline is not as bad as many feared it could be, primarily as restrictions had largely been lifted by the key summer months. Looking forward, developing markets will continue to provide growth opportunities for brewers. Even before Covid-19, many developed beer markets had stagnated in recent years. Key players have invested heavily in increasing their brewing capability and distribution networks across developing markets. Africa has been a particular focal point for investment, with new breweries opened in countries including Mozambique, Kenya and Ethiopia. In Asia, Heineken and Carlsberg have been very active in Vietnam and Cambodia. In 2019, Heineken enjoyed success with the launch of Heineken Silver in Vietnam, while Carlsberg’s relaunch of Huda was also well received. Of the leading markets, IWSR projects these two countries to be in the top ten growth markets between 2019 and 2024. The potential for beer growth in India is strong as well. AB InBev, for example, began brewing Budweiser in the market back in 2010. In January 2021, Kirin Holdings announced an investment of $30 million in New Delhi-based B9 Beverages, the maker of the Indian craft beer Bira. IWSR anticipates beer consumption in India to return to pre-Covid-19 levels by the end of 2023, continuing on its growth path from there.

Expanding beyond beer

As consumers moved to the at-home occasion, the trend for convenience has helped to shape purchasing behaviours. In markets such as the US, the ready-to-drink (RTD) category, which includes hard seltzers, has been taking share from beer. RTDs provide a growing opportunity for brewers to diversify their product portfolios. Indeed, Heineken entered the hard seltzer category in September 2020, with the launch of Pure Piraña in Mexico and New Zealand. In the US, Heineken partnered with AriZona to launch the AriZona SunRise Hard Seltzer in October 2020. AB InBev states that Bud Light Seltzer is their leading innovation in the US market, with over 75% of volume being incremental to their portfolio. In fact, 2021 was the first year in which a hard seltzer commercial (Bud Light Seltzer) aired during the Super Bowl. Malt-based RTDs are currently dominant in the US owing to their taxation base, and brewers there are in prime position to take advantage. Elsewhere, the alcohol base of choice varies by country, driven by consumer preference and local alcohol tax structures.

Changes in purchasing behaviour propel e-commerce

As with the wider beverage alcohol industry, Covid-19 has propelled the value of the alcohol e-commerce channel. Heineken, for example, reported that Beerwulf, its direct-to-consumer platform in Europe, nearly doubled its revenues in 2020, while in the UK, its revenues tripled. Online sales of its home-draught systems grew as well. Beer has traditionally under-traded online, primarily due to the channel offering lower margins. However, this will change as consumers continue to buy more groceries online and beer is included in the weekly shop. This is especially true in the US, where IWSR expects sales of online beer to grow rapidly as supermarket chains increasingly invest in the channel. Online beer sales hold the greatest market share in countries including Japan, the UK and the US. From a lower base, online beer sales will also grow rapidly over the next five years in markets such as Israel and Nigeria.

The entrepreneurial spirit of small-batch players

Craft breweries, which tend to be more dependent on the on-premise, have propelled interest in the global beer category and revitalised its fortunes in many markets. IWSR believes that the entrepreneurial spirit of the sector will mean that craft brewery regeneration will be quick. In the US, for example, IWSR has seen the pandemic lead to a “buy local” approach amongst some consumers, which will benefit small-batch players.

Innovation in the no/low space reignites the category

No- and low-alcohol beer is a bright spot for the category, as moderation and wellness trends continue to resonate with consumers. IWSR data shows that, to date, most volume has come from no-alcohol rather than low-alcohol beer across 10 key markets. Broadly, low-alcohol beer is giving way to no-alcohol offerings particularly in markets such as Australia, France and the UK. Spain, for example, is seeing a shift from low- to no-alcohol beers, as consumers seek healthier choices and view the newer 0.0% brands as more modern. In South Africa, investment from Heineken and the emergence of a craft segment has helped to generate interest in the no-alcohol category. While no-alcohol beer has existed for decades, in markets like the US, no-alcohol beer has premiumised through the release of no-alcohol versions of non-lager styles, long the domain of no-alcohol beer. More recent no-alcohol styles, such as IPAs, stouts or porters, are starting to make a real impression, driven particularly by new challenger brands, many of which are not linked to traditional brewing. The recent no-alcohol extension of Guinness – despite some teething issues – will help to underline that no-alcohol beers are no longer the sole domain of lagers. While several key beer players continue to steer the no/low beer category, the market is fragmented with a number of smaller brands vying to establish themselves as market leaders in this space. The segment is likely to become even more of a focus for smaller craft producers who are able to bring a diverse range of products to the market in future.

How Asian drinks brands are targeting new markets

Most Asian drinks brands sell the majority of their volumes domestically, where brand awareness is high and drinking cultures are long established. For example, IWSR data shows that approximately 97% of Japanese beer, wines, spirits and RTDs are consumed in the local market. When looking at just the premium-and-above price segment, over 60% of Japanese wines and spirits are consumed locally. But as competition from international brands mounts, local distillers, brewers and winemakers are dedicating more time and resources to developing their presence in overseas markets.

“There are lot of local champions that have a very strong position within their own market but little presence outside,” explains Tommy Keeling, Research Director at IWSR. “As Asian populations grow richer, consumers are trading up to imported drinks brands and the position of local champions suddenly looks less secure, so many are looking to diversify abroad.”

Keeling adds that for many brands, the real benefit of international expansion is the resulting uptick in interest in their domestic markets. In the case of Chinese spirit baijiu, for example, exports are unlikely to ever be more than a fraction of local sales, but distillers are hoping growing interest in the category abroad will boost its popularity at home.

Baijiu is a wealthy category, so brands are able to invest in high profile display advertising, such as Wuliangye’s billboard in Times Square. One of the main aims of this strategy would be to target relatively wealthy Chinese tourists who are already familiar with the brand. Luzhou Laojiao, another large baijiu producer, sponsored the 2019 Australian Open with its high-end Guojiao 1573 brand, again, principally targeting Chinese viewers.

For smaller brands such as Fenjiu, the main goal in international markets is education. “We would like to continue educating the UK market on baijiu and increase both trade and consumer awareness and understanding of this category,” says Qiqi Chen, managing director of Cheng International, the UK distributor of Fenjiu.

The brand takes a more intimate approach to marketing through meetings, masterclasses and tasting sessions, all supported through a strong social media drive. “There are two main baijiu education themes for us,” says Chen. “One is introducing Chinese food and drink culture, and the other is showing how Chinese baijiu can blend well with the western lifestyle.”

In order to offer a “more direct experience” of its brand, Fenjiu will increase its work with bars, restaurants, hotels and retailers, as well as brands outside of the food and drink industry.

Keeling adds that once brands start to expand internationally, it is crucial for them to tailor their approach to the market in which they are selling. For example, in South Korea, soju consumption is widespread, so brands mostly compete on price. However, due to shipping costs, import duties and excise taxes, the product becomes more expensive in overseas markets. As such, brands would be better to promote a different set of values.

For Asian beer brands, giving consumers an authentic taste of their respective cultures is an important way to expand their foreign fan base. The UK in particular gives brands the opportunity to grow their reach through the restaurant channel. Indian beer brand Kingfisher, for instance, has 5,000 distribution points in Indian and Bangladeshi restaurants in the UK.

John Price, head of marketing at KBE Drinks, the UK distributor of Kingfisher, notes that the brand “can be found in every type of eatery”, from high street curry houses to Michelin starred restaurants. “The restaurant channel will always remain the beating heart of our business, but it is sometimes hard to break out of this into wider consumption occasions,” he adds.

This is where sports sponsorships come in. Through commercial partnerships such as these, brands become visible in a new context. Kingfisher is currently a partner of Southampton FC, Leeds United FC, Sussex County Cricket and Wigan Warriors Rugby League Club. “We don’t take on a partnership unless we get pouring rights and this gives consumers the chance to re-evaluate the brand in a fun and exciting environment,” adds Price.

Thailand’s Chang Beer, which is the official beer of Leicester City Football Club, has an international marketing strategy centred around provenance and heritage. “Growing internationally is a journey that is carefully curated with the right partners, the right channels and the right marketing mix,” says Ronnie Teo, head of group marketing at Chang.

“It is important to ensure that we work with partners who share the same long-term convictions as us. Our partners understand what our Chang brand stands for – its provenance and values – and collaborate with us to market the brand in the right sales channels with the right messaging.”

For a number of years, Chang has hosted the Chang Sensory Trails event in London, which celebrates Thai cuisine in a contemporary setting filled with music and street art. Events such as these allow Asian brands to become an essential part of the cultural experiences and representations of their respective nations.

Ultimately, says Teo, to grow internationally, brands must first have a strong domestic business. “To that end, we have seen our marketing efforts in Thailand pay dividends, with our market share growing by more than 15% share points between 2014 and 2019. This strong growth has made Chang an iconic local champion, appealing to Thais, as well as the millions of tourists that visit Thailand annually. With a solid domestic foundation, we were then able to springboard our international marketing efforts.”

Beam Suntory Reports 2020 Results

Beam Suntory, a leading global premium spirits company, reported full-year results for 2020.

Global net sales were flat for the year, as a return to growth in the second half offset lower sales in the first half of the year. Full-year sales grew 4% in the United States, as restaurant and bar activity improved in the second half and spirits continued to gain share from beer and wine. Sales were essentially flat in Japan, up at a single-digit rate in the UK and Russia, up high-single digits in Australia and Canada, and up double digits in Germany and South Korea. The impact of the pandemic led to lower sales in markets including Spain, India, China, South Africa and the Global Travel Retail channel.

Global sales for Jim Beam grew to surpass 11 million 9-litre equivalent cases for the first time, extending the brand’s leadership as the world’s number one Bourbon whiskey. Reflecting sustained consumer demand for premium brands, sales for Basil Hayden’s bourbon, Hornitos tequila, Toki whisky and Roku gin increased at double-digit rates. Sales were also exceptionally strong for Japanese ready-to-drink products and On The Rocks Premium Cocktails (acquired in September 2020), as consumer demand for convenience, refreshment and quality cocktails expanded.

“As we expected, consumer demand increased in the second half of 2020, even as the global pandemic continued to impact markets around the world,” said Albert Baladi, president & CEO of Beam Suntory. “I couldn’t be more proud of how our people adapted to confront the challenges of 2020 – from our frontline distillery workers to our sales teams, from our brand builders to every company function. As a result, we were able to meet consumers digitally in the emerging ‘home premise’ to support at-home cocktail-making and satisfy their expectations for convenience through increased investments in e-commerce and ready-to-drink products. At the same time, we supported our on-trade partners with innovations like cocktails to go, and guided by our vision of Growing for Good, we provided vital assistance to hard-hit restaurant and bar workers in markets around the world.”

“Looking ahead, the pace of recovery from the ongoing pandemic remains uncertain. In this environment, we expect to drive continued improvement in sales as we benefit from the strategic investments we made in 2020, the exciting brand plans we have in place, and our commitment to delivering quality to consumers at every step of the value chain up to the moment of consumption.”

Baladi also noted that Beam Suntory made substantial progress reducing its environmental impacts in 2020, and will soon announce a new global sustainability strategy featuring ambitious targets focussed on making a positive difference for nature, consumers and communities.

Update on Beam Suntory Growing for Good Initiatives

Environmental Sustainability

Carbon Reduction: Through the purchase of renewable electricity and the completion of multiple energy efficiency projects (Kentucky, Mexico and Scotland), Beam Suntory reduced its total Scope 1&2 carbon emissions by 25% compared to the 2015 baseline.

Water Efficiency: The company has reduced water use per unit of production by 29% (versus 2015 baseline) by optimising existing cooling systems and investing in more efficient cooling technologies at the Jim Beam distilleries in Kentucky.

Watershed Protection: The company has established Natural Water Sanctuary programmes at Maker’s Mark and adjacent to the Jim Beam distillery. The company continues to expand watershed protection activities to global manufacturing sites in India, Mexico, Spain, the US Virgin Islands and Ireland. Future activities are planned in Scotland, France and Canada. 

Sanitizer: To support hospital systems and first responders in the fight against Covid-19, the company’s facilities in Kentucky, Japan, Spain, Scotland, Ireland, Canada and Mexico produced sanitizer sufficient to clean more than 50 million pairs of hands.

Hospitality industry: The company provided more than $3 million to support restaurant and bar workers and their families across numerous markets. Initiatives included Maker’s Mark’s partnership with the LEE Initiative Restaurant Reboot Relief Programme and Restaurant Workers Relief Programme, which donated more than 1 million meals to restaurant workers in the US, the company’s Shift-Meals To-Go programme supporting US hospitality workers and their families, and support programmes for on-trade workers in markets including Canada, the UK, Germany, Spain, Brazil and India.