Are you planning to get into the beer brewing industry? Wondering how much it costs and what are the expected profits? Continue reading to find all about the economics of owning a beer manufacturing company in India.
Is a brewery profitable?
If there is one business that is unaffected by the economy, then it’s the liquor business. However, the brewing industry is highly competitive. With hundreds of breweries sprouting across the country, is it profitable to run a brewery or a beer pub?
One of the main reasons why breweries is an exciting and lucrative business opportunity is that it has huge untapped potential. India is home to one of the youngest demographics in the planet. With increasing incomes and rise in lifestyles, the youth population of India are steadily becoming less traditional.
Today, beer drinking is a socially acceptable past-time for both men and women. Before you set up any business, you need to first understand your target market. The demand among customers for high-quality and premium liquor has spurred the craft brewery revolution in the country.
Just like any business, you have to first determine your target market to evaluate whether your venture is profitable. For a microbrewery, the target customers are young millennials and Gen-Zers who enjoy a drink with friends and family. Once you have identified the target market, you have to determine the market potential in your locality. For example, if your market is a residential neighbourhood with predominately seniors then it isn’t the ideal for your target audience.
Getting the target market and market potential right is the key to operating a successful brewery. Next, you have to figure out the ideal location. Look for locations with high-footfall near to a mall, entertainment centre or business districts.
One of the biggest hurdles to establishing a brewery or pub in India is getting the necessary licenses and permits for it. This brings us to the next section.
What are the different liquor licenses needed to operate pubs and breweries?
Here is a list of the various permits and licenses that you need. Note that you don’t have to get all of these:
- Brewpub liquor license (for craft breweries)
- Restaurant liquor license
- Beer and wine shop license (for mild liquor)
- P-10 for serving alcohol at specific functions like weddings, corporate get-togethers
- P-13 for serving imported liquor
- L1 for wholesale supply of liquor
- L3/L5 for hotels serving imported liquor in bars/room service
- L6 for retailers of beers and other Indian liquor
- L-9 for retail selling of imported liquor
- L-10 for retail selling of liquor
The cost of obtaining these permits and licenses varies depending on the state and location. Generally, it costs around ₹7000 to ₹10,000 to get a temporary liquor license. A permit room license can range anywhere from ₹1.5 lakhs to ₹10 lakhs, depending on your city.
Top Reasons to Start a Brewery in India
Irrespective of the economy, breweries are a profitable business venture. Even during the recent Covid-19 pandemic, liquor shops and pubs were among the first businesses to be reopened after the lockdown. This clearly shows the high demand for breweries.
Here are a few reasons why breweries are profitable businesses:
1.High public demand
Breweries and liquor pubs are a place for people to relax and de-stress. Hence, there is a huge demand for high-quality breweries with great ambience.
2.A revenue making venture for the government
Both central and state governments levy hefty taxes on breweries. Hence, they encourage the operation of breweries round the year.
3.Huge profit margins for business owners
This is a huge win for entrepreneurs planning to begin a brewery. Breweries have high profit margins making them a profitable venture.
4.Recession proof business
Breweries are among the handful of businesses that are profitable at all times.
5.Year-around demand
This is another plus of brewery businesses. There is a year-around demand. While some months like Ramzan, Navaratri see reduced demand there is a consistent demand all through the year.
Wrapping Up
If you are planning to set up a beer shop or pub, then we can confidently state that it is a great business decision. With a growing young population, rise in disposable incomes and a change in conservative mindset, the culture of beer drinking is steadily growing in India. Whether you start a craft brewery selling canned beer or run a brewery cum pub, you are never going to run out of profits. So, start planning the other factors and let’s raise a toast to a successful business venture.