B9 Beverages Pvt., owner of Indian craft beer Bira 91, is pushing its premium bottles further to protect its margin as ingredient, energy and transport costs rise.
The current operating environment is “extremely difficult” as costs have increased by 30-70%, forcing the company to sell more of its high-end portfolio compared to consumer products, said chief executive Ankur Jain, who founded the brewer in 2015. BloombergQuint in an interview.
The company started out selling premium beer and expanded into the mass market category just before the pandemic. Still, it has a “double-digit” market share in the premium segment, Jain said without disclosing the figure. Having a larger beer portfolio targeting consumers in large cities gives it an advantage: wealthier drinkers are less sensitive to price increases.
The brewer’s strategy highlights how consumer companies are trying to mitigate the pinch of higher costs. Covid-19 has disrupted supply chains, sending commodity prices skyrocketing. According to the Motilal Oswal report, barley jumped 62.5% year-on-year and 5% sequentially in the quarter ended March, with the latest spike due to Russia’s war in Ukraine . Ukraine, with 18% of exports in 2022, is among the top five barley producers, he said.
“Whether it’s glass, aluminum, wheat or barley, all the commodities that are essential to us are either facing price escalation or shortages,” Jain said. “We secure them [raw materials] in sufficient quantities to ensure uninterrupted production. However, we have no choice but to pass the cost on to our consumers. »
The Delhi-based company, with a cartoon punk monkey mascot, also focuses on innovation, where it is able to command high prices, he said. It launched limited-edition bundles earlier this month to capitalize on the trend of young, urban consumers experimenting with new flavors. It launched four variants: Bollywood IPA, Kokum Sour, Brown Ale and Mango Lassi.
The idea is to “bring together the many flavors of India,” Jain said. These will be retailed in metros such as Delhi, Mumbai, Bangalore and Pune.