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A lot can happen over beer. Most of the world’s most successful companies started out as ideas being tossed around over a couple of beers at the local pub. Some of the world biggest partnerships have been forged over a pint or two. Why, even President Obama has been calling for beer meets to forge peace.

And it was beer that kick started the entrepreneurial journey of two IIM graduates, Suketu Talekar and Prateek Chaturvedi. Back in 2005, the two were, in their own words, “stagnating in Singapore”, marketing and selling soaps and detergents across South East Asia for a global FMCG major.

“We were always tossing around ideas about doing something of our own, mostly after a couple of beers,” Chaturvedi tells us. It was on one of those nights at Brewerkz, a microbrewery-restaurant in Singapore, when we had an epiphany; we knew exactly what we wanted to do.”

What they wanted to do was set up a microbrewery—one that produces a limited amount of crafted beer. And they wanted to set it up in Pune. Talekar quit his job immediately after that life-altering night and moved back to India to start the groundwork. Chaturvedi stayed back in Singapore to learn the tricks of the trade by interning at Brewerkz under its founder, Devin Otto Kimble.

“Another reason why I stayed back was to understand the excise model and the rules that govern a microbrewery,” Chaturvedi adds. “India had no excise license enforced for a microbrewery that has an annual capacity of 10,000 hectoliter. That’s why it was important for me to study the model in Singapore, so I could engage the excise department in Pune to fix a model for us.”

Three months later, Chaturvedi handed in his resignation as well and headed back home in Pune. Both came to bewildered parents and confused peers. Talekar tells us that despite the initial opposition, most of their close ones came around. “It might have sounded like an on-the-whim-move, but we had thought it out. We love our beer and were quite frankly sick of the glycerine-filled beers that the behemoths were churning out. We studied and understood that there was a market for freshly brewed craft beer and that people will pay a premium for it.”

Once the initial opposition was stemmed, the two got on to fixing up their business plan and simultaneously getting started on the licensing and funding fronts. One of the first blocks that their business plan revealed was that they knew nothing about the art of brewing. They needed a brewmaster. Enter Oliver Schauf.

The duo met Schauf, a German national, on one of the many brewing forums they had been trolling on. A certified brewmaster, or braumeister, as they call it in Germany, Schauf had brewed beers in lands as far as Greenland. India was to be his next calling. He joined the duo in forming what is now Brewcrafts Microbrewing India Pvt. Ltd.

With the team in place, the founders began figuring out stage two of their venture: finance. “Setting up a Greenfield brewery—real estate, equipment, etc.—would have cost us more than Rs. 4 crore at a minimum,” says Talekar. “That was a daunting amount, but we worked around it to some extent.”

The founders met up with the team at Corinthian, an upmarket resort-cum-club in Pune, who showed genuine interest in their concept. An understanding was reached. Brewcrafts would be able to set up their brewery on Corinthian premises; in turn, the club would operate a brewpub connected to the brewery.

“This deal significantly brought down costs for us,” says Talekar. “Our startup capital was now down to a more manageable Rs. 2 crore. This amount was raised by a mix of savings, equity funding, soft loans from angel investors, and a term loan.” Meanwhile, the equipment was getting to be another pain, Schauf tells us. “We had contracted a Delhi-based fabrication firm to make the equipment. However, they were unable to do the job up to the standards needed—or in time.” Schauf, who had studied brewing technologies, had to make many changes at the site. In fact, he built the whole brewery himself, right from the engineering plans down to the last nut.

Slowly, almost three and a half years down the road, the microbrewery was taking shape. The licenses had come without any trouble or lobbying, the equipment was in place, dry runs were made and the team was ready to go.

1^st Brewhouse opened in September this year, serving Doolally Microbrews that are brewed onsite by the team at Brewcrafts. The Brewcrafts team handles the microbrewery, while the Corinthians team handles the food and beverage part of the pub. The two companies share the revenue.

“This works perfectly for us, as our core competency has always been in making beer,” says Chaturvedi. “We knew that if we got into F&B, we could have burnt our hands and put the brewery in trouble.” Responsibilities are also clearly divided between the three: Talekar is in charge of marketing and communications, Chaturvedi handles operations and finance, and Schauf is in charge of the beer production.

The response has been more than satisfactory, says Talekar. In the first month, almost 40 percent of the patrons were repeat customers. “[Having repeat customers] is always a heartening sign for any hospitality business. It reinforces our belief that there is a genuine market for freshly brewed craft beer in this country.” Several people in the hospitality business have been inviting the team to set shop in other cities. Talekar tells us that although it is logical to expand, some loose ends must first be tied up.

“We have to bring down our operational costs,” he says. “Most of our raw material, like the malt and the hops, is imported; we would ideally like to source it or grow it locally. We also need to get the equipment manufacturing process patted down, for which we are in talks with a local company. Most importantly, we have a major shortage of talent. We really need more people we can train as brewmasters.”

After tasting their beers, there’s a good chance that I might apply.

Pricing Puzzle:
One of the key factors for the decent response to Doolally Microbrews has been pricing. Talekar believes that beer is a democratic drink—if it gets too pricey, it will be shunted out. So, the rates have to be market aligned. That’s why the Brewcrafts team has priced their beers in the same league as mass market beers.

©Entrepreneur December 2009

Tags:
1st Brewhouse, beer, Brewcrafts, Brewerkz, brewmaster, Corinthian, Devin Otto Kimble, Doolally Microbrews, Greenfield, microbrewery, Oliver Schauf, Prateek Chaturvedi, Suketu Talekar