By nusra, Editor
Feb 09, 2024 / 12 MIN READ
Associated Alcohol & Breweries Ltd (AABL) has been a steadfast player in the Indian Alcobev Industry since 1989. This NSE and BSE listed company is one of the leading producers of ENA (extra neutral alcohol) in the country, which is essential for the production of high-quality liquors. As one of the fastest-growing breweries in the country, AABL currently occupies about 25% of the total market in Madhya Pradesh and has the highest level of commitment towards quality. AABL aims to premiumize the alcobev industry in India, and have recently announced “NICOBAR” Premium Handcrafted Gin signalling a move towards premiumization in the alcobev industry. Having 3+ decades of wide industry experience and a rich legacy, AABL is an esteemed bottler of single malt scotch whisky for DIAGEO / USL and Kingfisher beer in India. With manufacturing capacity now standing at 45 MLPA for extra-neutral alcohol and branded liquor, they have six proprietary brands like, Central Province Superior Grain Whiskey, Titanium Triple Distilled Vodka, etc. As they look towards the future, AABL remains resolute in its pursuit of excellence and innovation within the Indian Alcobev industry. Excerpts from the interview:
What’s the brewing process and how much do you focus on sustainability?
At AABL, our production process is a fusion of excellence, precision and commitment toward quality control. Right from the careful selection of the finest ingredients, our distillation and blending processes combine conventional artistry with sophisticated time-hallowed techniques. Employing a mix of advanced technology as well as the expertise of our skilled team during testing ensures consistency and surpasses even the most demanding requirements. Along with a commitment to quality, the central value guiding our production practices is sustainability. Water recycling process, energy-efficient power plants and by-product recycling are some of the steps we have incorporated as a part of our efforts toward sustainability.
From where do you source the ingredients from the finest brew?
We purchase some of our ingredients worldwide to satisfy our high-quality standards, we also use locally accessible resources where they match our needs. Our consistent dedication to taste and quality extends to ingredient sourcing. We rigorously examine each ingredient's compatibility for our manufacturing process, guaranteeing that it meets our high standards.
Who do you see as your competitor in the segment?
SOM Distilleries, United Breweries, B9 Beverages and Devans Modern Breweries are few of the prominent players in the industry who have contributed to the overall growth of the sector for decades. These companies along with AABL have a long-standing legacy in the sector and have collectively contributed towards the growth of the country's economy.
What’s your market share and who’s the target customer?
In Madhya Pradesh, we occupy over 25% of the liquor market and our affordable beer occupies over 50% of the total market while our premium beer occupies an 8-10% share in the market. We majorly target anyone who is above the drinking age and wishes for a premium drinking experience. Our primary target audience encompasses beer consumers aged 21 to 35 years. This group consists of individuals grappling with the pressures of daily life, be it relationships, work, finances, or routine tasks. They seek moments of unadulterated relaxation. They aspire to live life on their terms and cherish spontaneous experiences. Our secondary target audience comprises beer enthusiasts aged 36 to 45 years. Their focus is on seeking out the best alcohol options available, and they value high-quality experiences.
Are you also into HORECA? Who are some of the top partners (name restaurants/hotels)?
We have collaborated with almost 50 of the most prestigious restaurants and bars in Indore, out of which nearly 35 are sole providers for our draft beer. These include Farzi Cafe, Hobnob, Piano Project, Beer Café, Wow Hotel and Marriott among some of our most respected partners. These partnerships highlight our dedication for supplying the first-rate beverages to discerning clients in the hospitality sector.
What’s your expansion plan?
AABL has big aspirations to expand on numerous fronts. First, the company just introduced Nicobar gin and plans to expand its product line to include blended whiskey and Ready to Drink (RTD) choices. These offers are intended to cater to a broader spectrum of consumer interests, from those seeking unique spirits to those looking for handy RTD beverages. Second, while AABL is already present in numerous parts of India, the company plans to expand further in Maharashtra, Goa, West Bengal, and Karnataka. AABL has also shown interest in overseas markets, with prospective targets being the United States and the Middle East.
What’s your view on the current state of the Indian alcobev industry due to the changing consumer preferences?
A dynamic evolution of the consumer preferences in the Indian alcobev industry, supported by several major trends, characterise its current state. Premiumization is a key aspect, whereby consumers are exhibiting an increased propensity towards high-quality and also premium beverages. Indeed, the spirits segment has shown a significant growth in the volume of 6-8%. They are worth noting that both the spirits and beer segments have been experiencing significant growth, even though it is slightly less than 6-8% for beers while at around 8-10%. This increase is due to reasons that include an increasingly young population, changing attitudes toward drinking alcoholic beverages and rising income levels. Long-term prospects of the Indian alcobev industry seem to be positive. The young population and the growing mindset of the customers, along with an improving economy is a favourable environment for sustainability. With the preference moving from the standard to premium, the industry is set for growth and presents further business opportunities.
We see that there’s a rising demand for premium beer among the Gen Z. Why so?
The consumption patterns in India vary across regions and demographics. However, there has been a noticeable increased demand for craft beer, especially among urban millennials and Gen Z. There are a number of reasons for the increasing demand in the premium beer segment.
Changing Palettes: Generation Z was raised with a wide variety of foreign flavours. Their desire for rich flavours that go beyond lagers has led them to create their own brews, imports, and other high-end selections.
Social Currency & Experiential: Drinking premium beer is a social experience rather than just a beverage. Tasting limited releases, talking about flavour profiles, and touring breweries all contribute to their feeling of identity and community.
Value above Quantity: Although Gen Z is frugal, they are prepared to spend more on high-quality experiences. Fewer, better beers would appeal to them more than mass-produced ones.
Sustainability and Health: Gen Z values ethically sourced goods and health-conscious choices. Sustainable practices, lower alcohol content, and organic ingredients are common ways that premium products accommodate these desires.
In conclusion, the demand for premium beer is driven by Gen Z's preference for distinct flavour sensations, social interaction, and quality over quantity, and health-conscious choices. Brewers who accommodate these changing tastes have a good chance of building a devoted customer base among this generation.
Challenges faced in the alcobev sector in India
India’s alcobev sector has tremendous potential but is characterised by complicated barriers. A state-level regulatory quilt poses a bureaucratic maze, involving divergent licensing arrangements, taxes and distribution channels that impede seamless operations as well as market harmonisation. This regulatory fragmentation also impedes the forecasting and control of costs, forcing down producers’ margins while pushing up prices for consumers. In addition, the removal of alcohol from the GST system deprives the sector input tax credits which increase production costs and negatively impact investment. Morality and brand awareness might be constrained even further by the threat of moral policing for dry days and limitations on advertising. Moreover, increasing costs of inputs, especially costly raw materials such as barley and extra-neutral alcohol added to the unstable global market all increase an element of uncertainty. However, the Indian alcobev sector has a resilient spirit and players are constantly innovating to navigate regulatory hurdles. Nationwide regulatory harmonisation, GST adoption and responsible marketing could unleash the full potential of this sector by helping it to grow on a profitable but socially-responsible track.
Associated Alcohol & Breweries Ltd (AABL) has been a steadfast player in the Indian Alcobev Industry since 1989. This NSE and BSE listed company is one of the leading producers of ENA (extra neutral alcohol) in the country, which is essential for the production of high-quality liquors. As one of the fastest-growing breweries in the country, AABL currently occupies about 25% of the total market in Madhya Pradesh and has the highest level of commitment towards quality. AABL aims to premiumize the alcobev industry in India, and have recently announced “NICOBAR” Premium Handcrafted Gin signalling a move towards premiumization in the alcobev industry. Having 3+ decades of wide industry experience and a rich legacy, AABL is an esteemed bottler of single malt scotch whisky for DIAGEO / USL and Kingfisher beer in India. With manufacturing capacity now standing at 45 MLPA for extra-neutral alcohol and branded liquor, they have six proprietary brands like, Central Province Superior Grain Whiskey, Titanium Triple Distilled Vodka, etc. As they look towards the future, AABL remains resolute in its pursuit of excellence and innovation within the Indian Alcobev industry. Excerpts from the interview:
What’s the brewing process and how much do you focus on sustainability?
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