The COVID-19 pandemic seems far from over and has pushed businesses to think innovatively. Particularly hit hard was the FnB industry — for a while, alcohol shops weren’t open, and pubs are still shuttered. So how does a craft beer business survive and thrive? From releasing a drink in a new market to riding on delivery models, Javed Murad, founder of White Owl Brewery, relates how the company is adapting to changing circumstances.
White Owl’s beer journey began in 2014; Murad was ambitious about starting something of his own and identified a gap in the affordable craft beer market in India. As a Harvard Business School student in Boston in 2007, Murad stumbled upon some exceptional beer that was also priced well. On vacation in Mumbai, the void in the craft beer market became apparent to Murad and presented a compelling opportunity–creating artisanal beer like those in the US and European markets. The brand will soon launch Spike, German Weizenbock style beer, in Delhi.
How did you secure financing for White Owl Brewery?
After it was clear to me that we needed to create a craft beer segment within the Indian market, and quickly, I discussed this with friends, mentors, and colleagues. I moved back to India with the idea of White Owl and a detailed business plan. A bunch of my ex-colleagues invested in our seed funding round that was topped up by friends, family, and some beer lovers. Our subsequent rounds have come from family offices [wealth management firms of high-net-worth families] and institutional funds, including IIFL Pvt. Equity, RAAY Global, and the Jeejeebhoy Family Office, among others. We have secured Rs 70 crore in total, with Rs 40 crore in Series B funding being led by IIFL in October 2019.
How soon were you able to scale up operations?
We started our beer journey in late-2014 out of our brewpub in Central Mumbai and by late-2019 had migrated from a single point of sale serving kegged beer to a national business distributing bottled and canned craft beer at over 3,000 bars and retail stores across the country. It took us five years to scale to where we are today. And there were several exciting scaling milestones along the way. But all along, we always emphasised product quality, which has culminated into an award-winning craft beer portfolio that includes Spike, our 7.9% German Weizenbock that is India’s first strong-craft beer, and Ace, our Apple Cider brewed with Himalayan Apples and Champagne Yeast. Now that we are set with beer recipes for at least another five years, we have shifted our focus to scaling our distribution footprint further and strengthening our brand recall with our consumers across the country.
What should new businesses look out for?
Spending money is easy; earning is the difficult part. I would recommend focusing on revenue models, creating a cost-benefit analysis for every item you spend on and making sure you are always well-capitalised to be able to make calm, prudent decisions during difficult moments. This is something you will inevitably have to deal with time and time again in your entrepreneurial journey to take on new challenges.
What was your response to the pandemic-related restrictions?
We have grown from a team of five-ten, working at the back of our brewpub in 2014, to a parliament of 100+ owls across Mumbai, Bengaluru, Delhi, Pune, Goa, and Bhopal. I can’t imagine any startup that hasn’t had to make tough money decisions in its journey. At White Owl, we most recently were hit with zero revenues for more than six weeks, on account of the ongoing pandemic and lockdown restrictions. We lost a substantial chunk of our earnings in the peak season of the year that typically contributes to 40% of our annual business.
We have had to selflessly support one another and our organisation. The entire restaurant/bar channel that thrives on social interactions and forms 30-40% of our business will be handicapped for the foreseeable future until we have some sort of a vaccine option available. Whereas retail stores have opened, there is still an underlying fear of cases rising and ambiguity of new restrictions being imposed. Consumer sentiment is generally muted as one can imagine with salary reductions and job cuts across the country. But our team is working hard to rebuild the business. We are quite excited about home delivery models for liquor developing across the country. This is a much-needed evolution and will be fantastic for business momentum.
What is the impact on your business, overall?
This was at a time where we were set to triple our volumes compared to the same period last year. While we don’t expect the rest of the year to be as dramatically impacted, we are expecting and are prepared for a long recovery.
Nonetheless, our wealth management principles have been quite intact even through the current crisis. We remain conservative with our spending, keep our fixed costs low, and are always solving for net present value outcomes for any investment decision. We are, however, paying a bit more attention to our balance sheet now than we usually did, as cash conversion cycles are being extended all over the country. This requires more thorough working capital management than a boom period.
All images: Courtesy White Owl’ Brewery Instagram and brand