Did you know that a minor legal name change led to the dramatic collapse of Bira?
Launched in 2015, Bira had grown at a lightning speed. By 2023, the brand sold nine million cases across 550 towns. Revenues hit Rs 824 crore. Investors lined up from venture capital firms like Sequoia India to Kirin Holdings of Japan.
So, what went wrong? Letโs break it down. ๐
๐ง๐ต๐ฒ ๐ก๐ฎ๐บ๐ฒ ๐๐ต๐ฎ๐ป๐ด๐ฒ ๐ก๐ถ๐ด๐ต๐๐บ๐ฎ๐ฟ๐ฒ
Biraโs legal name was B9 Beverages Private Limited. But as more investors bought its unlisted shares, it came close to crossing the 200 shareholder limit allowed for a private company.
To comply, it converted into B9 Beverages Limited. It sounds very simple enough, right?
It's not that simple. In Indiaโs heavily regulated alcohol industry, every state treats you like a different company. Dropping โPrivateโ from its name meant reapplying for every licence, label and permit from scratch.
That bureaucratic maze lasted six months, halting sales in key markets like Delhi and Andhra Pradesh which together contributed 40% of Biraโs sales.
When customers couldnโt find their favourite beer for months, they simply moved on.
๐ง๐ฟ๐ผ๐๐ฏ๐น๐ฒ ๐๐ฒ๐ป๐ฒ๐ฎ๐๐ต ๐๐ต๐ฒ ๐ฆ๐๐ฟ๐ณ๐ฎ๐ฐ๐ฒ
Biraโs troubles began when it shifted brewing from Belgium to India. The ingredients, even the water changed and so did the taste.
Instead of building its own brewery, Bira leased a third-party hiring its own staff and managing operations end-to-end. It gave them control but at a huge cost in time, money, and complexity.
๐ข๐๐ฒ๐ฟ ๐๐บ๐ฏ๐ถ๐๐ถ๐ผ๐๐ ๐๐ฑ๐๐ฒ๐ฟ๐๐ถ๐๐ฒ๐บ๐ฒ๐ป๐
- Bira also went big on marketing.
- It splurged on promotions like becoming the official sponsor for ICC cricket tournaments for five years until 2023.
- Great for visibility, not so much for profits. And in a business where margins are razor-thin and cash flow is king, this became hard to sustain.
๐๐ป๐ฐ๐ฟ๐ฒ๐ฎ๐๐ถ๐ป๐ด ๐ฐ๐ผ๐บ๐ฝ๐ฒ๐๐ถ๐๐ถ๐ผ๐ป
- Once Bira opened the gates for craft beer in India, there were new players such as Simba, White Owl, Goa Brewing Co and others.
- Consumers had options and in this space out of sight is out of mind.
๐ง๐ต๐ฒ ๐๐ฎ๐น๐น๐ผ๐๐
- Sales dropped from 9 million cases in FY23 to 6โ7 million in FY24.
- Inventories worth โน80 crore were written off.
- Recently, Over 250 employees have petitioned the board to remove founder Ankur Jain, citing governance issues, delayed salaries and lack of transparency.
- BlackRock which wanted to invest Rs 500 crore, withdrew amid the chaos.
๐๐ผ๐๐น๐ฑ ๐๐ต๐ถ๐ ๐ต๐ฎ๐๐ฒ ๐ฏ๐ฒ๐ฒ๐ป ๐ฎ๐๐ผ๐ถ๐ฑ๐ฒ๐ฑ?
- Advance planning and strategic pre-approvals could have helped in avoiding this nightmare.
- They should have filed applications simultaneously with relevant authorities while maintaining buffer periods for unexpected delays.ย