Established in 1986, SOM Group of Corporations is a number one built-in alcoholic beverage producer, working throughout the nation and abroad. The corporate, initially centered on distribution, is now headquartered in Bhopal and has expanded to incorporate manufacturing. It operates in 18 states and has manufacturing amenities in 4 states. The Group now produces a variety of merchandise, however beer stays their major focus.
Diwakaran Suryanarayana, the COO at SOM Group, highlights the group’s three a long time of expertise in efficiently establishing and managing the beer enterprise in central India. In line with Suryanarayana, conventional lager beers make up over 95% of beer consumption in India. Robust lager makes up a good portion – over 80% – with gentle lager comprising the remaining.
“SOM’s method entails creating consumer-driven merchandise by analyzing market demand.As a part of our beer making course of, we assess product acceptability by organizing formal tasting periods with a various group of shoppers by way of a 3rd social gathering. Provided that the brew that we now have developed wins in such checks, it goes to the following step for industrial analysis,” Suryanarayana says.
The Group has an affordable grasp of the regulatory framework that guides the enterprise. States differ of their excise obligation construction, tax construction, pricing mechanism, import/export insurance policies, and taxes.
“The path to market, that’s from the time our beers go away the unit to the time it reaches the patron, is managed otherwise in numerous markets, relying upon the kind of the market. Some markets have the federal government managing each wholesale and retail distribution. In sure market markets, the federal government controls wholesale operations, whereas non-public entities deal with retail. Sure markets have non-public events in control of managing each wholesale and retail operations. We now have tailored to outlive in these complicated buildings and environments. All these come from a mix of expertise and rigor to the small print. These we consider are huge contributors to our selections to increase into new markets with new manufacturing amenities in geographically & logistically handy areas,” says Suryanarayana.Over the previous six years, the Group has expanded its manufacturing capability from one unit to a few models, doubling its manufacturing to almost 3.0 million hectolitres, with an funding exceeding Rs 300 crores. “Two of our three models go full throughout peak months. Our revenues have quadrupled previously 4-5 years, that’s from Rs 290 crores in 2020-21 to Rs 1280 crores in 2023-24,” says Suryanarayana.The Group attributes its swift progress to its well-located manufacturing capacities. Roughly 1.5 million hectolitres will be produced per 12 months by the brewery unit positioned close to Bhopal in Madhya Pradesh. The buyer base of this unit consists of Central India, North India, North-Jap states, and a considerable portion of its exports.
Established in 2018, the second unit in Hassan, Karnataka is a greenfield plant. The unit’s quantity has elevated from 0.34 million hectolitres to roughly 0.9 million hectolitres, serving the rising market in Karnataka. It covers Puducherry, Kerala, and the Andaman and Nicobar Islands as effectively. The third unit in Cuttack, Odisha is a brownfield plant that was arrange in 2018. It initially had a capability of 0.4 million hectolitres however has now been upgraded to roughly 0.6 million hectolitres. This unit primarily serves Odisha and infrequently West Bengal and Jharkhand if capability permits.
Pricing & challenges
SOM supplies shoppers with a variety of name choices at numerous worth ranges. As an illustration, in Karnataka, our model Legend Robust Beer serves each entry-level shoppers and people who often swap from reasonably priced spirits. Energy Cool Robust beer targets beer lovers who’re keen to pay just a little additional for a premium expertise. On the subsequent degree is Black Fort and Hunter, which competes with the MNC manufacturers. Our volumes are comparatively unfold out evenly throughout our portfolio and they’re interdependent inside markets for attaining scale in addition to rising revenues and profitability,” says Suryanarayana.
One among SOM Teams manufacturing models.
The enlargement of SOM Group has introduced its personal set of difficulties. Navigating the business is difficult as a result of multitude of insurance policies, guidelines, and taxes. We repeatedly try to handle regulatory challenges by partaking in dialogue and interesting to regulatory authorities. Most occasions, many state authorities do hear us and so they amend insurance policies to make sure ease of doing enterprise,” says Suryanarayana.
Suryanarayana highlights the business’s main drawback: the exorbitant taxes and duties imposed on beer. As an alternative of the alcohol share, excise duties are imposed on bulk litres. It’s extensively identified that beer has a decrease alcohol content material in comparison with spirits. Beer is topic to greater taxes than spirits in most states, based mostly on the share of alcohol. Moreover, one other hurdle is the variation in excise insurance policies and tax buildings amongst states. Many states demand advance obligation cost, which most often is 3-4 occasions our income per case, which makes issues extra complicated from ease of doing enterprise perspective,” Suryanarayana says.
Balaknath Datta, Impartial Enterprise Advisor, and former VP: Improvements & Class Improvement, SABMiller India, says in a rustic the place alcohol laws and tariffs are state-controlled, making a portfolio technique is each difficult and thrilling. This entails leveraging state-specific pricing, addressing client wants, and capitalizing on recruitment alternatives, he says.
“The Indian alcohol business is rising steadily, with some sub-segments increasing even sooner. SOM’s various portfolio—together with beer, whiskey, and ready-to-drink merchandise—positions it effectively to introduce a novel model lineup. A high-quality Single Malt Whiskey could possibly be SOM’s subsequent standout product, with strategic positioning being key to its success,” says Datta.
Future plans
In line with Suryanarayana, the corporate is contemplating numerous choices to increase capability and market attain utilizing its current portfolio. It additionally has a technique to get into the super-premium aspect of the beer business. “Woodpecker is a premium providing from SOM secure. We now have been nurturing it for a pair years with improved availability of Woodpecker Draught beer in premium bars, golf equipment in Bangalore,” Suryanarayana says. The corporate is now planning to introduce the model’s bottles and cans. Within the works can also be a foray into the ISM phase with the launch of a single malt.
The corporate can also be taking a look at exports as a chance. Som’s manufacturers are current in Europe, USA, South Africa, UAE, China, and so on.
The way forward for the alcoholic beverage business in India appears to be like robust. A beneficial demographic unfold, rising economic system, causes and events to have a good time, rising preferences of millennials, and higher disposable earnings means the alcoholic beverage business will see good progress. The scale of the beer market is roughly within the vary of 30-35 million hectolitres and it’s rising between 5-6% yearly, with premium beers rising at a a lot greater price.
“That within the metros, city and semi city cities and cities we see rising footprint of huge beer and liquor stroll in shops, with big number of choices in beer, seltzers, spirits, wine and so on each domestically produced and imported, displays the way in which India is consuming and it’ll emerge over the following decade or two,” Suryanarayana says.
Suryanarayana believes that from a path to market perspective, it ought to and it’ll get quite a bit simpler in the event that they preserve partaking with the regulatory authorities for ease of doing enterprise. “Accessibility of excellent high quality drinks and affordability is one thing that might assist develop the market,” Suryanarayana says.