Yes, you have heard it right. India which was traditionally a non-drinking country is witnessing a steep jump in alcoholic beverage consumption, which makes resto bars, pubs, and breweries a lucrative business to enter. In 2022, the total alcoholic beverage consumption in India amounted to 5.6 billion liters, and is set to grow at a CAGR of 6.3%.
In terms of per capita alcohol consumption, India is still far behind major alcohol-consuming countries in Europe, North and South America, yet it is perceived as a potential market for alcoholic beverage business. This further puts it on the higher radar of indigenous and international alcoholic beverage companies, retailers, and F&B chains.
The growth in India’s alcohol industry is rooted in a host of factors such as a large population, surge in disposable income, evolving consumer behavior, expansion in organized retail including F&B, and much more. Other factors such as breaking of taboos associated with drinking, increased participation of women in workforce, attractive demographics, mushrooming of swanky malls and shopping centers, etc. are also contributing the growth of the segment.
Mentioned below are factors driving alcoholic consumption in India
Growing Food & Beverage Business in India- The love for food has always been beyond anything in India. And lately, drinking cocktails or mocktails has become quite appealing as well, mainly because of the type of presentation and openness about eating ‘n' drinking out. In the past few years, food and beverage intake has increased, which has given birth to many new restaurants and bars. Though the market has witnessed some setbacks during the time of the pandemic, with the opening of the market, the sector is reviving soon, with average footfalls reaching 85-90% of the pre-pandemic levels.
Growth in Drinking Culture amongst Gen Z- The drinking sector in India is getting a positive thrust in the wake of higher participation of Gen Z in the retail market. For Gen Z consumers, drinking is about socializing, another notable factor that differentiates them from Millennials. In contrast to Millennials, who majorly favor indulging in a cocktail to loosen up, half of Gen Z consumers pop open a can or pour a glass principally to have a good time. Gen Z loves beer while also engaging with hard seltzers, flavored malt beverages, or mixed cocktails.
Social Drinking is No More a Taboo- Time changes everything, and so is the fact that drinking alcohol occasionally does not make one an alcoholic. And with this taboo taking a side lane, people have become quite open about hanging out with friends on a Friday night and enjoying snacks, and dancing with a bottle of beer in one hand. This culture has added to the lucrativeness of investing in a bar, pub, or similar business. Meanwhile, not just weekends, but also the culture of mid-week parties and corporate cocktails are also growing at a staggering pace, which is further helping the industry to thrive.
People Love to Drink and Relax in Pubs, Bars, etc.- Building a home bar is a sought-after proposition, but not everybody can afford the extra cost of a bar cabinet, basic drinking crockery, equipment, etc. This eventually makes hanging out in a pub or a restro bar a popular alternative. Also, drinking out at a pub, bar, or lounge outside the house gives us a break from regular life and experience something breathtaking. Increased volumes of millennials, Gen Z, and other adult segments visit pubs, retro bars and microbreweries to relax, unwind, and have some quality. Bars and breweries are also becoming opportune places to socialize and network.
There has been a growing demand for pubs and retro bars, not just in metros but also in smaller cities and towns in India. One of the key factors behind the same is the increase in disposable income, which makes people look out for new and unique experiences. Meanwhile, increasingly people are traveling abroad and visiting pubs and nightclubs. After coming back, they prefer a similar experience in India. They prefer places that offer a vibrant and energetic atmosphere, a wide range of food, drinks, live music and entertainment, and much more to have a truly enriching time.
India is among the top-10 tourism markets in the world with millions of foreign and Indian visitors. With the growth of the tourism industry, the demand for quality entertainment options has also increased. Pubs and retro bars can cater to this demand and offer a unique experience to tourists, helping them explore the city's nightlife scene. This is also helping the Indian pubs and bar industry to register growth and make profitable businesses. The meetings and tourism industry in India is also growing. After attending meetings and exhibitions, many visitors prefer to go to the nearby watering hole.
India is a diverse country, with numerous languages, cultures, and social strata. This diversity has contributed to the growth of the F&B business in general, as restaurants, cafes, and eateries are hangout places for people from diverse backgrounds to sit and socialize. Meanwhile, the concept of ethnic eateries is also thriving, especially to cater to the migrant workforce. As F&B business is growing, the demand for alcoholic beverages is also simultaneously moving upwards.
Pubs and retro bars are known to have high-profit margins, making them an attractive business option. With the right location, ambiance, menu, and marketing strategies, entrepreneurs can expect a significant return on investment. This is also one of the reasons why the industry is growing at a rapid pace.
It costs anywhere between 2- 10 crore to start a retro bars, pub, or microbrewery in India (capacity of around 120-180) With the right approach in place, the gross profit can be in the range of 25-30% (or more). While alcoholic beverages constitute 30-40% of the sales, the remaining will come from foods, soft drinks, mocktails , etc. (These are estimated numbers, and actual value will vary based on location, size, city, etc.)
In conclusion, pubs and restrobars are attractive business options in India given the rising demand, booming tourism industry, favorable government policies, diverse customer base, and high-profit margins. As the space is thriving, the opportunities are also lucrative for individual entrepreneurs as well as existing chains to further expand and enter new geographies.
Meanwhile, just like any other business, it requires thorough homework and an understanding of the multilayered nature of the business. There are multiple factors that should be considered such as:
The Type of Bar You Own- Different kinds of bars have different costs. For instance, opening a neighborhood bar cost less compared to a sports bar or a large-capacity microbrewery (above 12,000 liters/ month). The more equipment your bar setup requires, the more expensive it'll be, to begin with.
The Size of Your Bar- Obviously, the larger the bar, the larger the costs will be. Do not overlook the staffing costs, as you'll be required to hire a barback, bartenders, waiters, chefs, assistant cooks, cleaning staff, bouncers, marketing managers, etc. In the case of a microbrewery, you will have to hire chief and supporting brewers as well. All these estimations/ calculations are necessary.
Business and Liquor License Costs- Finally, there are the building and licensing costs. The costs for a liquor license will vary depending on where you live, like licensing costs in Gurugram will be different from that in Hyderabad or Shillong.
There are multiple factors that impact the business of a bar, pub, or lounge. Before starting a business, it is important to do in-depth research. The research can either be done by itself or with the help of a professional research advisory. A market research agency can conduct tailor-made studies to provide businesses with all the details that are essential to establish and grow a pub, retro bar, or brewery business. The scope of research will include
For any such query of service, you can consult The India Watch Team, by dropping a mail at firstname.lastname@example.org