Prosten liebe freunde! Say cheers to St Erhard!
For a teetotaler like me, all beer is the same. But people who understand the brew and have a preference, they are staunch loyalists of the brand, and these are the audience who are a liquor marketer’s dream. Hoping to carve a niche among such discerning connoisseurs is a new beer brand on the block – St Erhard from Bamberg, Germany. However people who want to consume the product would have to make a trip to Delhi, NCR, Haryana or Chandigarh – the rest of the country will have to wait a little longer to taste the beer.
A college project turned venture
We have heard of a lot of instances where college projects have transformed into a business venture and most of such examples are in the technology space. But St Erhard took birth in the ENVP (Entrepreneurship and new venture planning) course at IIM A. Vikanshu Bhargava met Christian Klemenz – an exchange student at IIM A in the course of the regular college project work. However, unlike many who don’t take projects seriously, this duo went the extra mile in their course work. Even while working on the project, Vikanshu & Christian spoke to many people in the liquor business, met F&B managers at Taj, Shangrila and did a lot of due deligience. “We decided to work on a business project to import German beer to India and to look at the entire feasibility of the idea. By the end of the project we had a decent idea of the entire market on a theoretical basis, we had done a whole financial analysis of the project as well – it was well appreciated,” says Vikanshu.
At the end of the course Christian returned to Germany and Vikanshu joined Ernst & Young as a management consultant. But the idea stayed on and they kept pursing the thought. Vikanshu reached out to a lot of IIM alumni to get help for starting up and he credits all the alumni for their great support. “Some of our alumni were highly placed in the liquor industry – the head of Kingfisher, another person who brought Carlsberg, Heineken and Red Bull to India. These alums could really share our vision and tell us everything about the industry,” credits Vikanshu. They also gave the young entrepreneurs insights into the market, tasted their product and vindicated their belief that the product would do well. “Help came in all forms and the alumni helped us with licensing, registration, finding the right distributors – in every way possible,” smiles Vikanshu.
German beer enters India
While Vikanshu was completing all the formalities in India, Christian had found a master brewer who could brew the lager for them and started producing the beer in one of the breweries in Upper Franconia in the north of Bavaria, Germany. Apparently Germany has a broader range of beer brands and varieties than any other country in the world. In total, there are approximately 1,300 breweries in Germany and almost half of them are in Bavaria. The region of Upper Franconia in the north of Bavaria is thereby especially important. Around the city of Bamberg in Upper Franconia the highest density of breweries in the world can be found. So here, in the home of bear, St Erhard also started their brewery. The company was also incorporated in Germany and as decided German beer was imported to India.
The first container of 10,000 bottles reached Indian shores on May 2011 and is currently available in parts North India. Now the startup had plans to enter Mumbai, Pune, Goa, Bangalore and Hyderabad. Apart from India, St Erhard is also sold in Germany, Poland, Austria and HongKong. Expansion into Singapore, China, Malaysia, Thailand and Serbia are also being planned says Vikanshu.
The market for St Erhard
Vikanshu says they have received an extremely positive response for St. Erhard by consumers. “We are targeting expats, elite consumers, who are well travelled and know about high end beer,” says Vikanshu about the TG for the beer. Priced at Rs 250 for a 330 ml pint, St. Erhard would fall in the super premium category of beers in India.
Vikanshu says, they are now the exclusive suppliers of beer to German Embassy Delhi. Other organizations like the German Chamber of Commerce, Alliance Francaise are some of the other regular patrons of the product. “Expats have really liked our product,” says Vikanshu. Besides institutions, St Erhard is also being retailed at speciality beer cafes like the Pint room, Beer café and other such places. They are also targeting clubs, poolside parties, farm parties – where people generally want to have a beer that is not commonly available. “People want to serve something special to their guests at such parties and we have received a positive response to our product from there as well,” says Vikanshu.
He says the USP of the product lies in its looks and taste. The bottle design is very unique(pictured here) and helps stand out on shelf. Most beer bottles are amber coloured, but St Erhard has a transparent bottle and dark colour of the brew makes it stand out among the crowd. The other thing according to Vikanshu is that it is an extremely pure beer. “St Erhard is very pure beer, it only has hops, malt and water. So even if you have like 5 pints in the night, you will not have a hangover the next day,” says Vikanshu.What lies ahead
Vikanshu is extremely bullish about the future and is sure they can create a strong brand of St Erhard in India. They are now awaiting the next container of 40,000 bottles to reach Indian shores to then ship it across the country. Markets like Hong Kong, Germany, Austria and Poland have also received the product well and there is a steady increase in demand there, says Vikanshu. India is comparatively slow because of the various regulatory concerns and the premium pricing of the product, he says.
The St. Erhard team currently comprises of five people – most of whom are in sales and one person in finance.
Given the ban of liquor advertising in India, St. Erhard relies on events to connect with their TG. “We have been covered by major liquor magazines and had our launch at Beer Café, where we invited a lot of people from our TG, that helped us get out the word,” says Vikanshu. They should break even by the end of this year, he says.