How this Chandigarh-based liquor brand is mitigating COVID-19 impact on its business
According to several reports, India is the third-largest liquor market globally, valued at $35 billion per annum. However, the COVID-19 pandemic, which brought the entire world to a standstill, enormously impacted the ‘recession-proof’ industry.
The nationwide lockdowns imposed during the first wave stunted the growth of the Indian liquor industry, where almost 70 percent of the alcohol is sold in stores and local vendors.
“The situation is the same as last year, but there are some differences. For instance, this year, the pandemic’s intensity is greater. But unlike last year, the duration of the lockdown is less,” Ashu Ratan Khare, Director, Rock and Storm Distilleries, tells SMBStory.
For Chandigarh-based Rock and Storm Distilleries, exports helped cope with the unprecedented crisis in 2020 as the domestic operations and sales were briefly halted during the lockdown.
Founded in 2010 by Arundeep Singla, the brand manufactures and sells whiskey, rum, gin, and vodka. In 2014, the current promoters, Prashant Arora and Vinay Ratan, joined the company as partners.
However, Arundeep gave up his stake in the company in 2018 and went on to launch Chandigarh’s first microbrewery — The Brew Estate.
According to the RoC filings accessed by SMBStory, in FY20, the company clocked Rs 298 crore in sales revenue.
The company exported its products to newer markets like Kenya and Rwanda. Ashu adds that supplying liquor to the Ministry of Defense also helped in further nudging sales numbers.
In fact, to avoid a similar situation amidst the second wave, the company produced lesser quantities instead of entirely stopping operations.
“Our shortfalls were covered by new markets,” says Ashu. The brand is also looking to expand to countries, including Chile, Australia, and Ukraine, and other east African markets, like Zimbabwe.
Ashu Ratan Khare, Director, Rock and Storm Distilleries
Liquor market in South India
The liquor market in South India is controlled by the state governments, and Ashu believes that due to the regulatory provisions in the region, the business can ensure timely payments and easier recovery of outstanding amounts.
Additionally, the market — comprising Telangana, Andhra Pradesh, Tamil Nadu, Karnataka, and Kerala — has the largest liquor market share for alcohol consumption in India, amounting to 45 percent, according to Goldstein Market Intelligence.
These are some of the reasons why Rock and Storm Distilleries plans to start its operations in Telangana in July 2021. Moreover, it aims to sell two lakh cases of liquor this year in the state.
Ashu says, presently, the company doesn’t want to invest in infrastructure and would pursue contract manufacturing for the first few months.
Coping with operational and regulatory challenges
Rock and Storm Distilleries has grown at a measured pace since its inception in 2010. The brand started selling in Delhi and gradually expanded to other states, including Uttarakhand, Jharkhand, Chhattisgarh, Assam, and Odisha.
Talking about the Indian liquor industry, Ashu says, “Selling in India is like selling in 37 different countries since different states and Union Territories have various excise duty policies. Before venturing into any new state, we have to study their excise policies and coin our business plans accordingly.”
However, amidst the pandemic gloom, companies like Rock and Storm had some respite when the government allowed home delivery of alcohol.
Recently, the Delhi government announced its decision to open home delivery for liquor. Ashu applauded this move saying this will help generate additional revenue for companies and cover up the losses incurred from the pandemic.
Ashu says, “Home delivery is the need of the hour. Moreover, aggregators like Swiggy and Zomato can manage the movement of liquor very well.”
He adds that allowing home deliveries is going to be a win-win for both the consumers, especially for women, who are hesitant to visit liquor stores.
Rock and Storm Distilleries competes with players, including Amrut Distilleries, Old Monk Rum, Blender's Pride, and Royal Stag, among others, in the space.
Going forward, it also plans to launch brandy and lager beer in the Indian market.