The Indian bar and restaurant sector is the third largest in the service segment, contributing over 2% to our gross domestic product. It contributes around US$ 340 million to the government exchequer and gives employment to more than 7 million people. It was valued at US$ 426 million by Pahle India Foundation (2019), and was projected to grow at a compound annual growth rate of 10% – until Covid-19 struck and shattered the world economy!
I say this because the hospitality sector is responsible for a large portion of the turnover of alcohol-based beverages. Consumption of beer, spirits and wines is concentrated in the on-trade channel. Besides bars, pubs, hotel restaurants and social clubs are the hot-spots where novelty, flair and innovation mix with bonhomie and business to make great social experiences.
The initial nationwide lockdown to attempt to contain the spread of Covid-19 severely affected the alcobev industry in the country, on a scale most of us have never seen, or even imagined. There were disruptions in sourcing material, production, distribution and sales that will not be easy to surmount in a short period of time. The continued closure of the on-trade channel, and re-imposition of severe social and business restrictions, is a serious existential challenge to the alcobev industry.
Yet, not all is lost! As some industry insiders are vouching in their articles in this issue, there is a need for patience and perseverance in our dispositions; forethought and prudence in our strategies for the future; and a spirit of collaboration, instead of competition, within the industry. I thank the people who spared time to write for this issue of the magazine, and will continue this conversation with more members in future, until we are rid of the pandemic. I welcome all of you to write in (editor@ brewsnspirits.in) to share your challenges, solutions and inspirations.
Amid the disruption and desperation, some significant trends are emerging:
- retail is king for now (outside of lockdowns and containment zones);
- home delivery and consumption through e-commerce channels will stay as long as there is the threat of human transmission of the virus;
- the time is ripe to seriously explore the ready-to-drink demand, even for craft beverages;
- online is the ‘New Normal’ for information and education of consumers;
- with consumers listening and searching, this is an opportune time to build brands and reputations for manufacturers and the service industry;
- it is also a potential window for local manufacturers and suppliers, because many businesses will want to reduce reliance on long supply chains.
Each state will have a different view of what works best for the local market; but it would help tremendously if governments also took note of the challenges faced by the industry, weigh their options on taxation, change certain anachronous regulations, and help the industry contribute to their revenues. Until next time, Cheer up!