1

An Evaluation for setting up a

Brewery Plant in Kolkata, West
Bengal

Table of Contents
Introduction................................................................................................................................3
Introduction............................................................................................................................3
Background............................................................................................................................3
Aims and Objectives..............................................................................................................6
Aims...................................................................................................................................6
Objectives...........................................................................................................................7
Research Questions................................................................................................................7
Conclusion..............................................................................................................................7
References..................................................................................................................................8

Introduction
Introduction
The paper focuses on evaluating the brewery market in West Bengal such that it focuses on
understanding the feasibility of setting up a brewery plant in the region. It would aim to
reflect on the demand situation for brewery and alcohol products in the region while also it
aims to understand and reflect on the potential challenges relating to the setting up of a
potential brewery business in the region. The paper in terms of highlighting on the essential
challenges would also focus on generating effective solutions to contribute in mitigating the
challenges relating to carrying out of the alcohol production, marketing and distribution
activities in the region.

Background
The growth of restaurants and pubs in Kolkata catering to the drinking needs of the urban
customers is observed to potentially contribute in the increase of beer consumption in the
region. The expansion of bars and eateries along different regions in the city has further
induced the level of beer consumption. The growth in the level of beer consumption is
observed to be directly proportional to the rise in the number of eateries and bars in Kolkata.
The growth in the level of affluent population in Kolkata is observed to owe primarily for two
main factors like the development of the service sector and also the growth in the
construction activities in the region. The development of the above sectors is taken to help the
population get enough money in the hands of the people which in turn encourage them to
visit eateries, pubs, restaurants and bars located along the region (Barua, 2004).
The demand for liquor products in the Indian consumer market relates more to the branded
alcohol product companies like that of United Spirits, McDowell, Whyte and Mackay and
also that of Bagpiper. Moreover the market for liquor products in India is also observed to be
largely influenced by both indigenous and westernised brands wherein though the indigenous
alcohol production reflects increased demand the country, India tends to generate a high
percentage of around 150 percent related to import taxes for importing of alcohol and liquor
products from western nations. The demand for liquor products can be further observed from
an estimate such that during 2013, around 46.7 percent of the total global consumption of
alcohol products accounted from the Indian Territory (Sen, 2014).

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Keeping in view the growing demand for beer in Kolkata the existence of a large number of
breweries in West Bengal fails to get highlighted. A single brewery plant in West Bengal is
observed to be existent in Kalyani built by United Breweries Limited. This plant contributes
in the development of the Kalyani Black Label Strong and the Kingfisher brand of beer to
help in catering to the needs of the local customer base in West Bengal and in Kolkata. The
generation of the two significant brands contributes in positioning the company in terms of
taste and quality. Moreover the Kalyani beer brand is developed by the company in such a
fashion as to reflect the sense of bonding and friendship among the male population with also
the sense of comradery. The company caters to the beer drinking needs to the customers
through production of beer in mainly three bottle sizes like 330ml, 500ml and also 650ml
bottles (United Breweries Limited, 2015). Another brewery company, Carlsberg India is also
observed to have expanded its operations in India by opening up a brewery factory in the
Hoogly region of West Bengal. The company opened up its branch during 2009 also aims in
contributing the needs to the urban customer base in Kolkata and other adjoining areas in
West Bengal (Carlsburg India, n.d.).
The absence of key liquor companies in West Bengal creates a potential problem relating to
the meeting of the demands of the customers both in around the urban region of Kolkata. The
above fact owes to the existence of regulatory hindrances and also the large scale
diversification of the liquor industry in the Indian sub-continent. The increase in the level of
government interference related to the development and production of liquor products in
India is observed owing to the incidence of high level of taxes and excise duties. The state
and central government in India focuses on earning needed revenues in the form of levying
increasing taxes and excise on the production and trading of liquor products. The incidence of
taxes and levies is observed to account to around 65 percent of the consumer price of the
liquor products. Further existence of other types of regulations relating to generation of
licenses, development and expansion of distilling and bottling plants, manufacturing and
distribution processes and also the advertising activities of liquor and brewery products tend
to largely affect the growth of brewery production in India. Similarly the growing politics
relating to the use of molasses for the production of brewery products also affect the liquor
production and development business in the Indian subcontinent (The New Indian Express,
2013).
The restrictions imposed by the state and central governments on advertising, marketing and
distribution activities of liquor products is observed to significantly affect the market share

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and profitability of the liquor companies in India. Similarly the above feature has also led to
the increase of advertising and promotional budget for the companies in that they were bound
to take resort to surrogate advertising while also requiring carrying out discounting and
promotional campaigns to attract dealers and retailers operating in the region. The growth of
the regulatory paradigm in India is observed to have largely affected the parameters of
economic freedom. Indias ranking in terms of economic freedom was observed to be around
110 out of a total of 152 countries during the 2014 period. Moreover in another estimate
generated by World Bank, the business score of doing business in India was estimated to be
around 133 out of 152. The existence of such high scores reflects on the existence of potential
regulatory hindrances in the Indian market that affect the mode of conducting business in the
region. The developments of the regulatory policies to reduce the level of alcohol and liquor
consumption in India are especially carried out to contribute in the development of the health
and safety standards. It is however observed that the growing impacts of the regulatory
paradigms tend to fuel the rise of black marketing and price hikes in the liquor industry. It has
also contributed to the in the deterioration of the product quality and also in the rise of
counterfeit products leading to greater risks (Dhanuraj & Kumar, 2014).
Similarly the regulatory policies of the West Bengal Government are also observed to largely
affect the growth of production and consumption of alcohol products. Item 51 of the State
List gives the right to the State Government for collection of duties, excise and taxes relating
to the consumption of liquors and alcoholic products. The production, marketing and
distribution activities relating to liquor products in West Bengal is observed to be carried out
in terms of gaining a license relating to the same. Thus carrying out production and trade
activities relating to non-licensed liquor products is largely prohibited in the region. The
Excise Directorate in West Bengal acts as the bureaucratic body that contributes in
monitoring and restricting the activities relating to production, export, import, sales and
distribution of intoxicant and liquor products in the region. It also focuses on deriving
necessary revenue in the form of excise duties and taxes from the illicit production of such
alcoholic production (Government of West Bengal, 2015).
Alcohol and liquor products however are observed to act as an effective revenue generator in
West Bengal such that the State Government is observed to earn total revenue of Rs. 2600
crore during 2012 as against Rs. 2100 crore during 2011. The total revenue earned from the
production and sales of alcohol products during the financial year 2012-13 was observed to
account around 7 percent of the total revenue collection by the West Bengal government

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relating to excise during the stated period. Apart from excise duty the government of West
Bengal is also observed to gain a sales tax amount of Rs 1400 crore relating to the trading of
potable alcohol. This reflects the growing demand and consumption of alcohol products in
West Bengal which acts as an effective opportunity for generating production and marketing
activities of alcohol and brewery products in the region (Basheer, 2013).
Business organisations focusing on conducting an alcohol production, marketing and
distribution activities are required to earn effective licenses for opening up of bottling and
distillery plants in the region. Moreover the business organisations are also required to
generate an effective environment for generation of employment opportunities which would
contribute in reflecting the social responsible image of the business corporation. The potential
of the alcohol and brewery companies in generating employment for the local people in West
Bengal can also contribute in generation of greater support from the government in
conducting of the alcohol business in a profitable and efficient manner. Moreover the
development of licensed production and marketing activities of brewery and alcoholic
products in West Bengal is also taken to help the State Government is effectively countering
the illicit production and marketing of non-licensed alcoholic products. The above practices
relating to filing for registration and also in gaining of licenses is taken to help new
companies in conducting profitable business relating to alcoholic products in West Bengal.
The government is observed to have given sanction to a large number of dealers and retail
shops in the region pertaining to the sales of alcohol products in the region (The New Indian
Express, 2013).

Aims and Objectives

Aims
The rationale behind conducting the above research activity relates to understanding the
feasibility of setting up a new brewery in West Bengal. The conducting of the project would
aim to understand the success for marketing a new beer brand, Brewski and also in generating
an effective tie-up with a potential beer production and marketing company in India,
SABMiller. The paper would essentially focus on understanding the fashion in which the
conducting of the business would contribute in generating greater returns in terms of effective
profits and also in recovering the capital that would be invested in terms of setting up the
production, marketing and distribution facilities.

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Objectives
The objectives behind conducting the research paper are effectively outlined as follows.

To identify how receptive of Indian alcohol consumers to an economical

beer brand.
To explore how breweries are typically managed keeping government

regulations and bureaucracy in mind.

To determine barriers to new beer venture in India.
To create practical guidelines on how a profitable alcohol business should be
managed.

Research Questions
The research paper would focus on generating effective inferences related to the following
research questions outlined as follows.
1. What is the demand pattern for brewery and alcohol products in the Indian consumer
market?
2. What are the challenges relating to the production, marketing and distribution of
brewery products in West Bengal?
3. What are the impacts of the regulatory and bureaucratic climate on the brewery
business in West Bengal?
4. What are the practical solutions and guidelines relating to the carrying out of a
profitable brewery business in the region?

Conclusion
The section provides an effective background relating to the present status of brewery and
alcohol business in the Indian market with special focus on the West Bengal consumer
market. It reflects on the demand and market structure also generating an overview of the
challenges relating to regulatory and bureaucratic structure that create an hindrance for the
firms to gain needed profit to sustain the brewery operations. It also reflects on the aims and
objectives behind conducting the paper with also highlighting on the research questions that
would be effectively addressed relating to the conducting of the research paper.

References
Barua, A., 2004. Of Kolkata, beer and urban revival. [Online] Available at:
http://www.business-standard.com/article/opinion/of-kolkata-beer-and-urban-revival104021301009_1.html [Accessed 21 May 2015].
Basheer,

K.P.M.,

2013.

The

alcohol

economy.

[Online]

Available

at:

Available

at:

http://www.thehindubusinessline.com/industry-and-economy/the-alcoholeconomy/article5436924.ece [Accessed 21 May 2015].

Carlsburg

India,

n.d.

Carlsberg

India

Breweries.

[Online]

http://www.carlsbergindia.com/experience/breweries/Pages/default.aspx [Accessed 21 May

2015].
Dhanuraj, D. & Kumar, R.V., 2014. Liberalizing Liquor Trade in India. New Delhi: Centre
for Public Policy Research.
Government of West Bengal, 2015. Department of Excise. [Online] Available at:
http://www.wbexcise.gov.in/CommonUser/info_under_act.aspx [Accessed 21 May 2015].
Sen, A., 2014. The Spirit of Development: India's Burgeoning Liquor Market. [Online]
Available at: http://www.businesstoday.org/articles/2014/07/the-spirit-of-development-indiasburgeoning-liquor/ [Accessed 21 May 2015].
The New Indian Express, 2013. West Bengal to give licences for distilleries, bottling plants.
[Online] Available at: http://www.newindianexpress.com/business/news/West-Bengal-togive-licences-for-distilleries-bottling-plants/2013/08/28/article1756261.ece

[Accessed

21

May 2015].
United Breweries Limited, 2015. Our Brands-Kalyani Black Label Strong. [Online] Available
at: http://unitedbreweries.com/kalyani_black_label_strong.aspx [Accessed 21 May 2015].