B91 is focussing on Premium Beer to Beat Inflation India’s fastest growing craft beer maker Bira is planning to increase the sale of its premium beer to beat the inflation. We all know due to supply chain issues around the world, the inflation is very high. In India, we have seen the WPI is at 13% and CPI a 7%. This has affected the whole sectors in the economy. Raw materials used in Beer? The main raw material used for making and packaging of beer is Wheat or Barley, Glass, and Aluminium. And, the prices of these commodities are soaring in the market. As per Motilal Oswal Report, Barley prices have been surged by 65% in the last one year and 5% quarter on quarter in the month of March. The barley prices are affected due to Russia and Ukraine war, as Ukraine exports world 18% barley. As per Jain, the founder of Bira Beer, the current environment is extremely tough as cost has risen by 30-70%. How bira is planning to tackle this? We all know, Bira beer has a double digit market share in the premium beers. In fact, when Bira was started in the year 2015 at that time they were selling only premium beers. However, they have slowly started manufacturing other beers to target smaller tier-2, tier-3 and tier-4 cities. Now, to beat inflation and pass on the cost to the consumers, they are focusing on selling premium beers. As wealthy people who consumes premium beers are not price sensitive. How many beers bira produces every month? As per Jain, B9 Beverages has also ramped up its capacity to 22 lakh cases a month (a case has 12 bottles), up from 6 lakh pre-Covid, with consumers returning to bars and liquor shops remaining functional. So, bira is producing ~2.64 Crores bottles a month. Market size of Beer Industry India’s beer industry, according to Expert Market Research estimates, was worth nearly Rs 37,100 crore in 2020, and is likely to reach Rs 66,200 crore by 2026 at an estimated annualised growth rate of about 9.2%. So, very good growth opportunities are available in the beer market for the company. Valuation of Bira Beer Currently, the Bira Beer Unlisted Share is available in the unlisted market at Rs.850 per share and with ~6 Crores shares outstanding, the Mcap or Valuation is ~5000 Crores. In FY22, they clocked a revenue of ~800 Crores, so Mcap/Sales = 6.25x.