As breweries, pubs and bars across India grapple with Covid-19 and a prolonged nationwide lockdown, the question on everybody’s mind is – what next?
Author: Ganesh Vancheeswaran
By the 20th of March 2020, a few states in India had issued strict warnings about the coronavirus disease, Covid-19. In response, businesses, educational institutions and various other establishments started curtailing their operations. Many schools in South India shut weeks before their scheduled date, and declared that summer vacation was on.
And when Narendra Modi, Prime Minister of India, announced a nationwide lockdown from March 25, all commercial establishments across the country had to shut at extremely short notice. This included restaurants, bars, pubs, taprooms and breweries. The lockdown has now been extended till May 3.
Concerns regarding Covid-19 had starting rising in India by end-February itself, and many F&B establishment owners suspected that this would hit them soon. It was obvious to them that the crowds were going to vanish from their outlets during this time, for fear of contracting coronavirus. But they thought it would be a matter of business dipping for a few weeks – at most, for a month.
Nothing prepared them for the full extent of what was to come.
A severe setback
“It has affected us badly, as you can imagine. We lost business for more than half of March, and will lose all of April,” says Prathik Shetty, Founder – The Reservoire, Bangalore and 1522 Bar and Kitchen, Mumbai.
Across the town from The Reservoire, both outlets of Brew & Barbeque shut when the Karnataka government announced a state-wide lockdown – even before the national lockdown was announced. Prasanna Kumar, Co-founder and Managing Partner, Brew & Barbeque, says that a good portion of their regular business in both outlets comes from the IT professionals working in tech parks nearby. “A number of foreign nationals visiting these tech parks would also come to our outlets,” he says. And since international travel started nosediving in early March, their business started going down, too. And by the last week of March, both their outlets had shut.
Owners of other pubs and breweries I spoke to, across India, tell the same story, more or less. The scene is grim, indeed.
Ishan Grover, Founder – IG Brewtech, and consultant to a clutch of craft breweries in Bangalore and the National Capital Region (which includes Delhi and satellite cities around it), says, “The worst part is, we don’t know when these outlets will be allowed to reopen. The lockdown will be lifted in phases, but F&B outlets will be among the last to open. That could mean June or July.”
Saurabh Patwardhan, Co-founder, Kimaya Brewing Company, Pune, feels the same way. He adds, “Though we had Covid-related concerns, we never imagined it would be this bad! And even after bars, pubs and taprooms are allowed to open, it will be a few more months before we see business as usual.” He is referring to the mood of fear that is likely to remain even after the lockdown is lifted and the worst of the situation is behind us. Most people are expected to give public hotspots a wide berth for months from now. Saurabh adds another valid point. “Everyone is going to be broke when they emerge from this phase. Nobody will have the money to visit night spots for at least a few months.”
Add up all these factors, and you will realise that these establishments will have to practically wipe off the rest of this calendar year from their books. Life is expected to be back as usual (or whatever the new ‘usual’ is) only by the end of this year. Some say, this may happen only in early 2021.
While the revenues have dried up for breweries and pubs, their costs have not. Oliver Schauf, Co-founder and Brewmaster, Doolally, says, “For these establishments, fixed costs account for a large portion of the total operating cost – as much as 60 percent or more. Of these, staff salaries, rent and electricity are the biggest chunks.” Electricity bills will go down now, but the big cause of worry for owners is something else. Prasanna of Brew & Barbeque says that there is no way pub/brewery owners can pay normal rents for their space for a few months. He and his partners are negotiating with their property owner to get a moratorium or a discount on the rent. “We are told that the force majeure clause cannot be invoked in the case of this pandemic, because it is not an Act of God or a natural phenomenon.” Because nobody knows for sure how this virus spread to human beings (leading to the pandemic), property owners and insurance companies will probably take an ultra-cautious view on the matter. Also, many property owners may have their own financial constraints. So, negotiating a settlement based on mutual comfort and trust seems to be the only way out. Brewery/pub owners who have taken loans to raise funds for the outlet would have EMIs on those loans, too. Thankfully, many banks have announced a scheme under which borrowers can defer their EMIs by three months.
As for beer and food, Prathik Shetty of The Reservoire says that while it would be easier to dispose of their inventory of food ingredients (owners could have simply distributed them amongst their staff for their personal use), craft beer will present difficulties. Ishan Grover agrees. He says that breweries will have to check the quality of different batches of beer to find out if they are good for consumption. “Given that craft brew has a very short shelf life, it starts deteriorating soon. Thousands of litres of beer may therefore have to be drained during this low phase,” he says. “For instance,” he adds, “I’m wondering what to do with nearly 8000 litres of my own craft beer brand, Kadak.”
Putting human life first
Severe as the setback has been, pub and breweries owners unanimously agree that tackling the pandemic is the top priority now, and that the lockdown is a critical part of India’s fight against Covid-19. Which is why, they are all doing their best to ensure the safety and well-being of their staff. Prathik Shetty says that they managed to send the majority of their staff members from their Bangalore outlet back to their native towns and villages (many of them hail from the eastern parts of India). The rest of them have been housed in Bangalore at the company’s expense. Expenses incurred in food are also being borne by the company. Most of the staff working at their Mumbai outlet are locals, and they have been asked to stay at home. “Also,” adds Prathik, “we are giving them money to handle emergency expenses that may crop up. We have paid their salary for March in full, and are trying our best to pay as much of the April salary as possible.”
The other brewery and pub owners I spoke have also given primacy to the well-being of their staff, and are taking care of their food and accommodation during this tough phase. They have assured their staff that their jobs are safe. However, the fate of those working in small establishments is definitely a question mark, given that many of these may not reopen at all while many others may have to retrench staff.
Their outlets may be shut, but pub and brewery owners can’t afford to lie back on their couches. They are busy drafting plans to mitigate their losses and are charting possible courses of action for the post-lockdown phase. For instance, Prasanna and his partners are using this time to (among other things) revamp their menu, think up interesting cocktails to launch, and identify new market segments to target when their outlets reopen.
Kimaya has repurposed its brewery outside Pune to make hand sanitisers, in an effort to help in the fight against corona virus and earn some revenue in the interim. However, Saurabh Patwardhan is clear that they don’t want to be in the hand sanitiser business post-lockdown. Their interest lies only in making beer.
At the same time, craft brewery owners have prepared a joint proposal that suggests a few key measures aimed at reviving business. Nakul Bhosle of Great State Aleworks, Pune, and President of the Maharashtra Chapter of the Craft Brewers Association of India, enumerates these. “We are requesting the government to allow us to sell growlers (which we are calling “beer parcels” or “parcelled beer”, because most government officials here are not familiar with the word “growler”). These would be 1 litre or more in volume, and won’t eat into the business of traditional liquor brands which sell industrially made beer in 330 ml and 650 ml bottles. We are proposing that takeaway and home delivery of these growlers be allowed. Also, we are asking for license to set up beer filling stations at various points across cities. People can fill beer at these points and take it back home.”
Outlets must also prepare themselves for a few fundamental shifts that this industry is likely to see, thanks to the pandemic. Manjuu Rangarajan, Founder-Brandit Communications, a company that handles PR for F&B brands, believes that social distancing norms are here to stay, even post-Covid. “Once these norms are implemented, outlets will have to change their seating plan. This, in turn, will mean that at any point of time, they will be able to accommodate fewer people than before. Also, vegetarian fare will gain more prominence on the menu, at the cost of non-vegetarian food. Some progressive establishments may also introduce a few Ayurveda-based dishes, sensing a shift towards healthy food. More outlets will prefer to use local produce, rather than chase the exotic stuff. Finally, outlets will have to be extra-mindful of hygiene. They will have to introduce additional measures and protocols, especially in the kitchen, to enhance hygiene standards,” she says.
Breweries and pubs (as also restaurants and bars) across India are facing an unprecedented situation. The mood at the moment is understandably one of anxiety and uncertainty. But owners of establishments are doing their best to cope with the crisis. They are eagerly awaiting clear guidelines from the central and state governments, and lobbying for a few specific measures that will help them pave a road to recovery.
This is a matter involving not just heavy financial investments, but also the livelihoods of thousands of people. Clearly, there is much more than just beer at stake.