Cheers! The Indian Alcobev Industry Era

by Vincent Fernandes and Trilok Desai

2 3 Cheers! The Indian Alcobev Industry Era Published by Trilok Desai Publisher: Special Audience Publications Pvt. Ltd. in 2013 Printed at JAK Printers Pvt. Ltd., JAK Compound, Dadoji Konddeo Cross Lane, Off Dr. Babasaheb Ambedkar Marg, Byculla (E), Mumbai - 400 027 Photographs, Cartoons & Illustrations National Museum (), Mathura Museum, Mario Miranda Foundation, Ambrosia Archives Editorial Team Amitabh Joshi, Rojita Tiwari, Lopamudra Ganguly, Yashnashree, Nivedita Nagpal, Alan Fernandes Photographers Shirish Karale, Steve D’souza and Ajay Singh Design and image editing Shirish Karale, Varsha Karale and Rajendra Gaikwad Marketing SAP Media Worldwide Ltd. Production Manoj Surve Advertisements Nivedita Hegde and Sudeshna Chakravarty Special Thanks CIABC, AIBA , AIDA, ISWA, ABDVI, USL, UB Group, Mohan Meakins,Tilaknagar Industries, Bacardi, Carlsberg, , Munjral Brothers & Mohan Bros Distributors: BD Distributors & Variety Book Depot Price: `.4,000 US$ 100

Special Audience Publications Pvt. Ltd. Mumbai Office: Delhi Office: 509 & 511, Dilkap Chambers, F-22 Green Park, Fun Republic Street, Off New Delhi-110 016, Veera Desai Road, Andheri (W) Tel: 91-011-26532567/68 Mumbai 400 053. India Fax: 91-011-26863028 Tel: 91-22-40401919 E-mail: [email protected] Fax: 91-22-40401927 Email: [email protected]

4 5 It gives me great pleasure to present the first Coffee Table Book “Cheers! The Indian Alcobev Industry Era”, documenting the past, present, and possible future of the Indian Alcobev Industry”.

As Ambrosia has completed more than two decades of publishing the magazine, it was only fitting that we archive the industry happenings over the years.The book is a complete retrospect with pictures of the alcobev scenario, the way it was.

At the outset, we would like to thank Confederation of Indian Alcoholic Beverage Companies (CIABC) for initiating the project, USL and the UB Group for their primary support, and the entire industry for its support in terms of editorial inputs. Many top executives, past and Trilok Desai present have also given us their valuable time and information for the book. Publisher, Ambrosia Also, special thanks to all those who have contributed in any way to the production of this book. Along the way the industry has had to encounter many a hurdle trying to negotiate its way in an environment where Prohibition is enshrined in the Constitution. This book is a tribute to the acumen of those doyens of the Indian alcobev industry.

While the book is a comprehensive history there may be some hits and misses. While most were co-operative, some were unable to provide information for various reasons. However, we have made every effort to incorporate every detail that we could get our hands on.

Perhaps this book is a harbinger of future books which will document the industry which is going through one of its bullish phases. Although the world is in the throes of a recession, the Indian alcobev industry continues to grow. Perhaps as and when the duties and taxes are scaled to reasonable levels, is when the real action will begin and the Indian market will be the cynosure of every global player.

During the course of producing the book, one important event is likely to change the course of the industry: the change of ownership at USL. Diageo, despite procedural hurdles in all likelihood will take over in the course of time and is likely to give the industry a new shape. There have also been some changes in management in few companies during this process. But we have endured it all to give the book its final shape.

On this note, we would like to say “Cheers to the industry” and “Responsible Drinking” to our Publisher’s Note millions of consumers.

7 Cheers! The Indian Alcobev Industry Era Contents Chapter 1: Uncorking the annals of alcoholic beverages The alcobev industry has evolved since time immemorial. We look at the history of drinking through the ages. The history of each segment of alcohol is also traced in this chapter. 13 Annexe: The divine intoxication in India The introduction will touch on the history of drinking in India with special reference to the different types of in India. The focus will then shift to drinking in modern times with anecdotes of the past. 27

Chapter 2: The steady rise of Indian Made Foreign This is a definition of IMFL, its inception in India, some information of the old brands which have stood the passage of time. Special reference has been made to its production, quality aspects, and how IMFL has been revered by the people of India and even foreigners. 36 Chapter 3: The Indian beer binge This is the history of the Indian beer industry with the history of some of the oldest breweries, the type of beers made then and now, and the popularity of different types of beer. There is also an account of the inception of strong beer and its growth story, its market share in the Indian market and how strong beer is only an Indian phenomenon. Special mention is also made about the oldest brands and their popularity over the years. Some mention is being made of their brand history. 52 Chapter 4: Wine world-The Indian connection India’s wine history is documented in this chapter. Mention of the grapes used to make wines in ancient times has been made. The chapter also covers the birth of the modern wine industry in India, some information on some of the architects of the wine industry, the growth story, the challenges, the pitfalls, the opportunities, and the road ahead. 68 Chapter 5: Country liquor – The poor man’s tipple An overview of the country liquor market, the growth of the market through the ages, a qualitative and quantitative profile of the consumer, some of the politics behind the industry and current trends in the industry. 98 Chapter 6: Imported wines and spirits Current taxation policies, the various taxes applicable required to import, some of the import procedures, and the challenges facing importers of alcobev products. Reports of the imported spirits market, profile of some of the major importers and some of the brands they represent. 106 Chapter 7: Allied industry – The shape of things to come A report on the supply chain so critical to the growth of the industry. Profiles of the big players in different segments of the allied industry, and the doyens of this industry. A note on the technologies that shape the products in the market place and future technological trends. 128 Chapter 8: Alcobev companies – Past and present A profile of companies that formed an integral part of the industry then and now. An account of how they grew through the ages, both organically and inorganically. Some of the milestones of all major companies, and their contribution to the growth of the industry. 144

8 9 Cheers! The Indian Alcobev Industry Era Contents Chapter 9: Business leaders – Past, present and future This chapter documents the important people in the industry who shaped the industry, gave it its character, those who contributed to the growth story, their tryst with the authorities, the challenges they had to encounter and how they managed to thrive in a high duty regime. Tributes are also paid to some of the late greats of the industry. 194 Chapter10: Legislation, excise and duty pertaining to the alcobev industry The chapter is the treatment of the subject of Prohibition in the Constitution, its implementation and impact on the alcobev industry. How each state is a market itself. The challenges of meeting the tax demands of various states and how various segments of the alcobev industry namely beer, IMFL, wine and imported spirits cope with the taxation policies. 286 Chapter11: Alcoholic beverage exports India’s exporting pattern of alcobev products, the countries exported to, some of the popular brands that are exported and what are the challenges to export. Also, a report on the impediments that hamper exports. 294 Chapter12: Horeca trade A report on the HORECA trade. How important is it to alcobev marketers? Some insights into the trappings of the trade. 300

Chapter13: Consumer concepts The changing face of the Indian consumer over the ages. Also, some demographics of a growing Indian consumer base and how the industry is gearing up to meet the demands of the new age consumer. Also, some comparisons of the Indian consumer with other global consumers. 308

Chapter14: Market musings The Indian market is beginning to evolve and become one of the biggest markets in the world. We look at some of the demographics and present a qualitative drinkers profile. 316

Chapter15: India alcobev market – Bullish but controlled An overview of the current state of the Indian liquor industry and how it has grown in recent times, the reasons for the unprecedented growth, some of the forces that determine the competitive intensity and therefore attractiveness of a market. 326

Chapter16: Glossary Famous alcoholic drinks, /spirits, beer and wine terminology 336

Chapter17: Glasses and Decanters Photographs of various types of glasses and decanters 350

10 11 The steady rise of Indian Made Foreign Liquor The first glass is for myself, the second for my friends, the third for good humour, and the fourth for my enemies. - Sir W Temple

36 37 he charm of leading a good life comes with having a vice has power packed young honchos, mixing coolly with the chic girls or two to indulge in. A taste for liquor has become the latest gulping down Long Island Ice Tea, a booze that is no longer hidden Tstatus symbol to move up the social ladder for ambitious behind the cola. The watering holes are the ultimate in luxury and urban executives in India. Take for example a megapolis like the spending force is unlimited. The concept of ‘Happy Hours’ now Mumbai that revels in its sleeplessness every night. On festive nights, stretches beyond drinking limits for some regular guzzlers. When the especially, the new trend of consuming IMFL (Indian Made Foreign season of weddings and traditional festivals are around, the spirits Liquor) has increased considerably. The plush restobars, dimly lit are high and large. Way down in the new Silicon Valley Bengaluru, pubs, transparently decorated liquid lounges, theme based sports the night life is hotting up with the return of the NRI brigade. They bars and regular restaurants and bars have huge weekend tipplers. have come with a sense of the western culture and are raring to They come there like swarming bees towards the catacombs of experiment with different products. They have the moolah to indulge honey. Disco dancing, pubbing and bar hopping is also indication in heady cocktails in bars where professional bartenders amuse, of the vibrant energy of these young men and women who look for entertain, chillax and serve the best IMFL. The same is the scene in life beyond the fast local. So is the case in the capital, New Delhi. It other emerging pub friendly cities like Hyderabad, Kochi, Chennai and Pune. and Kolkata top in offering the maximum bang for the alcoholic beverage and pure fun. It’s the young, single and trendy that keep the alcobev industry cash registers ringing even beyond the festive season. It is all exhilarating and a great leveler when they mix IMFL with IPL matches.

What has made the availability of IMFL such a huge game changer in the night life of Indian metros? The answer lies in its fairly recent history interspersed with the political winds of change a few decades ago. We go back in time to understand how intoxicating drinks have made nights younger, more colourful, and aspirational. It is now notches above having a staid status symbol of moving around a party in a five star hotel with a suspicious drink in hand! Today it is all about being seen by the right crowd at the right multi-level pubs or lounge bars owned by social celebrities turned entrepreneurs. The popularity of IMFL in India (after independence) has to do with the places it is available at. Alcohol in India is served in two kinds of places. One is the cheap seedy bars where only men go and the other plush restro bars where even upwardly mobile women go out for a drink or two and to catch up with friends after work.

Even though many moralists condemn the consumption of alcohol, the attraction of the ‘somras’ never waned. The liquor barons explain that it (alcohol) is the proverbial wayward wife who everyone loves to hate but cannot do without. The trends have changed now. The frown lines

38 39 have been replaced by nods of acceptance. During Diwali and Holi parties, it is quite okay to drink now. It is no longer a taboo. Between 15% and 20% of Indian people consume alcohol. In the last 10 years, the number of drinkers has increased from one in 300 to one in 20. The yearly sales have increased by 20%. All competing liquor brands have positive reports of growth. In 2013, the Indian alcobev industry is expected to be valued at US$23 billion.

How the IMFL lexicon came to exist The British had already started their alcobev companies that were run by Indians. The early history of the alcobev industry also has the mention of Gordon Shaw. He owned the Assam Frontier Tea Company. He appointed Charles William Wallace a competent and principled man to run his operations. They came into the lucrative alcohol business in 1948 when the British were leaving India. limited demand with a growth rate of about 7-10% per annum. The Shaw Wallace Company acquired the business of Cutler Palmer & industrial alcohol industry on the other hand, is showing a declining Co.Ltd., Calcutta, the old established importers of wines, spirits and trend because of the high price of molasses which is invariably used beers, and also acquired the distribution rights for Johnnie Walker as a substrate for production of alcohol. Whisky, Gordon’s Gin, Exshaws and Allsopps Beer. During this time only the British and Parsis drank IMFL. The term Indian Potable liquor and industrial alcohol are the two categories that the Made Foreign Liquor (IMFL) was coined to distinguish it from distillery industry serves today. Potable liquor includes the bottling of Scotch or other imported spirits bottled in India. local and foreign liquor for consumption of the general public. This sector has seen slow but steady growth over the last few years. The Significant growth cannot be registered overnight. Once India got boom in the potable liquor section can be seen from the fact that there independence, a certain set of politicians condemned drinking has been an increase in the export of Indian premium alcohol. alcohol, and considered it a bad vice. Mahatma Gandhi openly said that there should be complete prohibition. Similarly Morarji Desai, The current scenario shows that the sub-continent now has 320 the fourth Prime Minister of India ensured that there were heavy distilleries, with a production capacity of about 3.5 billion litres of restrictions placed when he was in power. rectified spirits (alcohol) per year. It is produced from sugar molasses. More than 115 distilleries modified their distillation facilities to The liquor industry survived and so did the thirst for the alcohol in produce ethanol, with a total ethanol production capacity of 1.5 various forms. billion litres per year.

Potable and industrial liquor In India distilleries are linked with the production of sugarcane. It The distillery industry today broadly consists of two parts - potable is able to survive competition because of the very high quality of liquor and the industrial alcohol. The potable distillery producing alcohol. The distilleries and sugarcane factories are set up close by. Indian Made Foreign Liquor and country liquor has a steady but India also has over 100 highly efficient “continuous fermentation” Late N N Mohan, Founder of Mohan Meakin Dr. Kapil Mohan, one of the pioneers of IMFL, being decorated during his army stint

40 41 plants producing quality products which no other Asian country has, possibilities of developing alcohol based industries for the purpose of including China. utilisation of molasses. It started as a substrate and as recommended by the Committee it was to be mixed with petrol as motor fuel. The In the states of and Uttar Pradesh, sugar factories make production of ethanol now served a dual purpose - to bridge the gap the molasses for industrial alcohol. Both states have the most viable between the alcohol needs and the other for the motor spirit needs. land for cultivation and irrigation. The utilisation of ethyl alcohol or After meeting its requirement for manufacture of gasohol, alcohol ethanol, now popularly known as alcohol, for industrial use became was diverted for production of alcohol based chemicals, manufacture important after the second world war. Molasses was a huge problem of solvents and intermediates all over the country. once the sugar was made. For resolving these problems, a joint committee of UP and officials was constituted to explore the Indian sugarcane production is cyclical and there is no guarantee of the bulk molasses. Hence alcohol production varies for all the byproducts. The Government’s main priority is food security as the domestic demand is more. GOI cannot afford to allow or promote the use of food feedstock for bio fuel from cereal grains for ethanol production or edible oils for biodiesel production, as is done in other bio fuel producing countries. But given the poor storage conditions and the requirement of low quality cereals often unfit for human consumption, grain based ethanol is now possible and companies are beginning to use it for their more premium brands.

The local markets for IMFL There has been a tremendous growth in IMFL in the last few decades. There is a palpable shift from the country spirits to the rectified

42 43 spirits. Amongst all of them, drinking whisky is status symbol. Hence it is the most expensive and also has unbranded ones floating in the market. Local operators believe that 2-3 million cases of counterfeit are put on the market every year – almost entirely of whisky. While whisky is loved by the mature consumer, the vodka rise has been attributed to the young adults. In metros across pubs the hip crowd has fun with drinks and discos. Rum is seen as a drink for the armed forces whereas brandy is widely consumed in Southern states particularly and ; gin still continues to be considered a woman’s drink and is growing, particularly high- strength flavoured gins.

According to statistics: ‘Prestige’ IMFL whisky brands rose by 20.4% in 10 years, ‘Regular’ IMFL whisky rose by an 11.9%, ‘Regular’ rum by a 12.3% and ‘Regular’ brandy by a 15.1%

Now grain-based alcohol is replacing molasses based alcohol. It is estimated that grain-based lot of all potable alcohol produced in India is now about 10 % of all potable alcohol produced in India. It was 2-3% only five years earlier and is projected to touch 22 % in the next five years. The increasing acceptance of grain based alcohol has improved due to several factors. The most obvious is the fluctuating molasses prices and then getting it for distillation. For instance, in December 2011, the price per tonne of molasses was `4,000, up from `3,500 per tonne in May-June. Earlier in the year, the price was `2,500 per tonne.

Molasses is now being used in several other industries. And alcohol isn’t getting priority any more. The Government has increased the procurement price of ethanol distilleries, say experts. The distilleries are likely to switch to producing ethanol more than potable liquor to take advantage of this. This means ethanol production for blending purposes will grow.

Grain based players in the market Although production wise United Spirits Limited remains the largest player in India. It has only recently started manufacturing grain based products. Multi-national Pernod Ricard has built its story around President Dr. S. Radhakrishnan conferring the Award of Padmashree on Col. V R Mohan

44 45 grain based products. USL has introduced in the premium segment McDowell Platinum which is grain based. Radico Khaitan can ideally be considered the third in the market. It has premium products like Magic Moments vodka and After Dark whisky in the grain based category.

There are plenty of changes in the tastes of the new generation. Single malts and blended Scotch is the favourite tipple of the whisky lovers. The young and trendy prefer flavoured vodka. As the financial figures USL has created history of sorts change, here is what the international wine and spirits records show: in the world of beverage alcohol by selling 750 million cases in Sales of premium whisky (prices varying between `400 and `800) about 25 years and became growing 19.5% in 2010, beating the overall growth of the domestic number one in terms of volume liquor market by over 3%. Vittal Mallya at one of his many factories Vittal Mallya In the semi-premium whisky segment (the `250 to `385 range), sales rose by 18.2%. Whisky, the largest liquor category in India, grew at 14.5% and accounted for about three-fifths of total liquor sales that stood at 234.4 million cases (of nine litres each). Brandy grew the fastest Right from 1950s the government has urged all states to have at 26.4%, while vodka clocked 22.2% and imported Scotch 12.9%. uniformity in their policies regarding the consumption of alcohol. Several prohibitions have been introduced in various states. But they USL has created history of sorts in the world of alcobev by selling have been toned down because of budgetary deficit and the extra 750 million cases in about 25 years and becoming number one in cost of enforcing Prohibition, which made the effort financially non- terms of volume. viable.

Some of the major players in India today are USL, Pernod Ricard, It cannot be denied that alcohol is the major source of revenue for Radico Khaitan, ABD, John Distilleries, Jagatjit, Mohan Meakins, the government also. Policies related to the state have always been Tilaknagar, Diageo, Beam Global, Moet Hennessy, Khodays, Amrut, changing. Hence the production, consumption and taxation have Bacardi, Simbhaoli Sugars, SOM Distilleries, Empee and Wave. different growth patterns. The political compulsions have dictated the Companies like Shaw Wallace today no longer exist after it was alcobev industry’s fortunes. The policy makers have always turned a bought by USL. Allied Domecq ceased to exist after the take over blind eye to the socio-economics that go along with its policies. But globally by Pernod Ricard and Fortune Brands, the owners of Beam the IMFL story goes on. Global. BDA is now called ABD. The bulk of spirit consumption is still accounted for by whisky that Expectations from the emerging market represented 58.3% in 2006 and is expected to contribute a little over While the success of the IMFL has helped the liquor barons and 60% of the total by 2013. The whisky market itself accounts for the tipplers alike the only spoil sport is the government policy of around 145 million cases. The IMFL market currently is 60% whisky, Prohibition. 17% brandy, 16% rum and 7-8% white spirits like vodka and gin.

46 47 While whisky rules the roost, white spirits are slowly finding flavour with the chic and young. The total vodka market (IMFL) is said to be nearly six million cases. The regular and mid-priced vodka segments make up 90% of the total market and the premium segment makes up the remaining 10%. However, vodka consumption is growing at 30-40%. North India is the leader in vodka consumption, followed by west, south and east. Vodka’s current share of throat is estimated at 6% of the total IMFL market and projected to go up to 7-8% in the next three years.

Rum is also gaining importance thanks to the likes of both Indian and international brands like Old Monk and Bacardi. India is the second largest rum market in the world by volume, after the United States, but only the sixth largest market by value. The rum market is slated to be around 22 million cases, with 5.7 million cases of Old Monk and 4.9 million cases of Celebration rum being sold in India annually. These two brands account for 56% of the

48 49 While Indians love their whisky, the Chinese love cognac. Brandy, a poor cousin of cognac is concentrated in South particularly in Tamil Nadu and Kerala. Nearly 90% of the 24 million cases market is in South India.

market. Contessa is the largest selling rum in the army and has a market share of 22%.

While Indians love their whisky, the Chinese love cognac. Brandy, a poor cousin of cognac is concentrated in South particularly in Tamil Nadu and Kerala. Nearly 90% of the 24 million cases market is in South India.

As the Indian spirits sector continues to grow at an average of 12%, the need for a single event where buyers and suppliers can discuss business has become stronger. Consumers are demanding more choice and better quality – and increased industry profits may depend on having the right contacts and the right products to offer.

Today it is the buyer’s market that is dominant. Consumer is the king, who’s all out to have a good time. Lifestyles have changed. Social drinking is not a taboo any more. But an occasional frown can upset the wine cart. Despite the embargoes, prohibition and cultural issues, the stalwarts march on ahead to uncharted territories. It is now time to salute the companies and doyens of the industry who have stood rock solid and provided us with the drinks before supper. File picture of Tilaknagar Industries Ltd. Tilaknagar Estates

50 51 Country Liquor – The poor man’s tipple Alcohol is the anesthesia by which we endure the operation of life. - Bernard Shaw

98 99 Allied Industry – The shape of things to come “The packages are trying to engage the consumer in such a way that they’re inspired to buy the product.” Chris Lyons

The Indian Beer Binge Pretty women make us BUY beer. Ugly women make us Drink beer Ed o Neil –American actor

128 129 he growth of the Indian scattered across most of its states. This enhances the scope of the alcobev industry has allied and packaging industry in particular the distillation and Tfuelled the growth of the brewing plants industry. Indian Allied industry. In volume terms, the IMFL industry is over Praj Industries 250 million cases with country Headquartered in Pune, Maharashtra, Praj Industries Ltd., a process liquor accounting for another engineering and technology company offers innovative end-to-end 220 million cases. Beer also solutions for biofuels, brewery, industrial processes and water and accounts for another 200 million wastewater treatment systems. cases. This gives a tremendous fillip to the allied industry The cornerstone of Praj’s technology development is Praj Matrix, which manufactures ethanol, The Innovation Center. This Center has been conceived and rectified spirits, distilling plants, established with the objective of providing future perfect technology breweries, water, packaging and engineering solutions for biotech led processes. Matrix is Pramod Chaudhri and bottling plants, packaging equipped with state of the art laboratory and pilot facilities. Praj materials, closures, mono Matrix is currently engaged in scaling up of second generation cartons, tin containers and even bioethanol and biodiesel technologies from agri waste and algae. corrugated boxes. Machinery to move cases within and outside The company offers solutions for the entire life-cycle of alcohol the factory premises also production. Their specialised services include license and contributes to the allied industry. technology for fermentation, distillation, dehydration, evaporation and wastewater treatment, detailed engineering services, The biggest manufacturer of project management, manufacture, procurement and inspection, distillation plants and breweries engineering and supervision of civil & structural work, supervision is Praj Industries with a market of erection/installation and after-sales service. share of 70%. Pramod Chaudhri founder of Praj was one of the Praj supplies brewery plants having world class manufacturing pioneers of this industry and capability to achieve excellent and consistent product quality at lower Abhay Chaudhri, President of Abhay Chaudhri cost with environment friendly technology. Apart from turnkey plant Praj now plays a more active and equipment supply Praj also undertakes brewery modernisation, role in the company. Alfa Laval was one of the first player and over capacity up gradation and equipment supplies.The final product the years international players like Krones, KHS, Sidel, Ziemann quality characteristics depend greatly on the ingredients used and the and Indian players like SS Packging, Brewforce and Naren Lala process conditions delivered by the brewhouse technology. This is established themselves. where the sound equipment design capabilities and experience come into picture. Glass was the dominant packaging followed by PET bottles and now cans are becoming popular in recent times. important segment of packaging. Praj utilises HiFerm fermentation systems for production of biofuels, which are based on sugar, starch, and sweet sorghum feedstocks. Praj With the need to build brands becoming more and more a necessity However, since alcobev is a State Subject, Indian alcobev companies additionally offers agro energy consultancy services related to crop mono cartons came into the picture. As brands became popular, are required to have distillation units and breweries in each state to solutions and management. The company operates its business in counterfeiting slowly became the norm and closures became an avoid paying interstae duties thus distilleries and breweries were India, Thailand, Netherlands, US, Brazil and UAE.

130 131 Alfa Laval Krones Naran Lala Alfa Laval is another player in the allied industry. It is a leading global Krones has been constantly growing at 20% YOY and the trend is Naran Lala is the turnkey supplier of distillery and alcohol based provider of specialised products and engineering solutions based on its expected to continue over the next three years. Their presence at the chemical plants. Heading fast to create a name in the world markets, key technologies of heat transfer, separation and fluid handling. moment is largely in the brewery segment. the company was pioneered by Naranbhai Lalabhai Kansara. With a rich experience that has accumulated since the 1890s, the company The company’s equipment, systems and services are dedicated to In the liquor segment, Krones as well as the Italian Division Kosme has already supplied over 200 plants to leading names in the field of assisting customers in optimising the performance of their processes. has provided high quality labeling solutions. engineering and chemicals. The solutions help them to heat, cool, separate and transport products in industries that produce food and beverages, chemicals and The Krones turnkey capability and the ability to provide a complete Naran Lala has created a niche for itself in the realm of Distillery and petrochemicals, pharmaceuticals, starch, sugar and ethanol. solution from a single source are major contributing factors in their Chemical Plants. It has consistently set new trends in this business success. giving a new meaning to the term ‘customer satisfaction’ through The setting up of new distilleries and breweries is likely to spawn development of better quality products each time. In 1942, Naran the demand for bottling and canning lines. Many international, In beverages, they have been commissioning three PET lines per Lala supplied end-to-end distillation plant to the Kohlapur Sugar especially German companies are well established to meet the demand. year as more and more customers look toward turnkey solutions. The Mills Ltd. Then in 1962, the company initiated operations in the Companies like Krones, KHS, Sidel and many others have been here company is the most preferred supplier and favourites for Filler & chemicals sector. Today, the company has successfully supplied over for more than a decade. Labelers for the beer bottling lines. 200 plants to the pioneers of chemical and engineering business.

Naran Lala offers services in conceptualising, designing, B. S. Malhotra manufacturing and commissioning of distillery projects. Brew Force Brew Force offers basic engineering, fabrication and manufacturing, procurement and supply of process plant and machinery along with utilities and total erection and commissioning of the plant.

Based in New Delhi, with manufacturing facilities in Dehradun, which includes the complete process plant from malt handling to bright beer tanks, they also execute complete brewery projects on turn-key basis (process, utility and bottling sections).

The family business is owned by B S Malhotra which includes brewery, distillery, pharmaceutical and food processing equipments. Clients include SABMiller, Bacardi, UB Group, Mohan Meakin, Inbev and Carlsberg.

The channel partners in India include Spadoni, Scanjet, Corosys and Filltec.

The company is also recognised as one of the leaders in the pub brewery segment in India. Services offered include project planning to beer production which includes procurement of raw materials and designing of beer recipes.

132 133 S S Packaging Industries Packaging This industry has long been a cottage industry resorting to Ever since its inception in early 1968, S.S. Packaging Industries, with Besides production, packaging also has a significant role to play in an rudimentary mouth- blown processes. The late 19th century a focus on manufacturing of liquid packing machines, has emerged as industry stifled by advertising and marketing constraints. The growth saw the introduction of automated process wherein the glass SS Group, which symbolises international quality in India and across of the alcobev industry has fuelled the market for containers. While industry evolved into a modern and hi-tech industry. The industry the world. Their machines are working in South-East Asia, Middle- most of the containers are in glass, PET bottle manufacturers are at present is one of the fastest growing segments in India with East, and Europe successfully. seeking their share of the pie. While most of the PET bottles are in production strength of 7,000 tons per day. the low end of the market, these segments are the high volume ones. Founded by Satnam Singh, now Chairman of the group, is supported It is now served by nearly 10 medium and large container glass by his son Pardeep Singh. The Indian container glass industry, which is currently estimated to manufacturers that contribute a sizeable share to its production be worth US$1 billion, is progressing with an approximate growth strength. Many small manufacturers having petite furnaces (in the From a humble beginning, the capabilities and facilities have been rate of 12%. Market analysis and research indicate that the trend semi-unorganised sector) also add up to the installed capacity by expanded to serve an ever broadening range of machines and needs. will continue or even improve in the times to come due to rising over 500-600 TPD. Research and development is the foundation of their business, and disposable income and GDP rate. The Indian economy has been a they always develop their own machines in order to bring the best major aid for the container glass industry enabling the industry to Industry sources reveal that Hindustan National Glass is the possible benefits. foster even during the worst financial crisis in history. leading glass container maker in the country with about 50% market share, followed by Piramal Glass (15%), AGI Glasspac The company (10%), Haldyn Glass (5%), Excel Glass (5%), Universal Glass has extensive R (4%) and others (11%). & D capabilities to engineer this Hindusthan National Glass & Industries Ltd liquid packaging Headquartered in Kolkata, Hindusthan National Glass & product range Industries Ltd. is India’s largest glass container manufacturing to the most company with a dominant market share. The company has exacting completed six decades of service to the glass packaging industry. specifications. HNG was founded by C K Somany, a visionary entrepreneur, SS Group in 1946. The company started its first commercial production in is totally 1952, with the incorporation of India’s first fully automated glass committed and manufacturing plant at Rishra, near Kolkata. Today, it has grown fully equipped into a large, multi-unit and multi-locational business, providing to deliver quality Glass Packaging Solutions to India and worldwide. HNG has an and customer annual turnover of over `2000 Cr (FY 2011-12) and produces satisfaction. more than 16 million bottles per day.

S S Packaging The company has an enviable clientele comprising of the Industries aces of the liquor, cosmetics, beverages, processed foods Private Limited and pharmaceuticals industries. Their list of esteemed clients is situated Delhi, include Asia Pacific Breweries, Bacardi, Carlsberg, Cipla, Coca along with its Cola, Dabur, Diageo, GlaxoSmithKline, Global Green, Heinz, sister company, Himalaya, Hindustan Unilever, Koeleman, Nestle, Pepsi, Pernod Optima Ricard, Pfizer, Radico Khaitan, Ranbaxy, Reckitt Benckiser, Machineries. SABMiller, United Breweries, United Spirits and many more. Pardeep Singh

134 135 HNG operates with a vision to create a world-class glass manufacturing plant that pursues quality, cost reduction and productivity improvement measures in a truly holistic manner, leading to customers’, shareholders’ and suppliers’ satisfaction. It believes that its integrated efforts will result in the company becoming an industry benchmark and a role model for its systems, processes and results. In fact, HNG has proved in the long run that its product orientation goes far beyond into providing complete packaging solutions, including pre and post bottling consultancy services.

As an organisation engaged in container glass manufacturing, HNGIL can be called a turnaround specialist as it has successfully acquired and converted under-performing units of Owens Brockway (world’s largest glass manufacturing company) at Rishikesh and Puducherry, L&T’s Nashik plant and Neemrana unit of Sheet Glass to profitable businesses. HNG is committed towards providing customized solutions to its clients. Its enhanced customer-centricity has strengthened its organisational focus towards market-driving innovations and transformations. The company aims to produce international quality standards and make glass the most preferred packaging material among the consumers.

Prices of glass have been increased steadily and companies like AGI, Hindusthan Glass, Janta Glass and Haldyn Glass have been finding it hard to cope with the demand. Bottles are also manufactured traditionally by Mohan Meakins, Jagatjit Industries and even the UB Group is firming up plans of setting up their own plants. It has emerged as a frontrunner in the technological expertise of glassmaking. It has taken efforts in bringing path breaking technology PET Bottles/CANS such as NNPB (narrow neck press and blow) for the first time in India While most of the containers are in glass, PET bottle manufacturers are to reduce the weight of the bottle by 15-20% and added benefits. In seeking their share of the pie. While most of the PET bottles are in the order to keep pace with changing technology and market dynamics, low end of the market, but these segments are the high volume ones. HNG has tied up with the most modern and innovative technology Beer which in India is restricted to 650 ml bottles and 330 ml pints, suppliers in the world such as Zippe (Germany); furnaces from Sorg is now moving to one litre PET bottles. In recent times India’s beer and Horn (Germany); Forehearths from Emhart (USA) and PSR manufacturers have clearly understood the importance of packaging (UK); IS machine control system from Botterro (Italy) and Futronics and shelf space to push retail sales. Beer-makers are introducing (UK); bottle transfer machines from Sheppee (UK) and Pennekamp cans in the Indian market which earlier were kept on hold on account (Germany); annealing lehrs from Pennekamp (Germany) and Carmet of prohibitive costs. On an average, a canning line requires an (USA); laboratory inspection machinery from AGR (USA) and bottle investment of around `1 crore (`10 million). In India, the packaging printing equipment from Strutz (USA) and Rosario (the Netherlands). material for cans has been imported so far. The beer cans segment has

136 137 been growing phenomenally over the past few years. In 2007-08, the segment grew by 50% and contributed to over 10% of the revenues. Though initially cans were popular in the West and North over the years, they have gained popularity in the South also.

Can-Pack India Pvt. Ltd Can-Pack India Pvt. Ltd has steered a revolution in the can packaging industry within the country and also with a sizable export share. The company keeps coming up with pioneering and attractive ideas. It works as per the customer demand and requirements. The firm has amalgamated with some of the toppers in the industry to supply its products to the Indian as well as the South East Asian markets. Their new ground-breaking design of a FIT can is successfully running today. The FIT can is available in two sizes 300ml and 330ml. Can- Pack is now dealing with cans of 500ml size.

After having made a mark in 12 countries, with 32 units and annually producing 10 billion beverage cans, Can-Pack has aptly proved success comes in aluminum cans. The company has a presence in Poland, India, France, Russia, Ukraine, UK, Slovakia, Morocco, UAE, Egypt, Romania and The Czech Republic. Four major global players in the industry include CanPack, Rexam, Ball Co and Crown. Can-Pack strongly believes in the power of the aluminum cans which are the preferable choice for beverages worldwide. Having entered the industry in 1961, aluminum’s market share reached 79% by 1975, 82% by 1980, and accounted for 95% in the 1990s. Furthermore, the beverage can market had grown to dominate the entire can industry. By the early 1990s, nearly three times more aluminum cans than steel cans were being produced. The other alternative to aluminium is tin. Tin is cheaper than Plastic containers, which accounted for more than 25% of all food aluminum, but aluminum is replacing tin. Aluminum is more suitable container production, were also competing for can consumers. for the alcobev industry while tin is favoured in the food industry. At a recent seminar, PET manufacturers underlined their intentions to Aluminum adds premium to the brand image as only aluminum cans increase the presence of PET in the liquor industry. PET bottles are give that perfect surface required for sharp print quality. They are well established globally for alcoholic beverages for different pack hygienic, chill very quickly, do not rust as they are not an alloy, do not variants, right from 30 ml to 3l. In India usage is primarily limited corrode or break during transportation, have a high shelf life and are to sizes up to 750 ml and higher pack sizes (2l and above) are used 100% recyclable. selectively in southern states. Total usage of PET in this sector grown from 55 KTA in 09-10 to 65 KTA in 10-11. It shall reach 80 KTA this Beer companies are also opting for cans in a big way. Cans protect the year and projected to grow at 20 % p.a. in coming 3-4 years. beer better from light and oxygen, making it fresher. Cans are lighter The Indian PET industry identified alcoholic beverages as one of to ship than glass bottles so packaging is easier and cheaper. Cans are the key focus areas for promotion and development. PET usage in infinitely recyclable, and can be back on the shelf in as little as 60 days. this industry for both country liquor and IMFL is growing and is Harsh Jajoo

138 139 getting approved in more and more states. It is already being used for Fowler Westrup different liquor products and there is growing interest in industry to Fowler Westrup is a global leader in providing solutions for grain broad-base usage of PET. It was approved for country liquor in West storage silo system, post harvest agricultural processing machinery Bengal in 2010. There has been an encouraging response and PET for seed and grain, opto electronic colour sorter, grain conveying has been approved for country liquor in Madhya Pradesh also. equipment, oil filtration and regeneration system. Fowler Westrup is a joint venture between John Fowler of India and Westrup A/S of While the cost of PET is less, it can be used only once which reduces Denmark. duplication to some extent. Glass bottles are often recycled and used by spurious manufacturers to duplicate proper brands. The industry The relationship between the Indian and the Danish company has has introduced different seals to combat the menace of counterfeiters. been further strengthened with the acquisition of Westrup A/S, Pilfer proof closures are popular. Denmark by the Indian joint venture partner, keeping in pace with the vision of a global leader in Post Harvest technology. Global demand for caps and closures is also expected to grow 4.7% annually. This growth will be particularly strong in emerging markets Fowler Westrup has established leadership through its commitment especially China and India. Trends also suggest that plastic closures the product and growing market demand encouraged the group to to highest quality standards, superior performance, reliability, safety will continue to supplant metal and cork in the $25.2 billion cap and treble the capacity at Goa and start another unit at Daman in the and durability. It has a modern manufacturing plant located at closure industry. same year. , India. The manufacturing is supported by an advanced design set up with capability of three dimensional design layout. Guala Closures In 2000, they started manufacture of PET preforms at Goa. Ravi Gupta New product development is an on-going process to meet the Guala Closures (India) Pvt. Ltd. is a wholly-owned subsidiary Guala caps have helped leading brands in liquor industry to fight continued enhancement of customer need. The company has an of Guala Closures SPA of Italy, has two manufacturing units in effectively refilling and counterfeiting of their bottles after usage. R&D test bed to ensure that every new development is tested to India besides manufacturing facilities in Spain, Brazil, Mexico, The company’s headquarters are in Panaji, Goa’s capital city. Its decorative closures, as well as capping heads and brand protection meet the rigorous field conditions. Colombia, China, apart from Italy and India. roster of clients in India are Diageo, Pernod India, USL, Radico products. The company also provides preforms, pet bottles, jars, Khaitan, Bacardi, and many others in the liquor segment and Coca flasks, cans, miniatures, neck finishes, and collars for various The capability of the people has been constantly upgraded. Six They are the world’s leading manufacturers of tamper evident Cola in the beverage segment. Guala Closures India also business areas, such as cosmetics, beauty care, carbonated soft- Sigma and Total Quality Management has contributed immensely non-refillable closures for the liquor industry. They control exports caps. drinks, food and dairy, oil and vinagre, detergents, and wine. It to the great leap forward in productivity, reliability and on time approximately 65% of the world market in this segment and also offers its products to domestic and international companies. delivery. Fowler Westrup has technical collaboration with leading manufacture PET preforms and blowing of PET bottles. The Guala Closures Group designs, manufactures, and markets non- The company was founded in 1954 and is headquartered in companies around the world. company started its operation in 1997, with manufacturing of refillable closures for spirits, beverages, pharmaceutical products, Alessandria, Italy with additional offices in the United States and specialty caps for liquor industry at Goa. Customer confidence in and edible oils. It offers safety aluminum, open pourer, and Mexico. It has operations in the United States, Mexico, Spain, Supporting the customer from concept to commissioning has been Italy, India, New Zealand, China, the Russian Federation, Brazil, the forefront of its strategy. The company has been rapidly growing Argentina, Colombia, Poland, and the United Kingdom. Guala in its field of activity with a growth of over 15 times in the last eight Closures Group operates as a subsidiary of GCL Holdings S.C.A. years.

140 141 ITC Manohar Packaging The last word Globally packaging industry turnover is said to be around $500 ITC occupies a leadership position in catering to the needs of the The Manohar Packaging Group (MPG) was founded in 1973 by While packaging for other industry has varying uses. For the liquor billion, with packaging container sales accounting for the major part liquor, mobile phones and food industry. ITC offers a range of value Nishikant Shirodkar, a visionary in the Indian packaging arena. Aditya industry it is gaining momentum for its role in marketing. However in and packaging machinery sales estimated around $25 billion. In India additions for carton board packaging such as UV offset printing, foil Patwardhan looks after day to day operations. From manufacturing recessionary times there is a tendency to cut costs in this area. it is said to be around US$14 billion. stamping, embossing, and window patching and lined cartons. India’s first foil stamped labels for Bagpiper Whisky, the company now develops packaging for several premium brands - including Black Used in a wide range of industries across food and ITC’s Packaging & Printing Business’ Chennai unit has received a Dog, Glenn Drummond, Teacher’s, 100 Pipers, VAT 69, Black & drinks, healthcare, cosmetics and other consumer goods Level 8 rating in the International Quality Rating System (IQRS). White, Signature, Golden Eagle Brandy, Campari, Whyte & Mackay, as well as a range of industrial sectors, packaging has IQRS Level 8 is the highest rating any company has received in and the McDowell’s No.1 portfolio. become an essential everyday item, with its usage India till date. IQRS has been developed by DNV, Norway and growing broadly in line with the global economy. is an amalgam of ISO 9000, European Foundation for Quality The MPG owns and operates three factories in Goa, and one in Packaging growth is typically higher than GDP in Management, Malcolm Baldridge Award and QS 9000 standards. Palghar, Maharashtra, all of which are equipped with world class emerging markets, where increases in standard of living The IQRS assessment is done across 14 parameters, ranging from printing and converting equipment, to supply the most demanding are typically used to buy packaged food, beverages and leadership and strategy to stakeholder satisfaction. labels, canister wrappers, and mono-cartons to the alcobev industry. other everyday commodities. The company supplies an average of 10 million complex labels for both wet glue and pressure sensitive (pre-gummed) bottling Today, alcobev segment is the largest and most strategic ITC offers a range of value additions applications per day, which are printed on custom built press market for glass packaging as well as allied industry configurations that are distinctive on a global scale. The MPG recently especially in India with an annual growth rate of for carton board packaging such as acquired the first of its kind mono-carton printing and conversion in 12-13%. IMFL and beer market in India is pegged at UV offset printing, foil stamping, Asia, which can deliver astounding results at competitive conversion Nishikant Shirodkar around 265 and 220 million cases respectively. The embossing, and window patching and costs owing to the major automation involved. The core equipment is growing youth population and changing life style of the lined cartons imported from Germany and Switzerland, countries renowned for their people are acting as catalyst in this regard. At present, engineering acumen, and high quality metallurgy. Indian alcobev segment has a per capita consumption of 1.83 in IMFL segment and 1.3 in beer segment. The MPG won Printweek India’s “Label printer of the year” award in 2011 year, as well as the Silver for technical excellence in Flexo These figures are much lower in comparison to global printing at the recent USFTA awards in the US for a canister sheet they averages which suggest that there is huge potential for developed. alcobev as well as glass packaging industry. The Indian alcobev market is expected to become the second largest globally by the end of this year as per ISWR’s forecast report.

The Indian packaging industry is poised for growth. The alcobev industry in India has been growing at a rate of around 12% in the last few years, with anything between 25-32 million customers falling into the drinking age bracket every year. Since companies cannot advertise through traditional methods, innovative packaging is extremely important - visibility and shelf throw assume prime importance vis a vis other industries. Aditya Patwardhan

142 143 Market Musings When I read about the evils of drinking I gave up reading - Henry Youngman

316 317