How a 'beer lunch' turns into a business – the Geist story

 
How a ‘beer lunch’ turns into a business – the Geist story

From importing beer to setting shop in Bengaluru, Geist is one of India’s oldest breweries. 

It was the Summer of 93. Friends and colleagues at Intel, Narayan and Jeff stepped out in Portland, US, to enjoy the sunshine and grab a bite. Not rocket science then, that Narayan got among his first beer lessons that day. 

“This was Portland, called the ‘Mecca of Microbrewery’ in the US. It is from here that the microbrewery culture moved into different parts of the US. Everyone around was passionate about beer, and I was the only one who didn’t know about it,” says Narayan Manepally. 

One could say it was that sunny afternoon when Geist’s journey started. 

Back in Bengaluru, what was once Chumbak’s old warehouse is now Geist’s brewery. “This was a depleted old shed. But I saw the old banyan tree and fell in love with the place,” says Narayan. 

It took $2 million from personal savings and a seed investment to set up the brewery, and get the equipment. Most of Geist’s brewing equipment is made in India, and the company brews beer that is served at various restaurants and pubs in Bengaluru. It also has a microbrewery in Brewsky, an upmarket restaurant and pub in the garden city. 

The beginnings 

While at his ‘beer lunch’ with Jeff, Narayan learnt not just to appreciate the beverage, but many nuances of brewing it as well from Kevin, the owner of Portland’s Main Street Home Brew. A PhD in microbiology, Kevin had left a well-paying job to brew beer. 

A $65 lunch and a lesson in chemistry later, Narayan and Jeff walked out with buckets and pipes – the bare necessities to make beer. 

Back home, they brewed their very first batch of California Ale, and offered it to some friends a few days later. “To be safe, I had bought various craft beers!” says Narayan. 

To this day, it stumps Narayan that their California Ale was near perfect. “The colour of the beer was perfect golden, the foam was great, and the beer tasted just as it should. Needless to say, the store-purchased beer was untouched.” 

Loving his new-found hobby, Narayan wanted it to be way more and felt Indian audiences needed great-tasting beer. 

Brewing in India 

Back in India in 2003, Narayan met Paul Chowdhary. Paul had worked for companies like Motorola, Solectron and VA Linux, and had already spent a year back in India. 

Bonding over beer at a school reunion, they decided to go into business together and brewed their first beer in Narayan’s parents’ basement.

Their first outing together was a wheat beer. They also roped in as a consultant Christian Myer, who had inherited his father’s beer company in Germany. They started with the basic equipment that Narayan had got back from the US. “Our true focus in the process and improving our recipes was brought in by Christian,” says Narayan. 

The team would try new recipes on their friends. In 2006, Geist was incorporated and made 300-400 batches of beer over six to seven months. “We tried to source raw materials from wherever we could, and tried different things,” says Narayan. 

The laws and regulations 

The law, at that time, was not on their side and didn’t allow setting up of microbreweries. “Nothing is easy when it comes to alcohol,” he says. 

Narayan and Paul then tried setting up a beer bottling plant, which again met with a dead end. In hindsight, Narayan says that was a good thing as Geist was in its early stages and the two founders had not really thought it out. 

The next option was to take the recipes abroad, get them made there, and import to India. They chose Belgium as the licenses were easier to come by, the people understood their beer. 

Geist’s first beers were wheat based – Whistling Wheat, The Dark and The Blonde. It also imported two other beers from the manufacturer. 

“Even though the beer was expensive, the team was able to source to 140 outlets across Bengaluru,” says Narayan. Initially, the beer was sold at Rs 199 per pint.

While Geist didn’t make any money during this time, the founders learnt about distribution, setting up excise-bonded warehouses, transportation and logistics, packaging, and other government complexities. 

Change in direction 

The dollar exchange rate played spoilsport in 2013, and Geist had to stop manufacturing in Belgium. For instance, by the time a bottle of beer landed in India, its cost price was Rs 245, and with no takers at that price point, losses were a given.

Around the same time, other things were changing too. The country’s first microbrewery was set up in Gurugram. 

When the The Biere Club opened in Bengaluru in 2013, Geist made their beer in an inhouse microbrewery. It followed the same model with The Big Brewsky and Brewsky. 

As other pubs came on board, Geist set up its own brewery, and supplies draft beer to Bootlegger, Hangover, and Tipsy Bull in Bengaluru, among other restaurants and pubs.

Geist charges an establishment Rs 270 per litre, which works out to Rs 90 for a pint. The team’s latest addition to its repertoire is an India Pale Ale, which is priced at Rs 300 per litre. 

The new shift 

In August 2017, the team started its sales of draft beer. “The brewery business is the only scalable business model you can look at. Brew pubs cannot be one or two, and they are operationally intensive. The better option would be to get into draft and bottle beer business,” says Geist COO Mohan Alapatt. 

The founders had sought licenses in various states but settled on Bengaluru. Every day, a company truck supplies beer to its clients and picks up empty kegs. 

Currently, the Geist team is 20 people strong. “We built a brewing ERP science. If you look at ERP, it keeps track of production, inventory, finances, purchasing, invoicing. For us, everything starts with the recipe,” says Narayan. 

The team is focusing on its brewery, and is also looking to set up the bottling facility. 

Globally, the beer market is at $111.4 billion, of that craft beer is pegged at $26 billion. In India Craft beer is relatively new. An All India Breweries Association report suggests the market is growing at 20 percent per annum. While there are several microbreweries in the country, packaged craft beer is not yet a large segment in India. Geist counts Bira as its significant competition. 

Geist has raised an undisclosed funding from high net worth individuals, which helped set up the brewery. According to the company’s RoC data, Geist’s revenue in FY 2017, was $15.7 million and claims to be growing at close to 10 percent month-on-month.

“The idea still, as when we stated, is to ensure that we get the customer a choice of beer that is tasty and fresh,” concludes Narayan. 

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