A ‘cheerful’ business

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The liquor market is effervescent in Goa with strong local demand boosting prospects of local companies. Growing at a fast clip is the Cheers Group, manufacturer of a range of wine, whisky and ready-to-drink alcoholic beverages. The group comprising units in Goa (Imperial Distilleries), Bangalore, Andhra Pradesh and Punjab, is present in the export market and has a reputation for quality.
It has a track record of building brands and is ambitious in aiming to be among the big league of companies. Turnover, points out Dr Mohan Krishna, founder, is heading towards Rs 100 crore, while total capital invested in various manufacturing facilities is about Rs 10 crore. Venture capitalists as well as equity investors are showing an interest in picking up stake in the company, he adds.
A seasoned member of the liquor industry, Dr Krishna’s foray into entrepreneurship began in Goa. He worked in Arlem Breweries for good many years before moving on to Mumbai to pick up experience in Shaw Wallace and MNCs such as SAB-Miller. He also worked with the team of international consultant Mc Kinsey and Company during his tenure with Shaw Wallace group.
The decision to set up the first distillery of the Group was always skewed in favour of Goa because of living in the state and hence a plot was purchased in Madkai, Ponda to start Imperial Distillery, he says. The unit had modern manufacturing facility from day one in 2008 and it was set up at a total cost of Rs 2 crore. An EDC loan brought in half of the funds while his contribution was the balance.
It took two years for the unit to stabilise by which time Dr Krishna was ready to start another unit in Andhra Pradesh. The liquor market, he explains, is highly regulated with curbs on all fronts. Each state has its own excise duties and to discourage movement of liquor from one state to another, transportation of finished products is subject to a lot of levies and tariffs. It jacks up the price of the product and makes it uncompetitive in the market. And therefore, it is a customary practice for a manufacturer to set up units in different states, says Dr Krishna.
The industry, he adds, is also capital intensive, in a way due to the cost of distribution and sales. Major overhead is on marketing with considerable sums spent on advertising and publicity. On the production front, raw material is another reason for expenditure as price of key material – extra-neutral alcohol ENA (grain based) – is increasing by the day.
The Goa units, says Dr Krishna, is totally dependent on outside raw material as everything including ENA, malt spirit, cane juice and grape comes in from other states.
A Phd in marketing, Dr Krishna’s expertise is in branding and selling. Some innovations of his which have paid off are packaging with the Group, the first to come out with liquor sold in ‘carry pack’ cartons. His is the first company to launch ready-to-drink (RTD) alcoholic beverages in different flavours. In the future, he says RTD alco-beverage market will be the fastest growing segment in the industry.
On the quality front, the group has pioneered the art of whisky blending and created delightful whisky blends which are far superior to their price points. The liquor industry, points out Dr Krishna, contributes generously to the state exchequer by way of taxes. It is an industry that always finds a mention in the fiscal tax segment of the budget. With proper controls, the industry should be given the freedom to operate peacefully.
Dr Krishna along with wife Anuradha, kick-started their liquor business four years ago and it has successfully grown beyond borders. Meanwhile, son Ashwin who is an engineering graduate, has also joined the company.

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