This article was initially published in the April issue of Global Drinks Intel magazine. For details on how to subscribe click here.
With new outlets springing up across Delhi’s vibrant young on-premise scene, domestic players are upping their game. The only barrier to growth? India’s maze-like regulatory and excise environment.
The on-premise in Delhi – or, put more accurately, the National Capital Region (NCR) also including Noida and Gurgaon – is as vibrant as the economy that underpins it. Though not without its challenges, India is one of the brightest prospects in beverage alcohol today.
The city’s sophisticated bar scene may barely be a decade old, but change is constant as fresh outlets spring up across this sprawling urban landscape. Bartenders and entrepreneurs are bringing international know-how to bear – and an increasingly affluent consumer base is keeping them on their toes.
The opportunities for international brands are enticing, but domestic players have upped their game and increased their focus on higher price points. The only significant barrier to growth, however, is the country’s notoriously labyrinthine regulatory and excise environment.
The scene
“I think the first steps in the evolution of the NCR bar scene were about ten years ago, when two pivotal outlets opened: PCO [Pass Code Only] in Delhi, and Cocktails and Dreams Speakeasy in Gurgaon,” says the co-founder of ’30 Best Bars India’ and CEO of training and consultancy business Tulleeho, Vikram Achanta.
These were the kinds of bars that Indians had rarely, if ever before, encountered in their home country. “During the early days, people were more inclined towards straight drinks, as they were unaware of cocktail bar culture,” recalls PCO GM Vikas Kumar. But PCO was, he says, “a game-changer”, turning consumers on to a range of classic cocktails.
Phase two kicked off a few years later – the opening of Sidecar in Greater Kailash in December 2018, along with Comorin in Gurgaon, Hoot’s at Perch, then Home, and Lair, opening in the shadow of Covid-19. As elsewhere, bars pivoted during those difficult times – online mixology workshops, premixed cocktails – and are now, in Achanta’s words, “reaping the peace dividend”.
Kumar explains: “The driving force behind these changes is globalisation. Indian bartenders have gone abroad and worked in prestigious positions, returning to India with new skills and ideas. Additionally, bartenders from other countries have taken over bars in India, bringing with them new techniques and providing access to global trends, while also inspiring bartenders to create something new and unique.”
Achanta adds that bars are being run by “owners who actually understand the business”, and says: “I think what has also differentiated Delhi from other cities in India are bars that are bars in the true sense of the word, rather than an add-on to a restaurant, no matter how evolved the offering may be.”
Nonetheless, a quality food offer is vital. “For Indians, food is a big thing,” says Radico Khaitan’s national on-premise head, Nishchal Kaudanya. “If the food is not good, then the bar will not stay in business.”
The trends
Outlets have worked hard to carve out their own identity. You’ll find Sidecar’s discreet entrance sandwiched between a bank and a hardware store, while Home’s complex – not just a bar, but also a cinema, wine lounge and sound stage – is located in the Ambience shopping mall, cheek-by-jowl with the likes of Starbucks and Pizza Express.
The clientele is demanding; Indian consumers are increasingly affluent, well-travelled and digitally aware [data is extremely cheap here]. That makes for a fast-changing scene.
“The on-premise is constantly evolving,” says Kaudanya. “Several new trends are emerging – mixology and cocktails, flaring, bartender’s cocktail recommendations, various types of tonics, new spirits such as rye whiskey or bitters. This is in response to increased interest in experimentation by consumers, as well as the bar operators’ desire to stand out from the competition.”
Kumar adds: “Our customers are knowledgeable and well-travelled, so they’re aware of their palate and often request cocktails such as the Martini, Sazerac, Negroni and Rob Roy. They demand high-quality ingredients, clear ice, fancy glassware and creative garnishes to enhance their cocktail experience.”
India is predominantly a whisky/whiskey market – described by Achanta as “the gorilla in the room” – but this is beginning to change with the rise of vodka and gin, with more than 20 Indian gin brands now active in the market. “The rise of gin has led to other categories emerging, from craft rum to native spirits to India’s first coffee liqueur and even absinthe,” Achanta adds. “The other big story now is agave, as India grows agave americana, and has had a local agave spirit brand for the last ten years that has finally caught fire as agave is now an important part of most drinks conversations.”
The local players
Traditionally, local drinks businesses such as United Spirits and Radico Khaitan have mainly focused on the volume, lower-priced end of the market, but this is changing in line with the fast-moving premiumisation trend currently pervading India.
“The main [cocktail] drivers are the classics,” says Achanta. “Negronis, Old Fashioneds, Manhattans, Whisky Sours. But most bars are innovating, twisting the classics and reimagining them with local ingredients. People are taking pride in local products like Jaisalmer [Gin, from Radico Khaitan].”
Kaudanya goes further, arguing that consumers are more receptive to premium-plus local products – he cites Radico’s Rampur and Royal Ranthambore whiskies – than many bar operators. “One senses hesitation among the on-trade decision-makers for listing such a new product, and they seem to need a lot more education and evidence of consumer acceptance before they’re willing to add this to their menus,” he says.
“Having said that, even this last barrier is rapidly vanishing. It wasn’t long ago that the only local product in any self-respecting high-end bar was Old Monk Rum. Now. Indian single malts, gins, rums, vodkas and brandies are a common sight.”
The international players
Multinational spirits companies have targeted India pretty much since the ‘BRIC’ acronym was coined; following its acquisition of Seagram’s local business in 2001, Pernod Ricard became the biggest overseas operator in the market – a position challenged just over a decade later by rival Diageo with its purchase of United Spirits. Both have sizeable rosters of domestic Indian brands to supplement their imported products.
All international businesses face the considerable challenge of operating in a market beset by political and regulatory hurdles. At best, these erode profit margins and make imports potentially uncompetitive because of India’s notoriously high tariffs; at worst, products are unavailable altogether.
Nonetheless, the size of the prize is considerable, and hopes persist that trade barriers will ease over time, with current attention fixed on a free trade agreement between the UK and India, which could be finalised this year.
Challenges and opportunities
If the opportunities offered by a rapidly developing economy and a fast-moving, dynamic bar scene are clear and obvious, then so are the challenges. Over the past 18 months, Delhi’s liquor policy has been a mess.
In November 2021, the city privatised its previously state-owned liquor retail network, hoping to stamp out corruption and improve the quality of the often ramshackle stores. Within eight months, though, the new system was in tatters amid accusations of more corruption, with widespread deep discounting driving stores out of business. By the end of July last year, Delhi had reverted to the old state model.
Meanwhile, Pernod Ricard has faced allegations – strongly denied by the company – that it broke the rules on relationships with retailers in Delhi, with the painful result that, at the time of writing, none of the company’s products can be bought in the city. Pernod Ricard is working to re-obtain its licence to operate “as soon as possible”.
The chaos is symptomatic of a difficult operating environment, where excise policy is a state responsibility, but often runs into conflict with internal politics. In Delhi, there are challenges around the legal drinking age [25 here, but as low as 18 elsewhere in the country], closing time restrictions and a ban on direct liquor promotions.
For bar operators, it can be difficult to obtain certain products – many liqueurs, for example, are not registered for sale in Delhi – restricting their offer and playing havoc with their cocktail menus.
Despite these hardships, the city still remains one of Asia’s most exciting bar and cocktail hotspots, and one that is evolving by the day. What’s more, the past 12-to-18 months have witnessed the expansion of the high-quality on-premise channel beyond Delhi and Mumbai to a number of smaller cities across the
country.
The prospects for the future are very exciting indeed.
This article was initially published in the April issue of Global Drinks Intel magazine. For details on how to subscribe click here.
