Cheers! Adding a tech zing to your favourite tipple

Prasanna Natarajan shocks you when he tells you that his venture HipBar is about helping people drink alcohol wisely. Really, you wonder. Till recently, HipBar, which is an RBI-approved mobile payments wallet and an FSSAI-registered food business operator involved in delivery, was delivering liquor to homes in Bengaluru.

“We have done about 75,000 bona fide, age-verified deliveries in the last one year in Bengaluru. We have the wealth of data to say that the myth that ease of access to alcohol will make people drink more is not true,” says Prasanna and adds, “people are not ordering as frequently as you would think.”

“We were,” he says, “delivering one bottle of beer also. There was no minimum order.” When a customer walks into a store to buy alcohol, invariably for the time he or she invests in driving and finding a parking slot, the tendency is to buy a lot more than what they want. But because HipBar delivers even a single bottle, they found customers buying just what they required for that evening and not stocking up. “We have said that just-in-time also fosters a responsible purchasing behaviour.”

Prasanna is unfazed by the suspension of HipBar’s alcohol delivery service in Bengaluru. “There is going to be resistance to change. These industries have not been touched by any technology. It is not surprising. We are determined to overcome all that because we believe in the power of digital,” he says. HipBar, he adds, is in talks with a few other State governments to start operations in those States, including being able to order alcohol through its platform and for home delivery.

The trigger point

What was the trigger for HipBar? Prasanna says his background in the alcoholic beverages business is the main reason. He started Sipping Spirits in Goa, which imports vodka and tequila in bulk and bottles the two drinks and sells them predominantly in south India. There is a good duty arbitrage when you import in bulk and sell locally. Eight years after starting that business and growing it to a reasonable size, Prasanna wondered why not have an e-commerce venture for alcohol retailing.

Each State has its own rules. In Tamil Nadu, for instance, a government-owned agency is the retail vendor. For Chennai, HipBar came up with the option of ordering alcohol on its platform, after which a customer can go and pick up the bottle from a specified retail outlet. With this, customers did not have to pay more the MRP, which was an issue in Tamil Nadu.

According to Prasanna, he decided that pre-paid instruments are a good way to start the digitisation process of the alcohol retail business. The original idea, he says, was “bar on the cloud”. You could buy a bottle, put it on the cloud and drink it anywhere. Which means, a customer could order a bottle of alcohol of his or her choice on HipBar, go to a restaurant or a pub or a hotel, mention the HipBar order and have the drink. “We experimented with that. It was becoming engagement intensive. Each hotel, each bar to go and get the deals done and without customers on your side, it was becoming tedious for us,” says Prasanna. For that model to succeed, he adds, you need customers. And, to get customers, HipBar would need to have a better proposition. This was also the time when selling alcohol along national highways was banned.

E-governance solution

Therefore, HipBar started building an e-governance solution for State governments to monitor alcohol retailing and home delivery. “We started as a consumer proposition. But the alter ego of that is government oversight. This sector is heavily regulated and without regulatory tools, they will not be able to permit it. So, logically it had to come in early in the day. We built it out,” says Prasanna. The company manages the entire ecosystem through its platform.

HipBar, according to Prasanna, does about ₹5 lakh worth of orders a day in Chennai. The company gets its income through a merchant discount rate from merchants, whose brands it sells on its platform. In a technology business, says Prasanna, the revenues will have to come much later. The first task is to build out the platform and grow the business. “Your revenue will not come in unless you create the network effect and create a sizeable audience.” He is confident that the company will start earning revenues when the number of customers increases to two million, from around 200,000 users on the platform now. Prasanna says he invested ₹13 crore of his own money in the venture.

The proposition for the States is that they are not going to lose control over the liquor trade – a major contributor to the exchequer – and on the contrary, the governments will gain more control, for which they can rely on technology and not employ more people.

While welcoming competition in this space, as it will help grow the business, Prasanna says it would have taken him at least a hundred trips to the excise office to get the permissions, both in Chennai and Bengaluru. One trip to the excise office and any thought of starting a similar business will vanish from an entrepreneur’s mind, says Prasanna.

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