Beer is a mass drink like no other for Indians, who downed no less than 3,000 million litres in 2023. It makes up nearly half of the country’s alcohol consumption, as data from market research firm Euromonitor International shows.

Standing out against this ocean of largely mass-produced ale from multinational giants are tiny streams of artisanal stuff from microbreweries around the country. Produced in small batches, these craft brews are a favourite with millennials and GenZ-ers in major metropolitan cities for their unique flavours and distinctive styles of production. The microbreweries typically serve the fresh brew with a curated blend of food and culture.

Their numbers are set to triple from 300 currently to 1,000 by 2030, according to Bengaluru-based investment firm Optimistic Capital, founded by ISB alumni, which has launched India’s first microbrewery-focused fund worth ₹200 crore.

The country’s beer sector as a whole attracted $393.6 million funding between 2019 and 2024, according to market intelligence platform Tracxn, with a peak of $179.6 million in 2022; in 2024, $26.5 million has flowed in so far.

The fund flow to the microbrewery sector, in particular, has been on a steady upward trajectory, with angel investors and niche venture funds betting on its growth potential, says Bhavik Vasa, founder of alternative debt financing platform.

Modus operandi

Prominent names in the microbrewery space include Proost69, Ironhill, Byg Brewski, Bira 91, Beeyoung, and Latambarcem Brewers.

Ironhill India is the largest microbrewery chain in Asia, says its managing partner Teja Chekuri, who is the founder of Full Stack Ventures, the parent company of Ironhill. 

Teja Chekuri, Founder, Full Stack Ventures

Teja Chekuri, Founder, Full Stack Ventures

Currently operating in six locations, Ironhill plans to open three more outlets across Karnataka and Maharashtra. 

“Typically, the minimum cost of setting up a microbrewery in a city like Bangalore would be ₹14-15 crore. In a tier-2 city, with the cost being inflated, the investment may be around ₹10 crore,” he says.

In Bengaluru, the company has a 10 hectoliter (HL) unit, which can produce 1,000 litres per batch. In smaller centres it uses a 5 HL unit. 

Ironhill India’s microbrewery outlet in Bengaluru 

Ironhill India’s microbrewery outlet in Bengaluru 

“Our Bengaluru microbrewery sells around 26,000 litres a month. In Hyderabad, it is 14,000 litres a month,” he says. Of the eight craft beer variants on offer at Ironhill, five are standard — Hefe wheat, apple cider, coffee stout, rice lager and red ale. The three special variants are Native Secrets, brewed with local ingredients; World Series; and Season Finale. 

Sending kegs overseas

Another large player, Bira91, which has raised $456 million in funding till date, has 48 points of sale in India — 40 beer cafes, and eight taprooms. The brand also has 12 franchisee-owned beer cafes across 21 cities.

The taprooms are spread across six cities — Ludhiana, Mohali, Delhi, Gurgaon, Bengaluru and Mumbai. One more is planned soon in Mumbai, even as the company eyes Pune as a potential market. 

Internationally, it aims to send kegs of draught beer to Singapore, West Asia, and the US East Coast (New York and New Jersey), which have a large section of Indian diaspora, says Rahul Singh, Senior Vice-President of the company’s pubs vertical. 

“Those are the three critical international markets for Bira’s taproom business right now, outside the 24-25 countries we are already present in with our bottled products,” he says. 

Ajay Gowda, Founde, Byg Ventures

Ajay Gowda, Founde, Byg Ventures

Ajay Gowda, founder of Byg Ventures, the parent company of pub brands Bob’s Bar and Jollygunj, and microbrewery brand Byg Brewski, points out that experimentation is the USP of craft beers, which commerical breweries cannot afford owing to their large batch sizes. 

With three outlets in Bengaluru, the company targets venturing to other major cities like Hyderabad, Gurgaon, Pune, Mumbai, and Kolkata, apart from tier-2 cities across Karnataka such as Hubballi and Mangaluru.

Key challenges

Founders and industry experts point to the country’s regulatory landscape as the biggest hurdle in attracting newer players and investments to the microbrewery sector.

“One must go through multiple channels, authorities and agencies to procure different licences to get to the finishing line. Almost every State makes it difficult to make beer accessible. Though the governments charge taxation on the entire capacity (in the case of microbreweries), they are reluctant to even approve people producing kegs,” says Abhinav Jindal, CEO and founder of Kimaya Himalayan Beverages, which manufactures BeeYoung Beer and operates the direct-to-customer venture BeeYoung Brewgarden.

Vasa of GetVantage says investments have remained concentrated in the bigger cities with a strong craft beer culture, such as Bengaluru, Mumbai, and Delhi-NCR.

He points out that, unlike the big alcobev players, microbreweries can capitalise on higher profit margins through premium pricing and foster deep community connections through localised offerings and events. 

Moreover, the smaller scale allows for greater agility in experimenting with new flavours and trends to stay ahead of consumer demands. This combination of niche market appeal, brand loyalty, and innovation positions microbreweries as an attractive segment within the broader alcobev industry, he says.

“Looking ahead, the investment cycle is expected to involve more strategic partnerships and collaborations with larger beverage players. Alternative financing models like cash-flow-based funding could also gain traction, providing microbreweries with flexible working capital solutions without diluting equity,” he says. 

On the road ahead for microbreweries in their push beyond big cities, Anant Iyer, Director General, Confederation of Indian Alcoholic Beverage Companies, says, “Most microbreweries in India stock IMFL/BIO (Indian-made foreign liqour, or bottled-in-origin) brands as their licences are general. For most, their turnover, while it is good for their brews, largely comes from spirits and wines, where margins are higher. More States are now allowing microbreweries as part of their excise policy in their main cities and towns. The issue, however, is real estate and customer traffic. Towns need the right consumer set who prefer microbrews. Hence, the model is sustainable in places like Bengaluru, Hyderabad, Chandigarh, Pune, Mumbai, Gurgaon and Delhi.”