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Bira’s $30m Sequoia-led round shows India is ready for premium, tech-led F&B brands

April 27, 2020

Indian craft beer brewer Bira 91 has raised $30 million in a funding round led by existing investors Sequoia Capital and Sofina, underscoring the growth potential for premium, tech-driven food and beverage brands in the rapidly developing country.

Other investors taking part in the round included Mumbai-based, consumer-focused VC firm Sixth Sense Ventures and South Korean private equity player Neoplux, alongside several undisclosed family offices.

According to the Times of India, the round constitutes pre-Series C bridge funding. Bira will use the capital to expand its presence in India.

Founder and CEO Ankur Jain said that Bira’s share of the beer market in several states is higher than 5%, and over 20% in the premium beer segment.

“2020 is a key inflection point for the company, where we expect to reach double-digit market shares in a number of states,” he said.

The Bira brand was launched by Jain’s B9 Beverages in 2015 with the aim of producing premium beers targeted at younger Indian consumers. The idea was to create a brand that could be “an integral part of a tech-immersed, creative, urban, diverse, and modern world of the 21st century,” according to the company.

Initially, it made its beers in Belgium – home of investor Sofina – exporting them back to its home country. It opened its first Indian brewery in Indore in October 2016, with a second facility in Nagpur following in August 2017.

Bira’s craft-style beers are now sold in 10 countries, and it opened a US production facility in upstate New York in March 2018. It has also expanded beyond beer to launch a hot sauce and a range of merchandise – including anti-pollution face masks – and it has grown its profile by co-producing TV content and sponsoring events such as the Cricket World Cup and the Tribeca Film Festival.

Following China’s lead in Premium Branded Foods & Restaurants

While not a food tech company per se, Bira’s backing by VC funds is reflective of a trend playing out in another major, newly-industrialized market: China.

In India’s north-easterly neighbor, food and beverage brands that are marketed as premium products – typically with a tech element to their offering and often targeting the ‘Millennial’ demographic – have been raking in VC money at an astounding pace. Several have had blockbuster IPOs, too – though not without controversy.

This trend of ‘consumption upgrade‘ is due to the growth in the Chinese middle class, who have increasing levels of disposable income and are therefore exercising more choice around their purchasing decisions.

In its annual China Agrifood Startup Investing Report, AgFunder tracks this trend under a specific investment category: Premium Branded Foods & Restaurants.

According to the most recent edition of the report, deal activity in this category ranked second overall last year, with 44 investments, putting it behind eGrocery’s 51 deals.

The largest deal was Luckin Coffee‘s $150 million BlackRock-led Series B round, which came barely a month before the “digital-first” coffee chain made its $561 million NASDAQ debut in May. Luckin’s rapid rise appeared to continue into post-IPO growth, but its stock price cratered earlier this month after it admitted that a senior executive had fabricated its 2019 sales figures.

Other deals in the category included noodle restaurant-cum-bookstore Hefu Noodle‘s $31 million injection from undisclosed investors, premium teabag brand LeLeCha‘s $30m seed round led by Singapore’s Vertex Ventures, and online health drink maker Genki Forest‘s $21 million Series B raise.

With discretionary spending on the rise among India’s growing middle class, more local premium F&B brands like Bira are coming to the fore. Another example is Rebel Foods, a cloud kitchen operator with several of its own-label restaurant brands, which raised $50 million from Coatue Management earlier this month. In January, snack maker Samosa Singh – another cloud kitchen-based startup – banked $2.7 million in Series A funding.

What’s your view on tech-focused VCs backing food and beverage brands? Let me know at [email protected]

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