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India’s Beer Supply Chain: Fizzing Finance Formula from Farm to Fridge

By Vishnu Priya Govindarajan

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Updated on: May 27th, 2024

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10 min read

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India, the land that birthed the chai, also crafts spicy IPAs and white beers that swirl in the Goan shacks and country’s rooftops alike. The journey of the beer from hops to happy hour travels through a thirsty supply chain with more cliffhangers than a Bollywood blockbuster.

We are thrilled to bring you the candid confessions of a craft brewer in India. We captured snippets of conversation over a liquid lunch with the Chilli Chug’s CFO (Company name anonymised upon request). It’s only fair to say the supply chain secrets flowed as freely as the pints. 

Sourcing - The chaos of the hops

Sourcing hops and barley for a brewery

We began our line of questioning at the source of the supply chain. Addressing the challenges of sourcing raw material for the brewery, he exclaims Ah, ingredient sourcing can be quite an adventure! We like to use local ingredients, but sometimes the local hop crops suffer due to unexpected weather conditions. We've had to diversify our suppliers and even import when local sources fall short.”

One would think sourcing hops and barley would be the challenge in sourcing for a brewery. He promptly refutes saying, “The brewery may face issues with securing a consistent and quality supply of raw materials but my team’s challenge begins with the invoices that come after we source them.

Production - Manifesting a manual mayhem

Production process of a brewery

For him, the relief of opening a hop shipment that is free of spoilage is like opening a Pandora's box. It results in a flood of paperwork, each sheet an entangled web of prices, taxes, and transportation fees. His team is quickly overwhelmed with a dizzying maze of discrepancies, delays, and deadlines. 

He says,Negotiating and managing payment terms with a diverse vendor base may be complex. Different vendors may have varied expectations regarding payment schedules.”

It is apparent that a brewery may be fitted with the best technological innovations. But, the hops and barley are harvested by farmers, driven by transporters, and flagged off by highway toll booths, who do not have access or need of the same technological advances. 

Bridging the technological gap from paperwork to paying invoices on-time and cross-checking each invoice when filing the ITC claims is the real challenge in a brewery’s supply chain.

Compliance - Playing by the Brew-code

Brewery - The big picture of compliance and regulations

As the barley boils, the brewery hums to life. Our senses are keen to know the inner mechanics of how regulatory challenges are unique to the brewery. He explains, “There are the regulatory hurdles. Alcohol regulations and tax laws vary from state to state for us, and it's a constant challenge to stay compliant.

It is evident that complying with varying state and central regulations related to alcohol production, distribution, and taxation can be complex. It is prudent to eliminate the risk of non-compliance that attracts penalties. 

It becomes essential for the brewery to invest in a substantial work force or a competent technology. This is to handle the incoming invoices and ensure safe & compliant transit of the licensed goods to enter a highly regulated marketplace.

Packaging - Addressing Automation Angst

Different beer packaging

The bottle is more than just a container for the licensed brew, it's a billboard, a story, and a handshake with a customer. Every design and detail has to emulate Chilli Chug brand's personality. 

He explains the juggling act, We offer a range of beer styles, each with its unique packaging requirements. Coordinating label design, material sourcing, and production schedules for that can be a real juggling act.” 

But our curiosity is piqued by his team’s juggle. Handling the most crucial next step once the bottle is sealed. He says, Automation can eliminate manual drudgery of invoice entry, validation paperwork, vendor acknowledgements, and archiving each signature for audits. It liberates my team to focus on optimising a smooth transit for the brew.” 

Evidently distribution begins with tackling a flood of incoming invoices that need to enter the ERP for ensuring smooth flow of the goods. Which is a tedious process, but only if it remains manual.

Distribution -  Fermenting Fast Approvals

Brewery retail outlet

The final leap of distribution is to reach the end consumer. It requires an efficiently managed network navigating an expensive cold supply chain, he agrees saying “Oh yes, managing distribution can be quite the puzzle. We've got our brewery, taproom, and a network of local retailers and restaurants. Coordinating deliveries while complying with state-specific distribution laws is a challenge.”

Securing quality delivery and exceptional taste necessitates a meticulously choreographed supply chain for smooth transit of the goods across several checkpoints. Prompt validations and approval workflow ensures a streamlined distribution, ultimately culminating in a perfect happy hour.

Vendor Management - Paying the piper

Brewery vendor receiving payments

The relay from farm to fridge ends with the final chug, but we were inquisitive to know when the happy hour starts for the brewery’s CFO? We get a short yet ponderous response, “Happy Hour begins when our paperwork is cleared out!” 

It is clear that the brewery’s happy hour starts in the field. Cultivating strong relationships with vendors ensures everyone reaps the rewards, from barley fields to the barstools.

Each invoice requires scrupulous attention to be checked for accuracy, to identify discrepancies. It also requires the brewery to stay in constant communication with each vendor. He illustrates the importance of vendor satisfaction for a supply chain’s health, “Late payments leave a bitter aftertaste, which our vendors don’t deserve.” 

To sum up, the challenge lies in managing innumerable vendors, their queries, their payment status, scheduling their payments. Also, ensuring the payments are made on time, offering invoice discounting to vendors, and expertly navigating a partly opaque supply chain.

Clear fix for the beer supply chain.

Beer tap at a local pub

Chilli Chug’s brewery is a symphony of ingredients, processes, and people, all working together to produce delicious brews. But behind the scenes, keeping the supply chain in sync and managing accounts payable efficiently can be a messy concerto. 

So, to conclude we were ardent to understand how Chilli Chug’s CFO views the advancements in AI and automation to relieve him of the immense administrative burden. We've distilled his input into an AI-driven formula to optimise the brewery's supply chain.

  • Empower brewery's financial health: Eliminate manual entry with advanced OCR technology & AI-driven automation to streamline accounts payable.
  • Gain unrivalled clarity: Gain complete visibility of the supply chain & finances with interactive dashboards powered by real-time data. Optimise spending & make data-driven decisions.
  • Boost collaborative excellence: Connect vendors, accounting & brewing teams with a unified platform. Foster accountability & drive success through shared goals & transparency.

Also Read
Solving Cooking Oil Supply Chain Issues in India
Tech Made in India: A CFO’s Story of Streamlining Manufacturing Supply Chain

About the Author

A bookworm transformed into wordsmith, I leverage 7+ years of marketing expertise to craft compelling narratives that might've even grabbed your attention on a forgotten billboard. Whether collaborating with industry experts or traversing uncharted trails, I'm rarely far from a book (for stories) or a backpack (for adventures).. Read more

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