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May 2018 Corporate Focus

Published on: 2018-05-14 14:19:25     319 times read    0  Comments
 Warsteiner : Himalayan Waters German Taste

With production units in Germany and Argentina and now in Nepal, Warsteiner premium beer is available in more than 60 international markets. The commercial production of Warsteiner beer in Nepal started in April in a Nawalparasi plant set up by Raj Brewery, a member of JGI Group with an investment of Rs 4 billion. Warsteiner is brewed in Nepal according to German standards using the same test note that they use in Germany and in line with ‘German Beer Purity Law’. The partnership between the two reputed business houses also marks the beginning of new economic ties between the two countries.

--BY A STAFF REPORTER

Raj Brewery, a subsidiary of Jawalakhel Group of Industries (JGI), has started the commercial production of Warsteiner, a premium German beer brand, in Nepal. The production and bottling of Warsteiner beer, which is brewed using the German technology at a production facility located in Nawalparasi, marked the 60th anniversary of bilateral relationship between Nepal and Germany.

Speaking at a formal programme organised on the factory premises in Nawalparasi on March 5, Catharina Cramer, president and owner of Warsteiner Group, expressed her delight in joining hands with JGI for the production of the German beer brand in the Himalayan nation. “Warsteiner is among the most successful beer brands in Germany,” she said, adding, “Our partnership became possible because both Warsteiner and Raj Brewery are reputed family business houses which have a strong goodwill in the beverage industry.” 

Germany has 4,000 beer brands to its name but it is Warsteiner that perfectly matches Nepalis’ taste, shared Maggie Shah, chairperson at Raj Brewery. Raj Bahadur Shah, managing director (MD) of Raj Brewery, stated that Warsteiner has received a warm reception since its soft launch in the Nepali market three months ago.

Speaking at the same programme, Deputy Chef de Mission of the Embassy of Federal Republic of Germany, Claudia Hiepe shared that it was a matter of pride that Warsteiner’s production in Nepal started on the occasion of the 60th anniversary of the establishement of diplomatic relations between Nepal and Germany. She hoped that the tie-up between the two companies will also reinforce the economic ties between the two countries. “The entry of Warsteiner beer also marks the arrival of German technology in Nepal. This must help Nepal attract more foreign investment,” noted Hiepe. 

Investment Size
“The current investment in the Warsteiner plant is Rs 4 billion. We will inject another two billion rupees in the next two years,” said MD. According to him, the scale of investment is massive due to the German technological standards. The annual production capacity of the plant is 1.5 million cases of beer and is one of the finest German technology-based beer plants in Asia. “Had it been an Indian plant, we could have built 12 such plants with the same investment,” shared Shah. The brewery expects to recover 75 percent of the initial investment in five years and plans to expand its reach to the Asian market in the future. At present, Raj Brewery has capacity to produce 60,000 hectoliter of beer on a daily basis that translates into 5,000 cases of beer while the brewery has plans to raise its production capacity in the near future by installing few more plants.

Talking about the price of the beer, Maggie Shah said that a bottle of Warsteiner comes at a price of Rs 295 which is quite cheap compared to other beer brands available in Nepal. During initial days, Raj Bahadur Shah had also thought about domestic farming of hops in Mustang, which would have kept the prices further low, but it appeared too costly to start farming in Mustang. Hops are key ingredients in Warsteiner beer that give it a special bitter flavor.

Quality Assurance
According to Shah, the combination of an outstanding industrial plant, best raw materials imported from Germany and an experienced brewing team will produce the authentic Warsteiner beer for Nepali beer lovers. Except for water, the entire ingredients used in Nepal’s production line will be directly imported from Germany while the brewery’s employees are already German-trained. In addition, Raj Brewery has also employed two international ‘Brew Masters’ who have more than 30 years of technical experience in beer production.

 “In beer production, maintaining consistency in the quality is the biggest challenge. It is our foremost priority to maintain the quality standards and we will not compromise it at any cost,” says Raj Bahadur Shah. Warsteiner is brewed in Nepal according to German standards using the same test note that they use in Germany and in line with ‘German Beer Purity Law’. Shah further said that the company is equipped with a state-of-the-art laboratory to ensure consistent quality in Warsteiner beer, and they are not hesitant to seek cooperation from their counterparts in Germany if needed. Moreover, the German team will also make regular visits to monitor the quality of production. 

Beer Market in Nepal
The entry of Warsteiner in Nepal complements the huge opportunity that the Nepali beer market presents. Some 103.5 million cases of beer are annually consumed in Nepal which is equivalent to a market value of Rs five billion. According to Shah, Nepal boasts one of the largest growth rates in the beer market in the world growing at an annual rate of 25 percent which shows the depth of the Nepali market. “Around 40,000 shops are selling beer in Nepal while the beer consumption is 500 percent times than that of India,” he mentions. 

It is estimated that the can beer market in Nepal is growing by 15 percent. Currently, can beers are available in 330 and 500 milliliter cans which are manufactured by breweries such as Gorkha, Everest, Tiger, Yeti and Nepal Sun Gold. Strong beers which have an alcohol volume of eight percent hold 54 percent of the market share. The rest of the market share is held by mild beers which have five percent alcohol composition. Terai region is the leading consumer of strong beer whereas mild beers have stronghold in Kathmandu, Pokhara, Narayanghat, Butwal and Bhairahawa regions. Annually, Nepal imports around 25,000 cases of beer in cans and 350 milliliter bottles that includes Heineken, Budweiser, Stella and Corona beers. 

About JGI and Warsteiner
The Warsteiner Brewery Group is one of the most successful and largest family-owned brewery companies in Germany having a legacy of 265 years. The group started in 1753 producing beer as a family business which is now owned by Catharina Cramer who is also the president of the board of the Warsteiner Group. Today, Warsteiner premium beer is available in more than 60 international markets having production units in Germany and Argentina and now in Nepal. Warsteiner Premium Verum, Premium Dunkel, Premium Fresh and Royal Bavarian Hefeweizen are the other flagship brands of the company. 

Jawalakhel Group of Industries Pvt Ltd (JGI), a business conglomerate that has several alcoholic beverage companies under its wings, is the leading business house in liquor business in Nepal. Back in 1973, Jawalakhel Distillery Pvt Ltd started the first commercial production of alcoholic beverage which laid the foundations for the formation of JGI. The parent company JGI manages seven subsidiary beverage companies under its flagship which includes distilleries, brewery facilities and research and distribution units. Raj Brewery is one of the distillery companies under the flagship of JGI companies which was established in 2012 while Ruslan Vodka is one of its leading products.  

Human Resource
Currently, around 1,200 employees are working for the JGI at various positions. The company has 250 sales representatives who reach out to 1,000 outlets on a daily basis. Meanwhile, the company has plans to recruit an additional 500 sales representatives and mobilise them throughout the country. 

Prior to setting up the Warsteiner plant in Nawalparasi, Raj Brewery had set some good examples in the training of its staff. The brewery had sent its staffers to Germany to gain firsthand experience and knowledge about Warsteiner beer production. 

According to JGI, the company has been maintaining minimum 15 percent female staffers in its total staff count with a view to maintain a balanced gender ratio. Meanwhile, the company plans to increase the ratio to 30 percent by this year. 

Market Strategies
JGI is one of the highest spenders in marketing. According to JGI, it spends an annual budget of Rs 1.5 billion for its marketing purposes that includes trade discount and brand publicity for its entire portfolio. JGI is one of the key sponsors of mega events such as Miss Nepal and sporting events such as cricket and football tournaments. 

Currently, the company is distributing its own ‘tulip glasses’, imported from Germany, to several outlets. Tulip glasses have a small stem and a base with a unique tulip-shaped bowl on the top and complement the Warsteiner beer in the best way. The company has also been providing training at several hotels and restaurants teaching staffs the right way to serve beer.

CSR Activities
Apart from regular businesses, JGI is engaged in various CSR initiatives. According to JGI, it was the largest contributor to the Prime Minister Disaster Relief Fund in 2015 when the devastating earthquake struck Nepal in April 2015. Similarly, the company has rebuilt homes of its 75 employees who lost their homes during the earthquake. The company also provided compensation package to its distributors and wholesalers apart from the insurance compensation that they were entitled to receive from their insurers.  

Challenges
Shah is mindful about the possibility of unhealthy practices in the market. “Warsteiner is an internationally reputed brand across the globe which is why some beer manufacturers are alarmed by its entry in Nepal,” says Shah. “With the intention of holding back Warsteiner from gaining a strong footing in the market,” Shah reveals, “Some beer manufacturers are heard to have made unhealthy dealings with some of the premium Nepali restaurants giving them Rs 1 million to Rs 5 million.” 


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