Opening a brewpub in India seemed like a relatively simple idea to Matt and Rene Greff.
The co-founders of
Arbor Brewing Co in downtown Ann Arbor and
Corner Brewery in Ypsilanti had nearly two decades of experience in brewing craft beer and running a brewpub. Starting and running a business is nothing new to them. Doing the same with a franchise in India shouldn’t be too different. Or so they thought. That was four years and a huge life experience ago.
“The start-up was much harder than we ever thought it was going to be,” Rene Greff says. “The buildup to make it happen took forever.”
Gaurav Sikka, a University of Michigan student and former Arbor Brewing Co patron, approached the Greffs in 2009 about opening a franchise of their brewpub in India in 2009. Two years later, the Indian city of Bangalore legalized craft breweries and the three partners were working toward opening one of its first brewpubs.
The Greffs expected they would only need to be there a few months to help get the brewpub up and running to Arbor Brewing Co’s standards. In a 16-month period, they ended up spending nine months in-country. A majority of that time was dedicated to getting the doors open by December, 2012.
ABC India, as they like to refer to Arbor Brewing Co’s Indian franchise, wasn’t serving its own beer until the following February, which meant sparse business in the meantime.
“We would have days where we might have three tables come in all day long,” Rene Greff says. Matt Greff adds, “And that is a 12,000-square-foot space so it felt like a morgue. We can laugh about it now, but our partner likes to say ‘I never had one day with no customers at all.’”
The reason they can laugh now is when cold Arbor Brewing Co brews started flowing then the customers came even faster. The Greffs say ABC India is now one of the most popular bars in Bangalore, drawing crowds comparable to the local Hard Rock Cafe.
“Thank goodness, it was literally like flipping the switch when we started serving our own beer,” Matt Greff says. “It became absolutely insanely busy ever since.”
The Struggle
The problems didn’t magically go away with open doors. If anything the real struggle began as cultures clashed between Arbor Brewing Co and mainstream India when business started to pickup.
Arbor Brewing Co is a reflection of the Greffs’ values. The married couple from Ypsilanti are two of the more progressive business owners in southeastern Michigan. They emphasize environmental sustainability in their business practices and paying their employees with living wages and good benefits. That business philosophy flies in the face of conventional wisdom in India.
“Indian labor is so cheap that the business model is you throw a bunch of people at it,” Rene Greff says.
For instance, waiting on tables isn’t as easy as one person taking an order and bringing out food and drinks.
“There are four different people who come up to your table,” Rene Greff says. “It’s always a disaster. It’s a game of telephone in different languages.”
And those four people occupy different areas of the local pecking order. And most of those people don’t speak English because service work is appropriate for only certain parts of the caste system. And then there are the gender-based societal rules, such as women aren’t allowed to tend bar or even be out after dark with an escort. Add in that most call-center workers with language skill are women, and, well...
“The service is very different,” Rene Greff says. “We have definitely had to make some concessions and accept that because of cultural differences some things are just - I wouldn’t say impossible but very difficult to duplicate.”
Then there is the larger societal view in India of looking down upon service work. Where working at a bar or restaurant is sort of a right of passage for young people in the U.S., that’s not the case for the up-and-coming educated class in India.
“That’s not what people do there at all,” says
Rajeev Batra, a professor of marketing at the University of Michigan’s Ross School of Business. “The people who do those sorts of service jobs are seen as inferior, a sort of a servant class.”
And then there are the differences in the average work week. While western culture embraces the 40-hour work week, it’s fairly typical for Indian workers to sign a one-month contract to work 10-hour shifts, six days a week. Compounding that even further is that there is normally a lunch rush and then a huge dinner rush between 8 p.m. and 11 p.m. Local laws mandate that bars need to be closed no later than 11:30 p.m. The Greffs have been lobbying to let the service workers do fewer hours so they can work a more Americanized 40-45 hour work week.
“That’s a big thing we’re working on with our partner but it’s a really difficult cultural change to make,” Matt Greff says.
But this sort of insistence on business culture isn’t just about personal morals. The Greffs see it as competitive advantage as more and more brewpubs open in India and the market becomes saturated with craft beer.
“We believe that American-style service is going to be the thing that continues to set us apart from other brewpubs,” Matt Greff says. “That’s going to be a work in progress and it’s going to be a long, frustrating battle. But we want to figure out the right number of hours and a different style of pay structure to make waiting on tables an attractive job like it is in the U.S.”
The Reward
Changing any culture is never easy, if even possible sometimes. The Greffs are open to giving it a try because the reward is ground-floor access to what has turned into a huge, untapped market.
There are two brewpubs serving the 9 million people in Bangalore. Of that population, there are about 100,000 Indians who have studied in the west or are ex-patriots. The Greffs estimate there are about 500,000 to 800,000 Indians with disposable income. Since Bangalore is one of the continent’s main business centers, doubling that number thanks to business travelers and tourists isn’t out of the question.
“There is already demand,” Rene Greff says. “Most of our customers are western-educated Indians and ex-pats. There are people who have already discovered good beer and are dying for it in India. It’s not like we have to teach people how to appreciate good beer. It’s already there.”
And disposable income isn’t necessarily in short supply to the upper classes.
“There is a lot of money,” Batra says. “People are looking for aspects of lifestyle that remind them of western civilization (and they are willing to pay for it).”
And that market demonstrated its thirst for Arbor Brewing Co’s beers right away. It took less than two weeks after the debut of their beers to go from a handful of patrons to consistently hitting capacity of 300 people during lunch and dinner rushes.
“The opportunity is much bigger than I ever thought it would be when Gaurav (Sikka, the Greffs’ partner in India) first contacted us in 2009,” Matt Greff says. “We thought it would be a niche, boutique concept, and we’ll appeal to ex-pats. Being there as much as we have been there and having as much success as we’ve had we know it is a big, big number of Indians and ex-pats with a lot of money to throw around looking for new, exciting, fun things to do. Any kind of American concept is really wildly popular.”
So much so that the Greffs are returning to India in January to evaluate more business opportunities with Sikka. They are looking at opening new brewpubs not just in Bangalore but elsewhere in India.
“We’re not sure which direction we’re going to go,” Matt Greff says.
Jon Zemke is the Innovation and Jobs News Editor of Concentrate and its sister publications, Metromode and Model D. He is also the managing editor of SEMichiganStartup.com.