Too Early for Pub Owners to Cheer

It may not be the mug that cheers. At least pubs in the twin cities may not be on a high even if Andhra Pradesh is on the verge of becoming the state with the highest number of beer guzzlers, with beer sales hitting 20 lakh cases in May and growing by 20 and 28 percent over last year to over 10 lakh cases each in June-July.

What's taking the froth out of the pubs business are pubs themselves, ie, their numbers. The government has issued over 45 licenses since April, some of which are expected to manifest themselves in the form of pubs according to C Jayaprakash Reddy, joint commissioner of excise and prohibition, AP government. The numbers may increase with growing demand for licenses, he adds.

According to sources, at least six pubs including 10 Downing Street, Black Cadillac, Cha and Spark, will be opening in the next three months, and it's going to be an all-out brawl, with tough competition staring them in the face.

"The pub culture here is a miniscule of what it should be. Hyderabad hasn't arrived yet and will take two years to mature and catch up. With so many new pubs that are aiming to cater to the elite crowd, which isn't growing in the same proportion, it's going to be a tough time for everyone except those already well-established," says Santhosh R Kutty, F&B manager of Taj Banjara, with its highly popular Underdeck pub.

The Underdeck, set up in October, is an exclusive pub for couples, allowing stags only on Mondays, trying to target only "quality, higher-end kind of crowd, people who have travelled and know what it is to appreciate good drinks."

"Ladies come and have a good time here. It's for the young, trendy, the young software CEOs, MDs and top-rung management guys, not low level programmers etc., he says.

The 70 cover pub done up like the inside of a ship, has a multi-talented crew, who are trained in flair bartending, and even dance and sing in the informal but elite ambience. The pub keeps changing the live bands that play music and currently has a Malaysian band Solid Earth playing, with DJs pitching in on Tuesdays.

The range offered is on par with Seasons in Taj Krishna, but here it's the white spirits that dominate as against the brown spirits at the latter, Kutty says.

Taj Krishna's elitist Seasons bar and lounge, on the lines of martini bars in US, has been targeted at senior corporates, for socialites, for foreigners, for the most elite, according to Anil Malhotra, executive assistant manager F&B Taj Krishna. The elitist bar set up with a whopping Rs 1.5 crores, serves international beers ranging upwards of Rs 125 for 330 ml and champagnes that run up to even Rs 25,000.

The Underdeck, similar in stature to Seasons, however is more informal and attracts the young and lively upmarket crowd, and does up to Rs 50,000 a day, while at weekends crossing a lakh. We conduct events every month to keep the spirits high. We have the highest consumption of Tequila in town, with 50 cases a year," Kutty says.

"We spent Rs 32 lakhs on pub, on the premises available with us. But the normal investment needed is anywhere in the range of Rs 80 lakhs to a crore for a standalone, and it will be tough getting back returns for them," he adds.

Agrees Peter Das, manager of Outswinger pub at Hotel Baseraa. "I've worked in Bangalore pubs and know it's going to be tough out here. We don't have a floating crowd here unlike in Bangalore, and we will have to depend on the same locals which will get further distributed with more pubs. Everybody will be doing average business.

It takes at least a crore to set up a standalone and they will face tough times with the competition. Everybody needs to work hard, spend on updation to attract people. We are adding a family section and holding a lot of events at Outswinger, which is currently going extremely well," says Das.

The almost four-year old cricket-themed Outswinger, stacked with cricket memorabilia and with DJs playinglive music, caters to the middle and the upper middle class, the new software professionals and young marketing executives newly come into money after graduating from college. The pricing is very economical, with a mug of draught beer priced at as low as Rs 45, and a pitcher at Rs 225. Regular drinks are also around Rs 100 and premium liquor in the range of an affordable Rs 120-130.

Not surprisingly, the pubs is doing Rs 18 lakhs a month at Rs 60,000 per day, with its 120 cover capacity, averaging 250 to 300 guests per day.

But the same hotel's executive director Amar Ohri begs to differ. "Today Hyderabad does have a considerably large pub-hopping crowd. People have been always drinking - prohibition or not. The ambience and pricing has helped us to attract people from the middle and upper segment, which has only been increasing with changes in lifestyle and larger disposable incomes."

With the new competition, "men" will be separated from the "boys." We have little to fear from competition, as we are selling a lifestyle not just drinks. Outswinger, the trendiest pub here, will always be popular as long as we offer a unique lively ambience, excellent service and top-notch quality. We think competition will only make us perform better. In fact, we are expanding to Banjara Hills very soon, Ohri adds.

Also welcoming the competition is B Chandrashekar Rao, director of Sundar Taj Mahal Hotels, which recently opened Blockbuster pub at the Taj Tristar.

"Secunderabad didn't have too many pubs, just a couple of them. There was a lot of demand from the young middle-class office-going crowd for pubs nearby to the offices in Secunderabad. The demand for pubs is picking up, with the growing social acceptance of beer drinking. The prohibition almost killed it, but it's reviving now," he says.

The pub, with its contemporary decor designed by Yeshwant Ramamurthy - a collage of the images of the celluloid world glory, sporting excellence and chart-busting music -- has attracted youngsters want to listen to loud music over beer, party with friends for a while and forget their tensions and have a good time without burning their pockets.

The 78-80 cover pub, with low prices caters to a large segment of beer guzzlers and the average spending is around Rs 100 a person. We expect to make at least Rs 30,000 per day on weekdays and Rs 50,000 during weekends, Rao says.

"With at least six more to open in the city in the next six months, it is going to be a tough competition, but then we don't have to worry. The growing segment is in the category we serve, not the elitist segment, which most up-coming pubs intend to cater to," he adds.

However, older pubs in town are gearing up to face the challenge. The Escape at Hotel Green Park, popular with not just IT professionals but also college youth, is into constant updation of its relatively sober decor, by adding UV lighting, more diffused light effects etc. Despite comfortably making revenues of Rs 12 lakhs a month.

Setting up new pubs is expensive not just in terms of initial investment in terms of decor, music equiopment and furnishing, says Verghese George, vice president operations.

"The license of Rs 13.5 lakhs per annum works out to Rs 3,700 per day, as against Rs 275 that pubs in Bangalore pay. Also, the procurement costs are higher here, with liquor being 50 per cent more expensive than Bangalore. Also, we have to close it early -- by the time customers can actually start coming in, and not allow dancing," he adds.