After 62 years focusing on the rum market, The Nepal Distilleries (P) Ltd. has started expanding into other liquor segments.
--BY NEWBIZ TEAM
The company was started in 1959 with investment of an Indian party, thus becoming the first formal sector distillery of Nepal as well as the first instance of a Nepali liquor industry set up with foreign investment. And the first product it brought out was Khukri XXX rum. Till recently, the company was focused entirely in rum segment with a single brand Khukri, though the company went on adding varieties of rum under the same brand, such as Khukri spice rum and Khukri
Now in 2022, the company has brought out two new products. One is a vodka with the brand Nude, which created lot of ripples immediately after its launch for the seducing word used in the name. Within months of that, the company has brought another brand, Karda, which is a rum-flavoured drink. Nude too is a lot different from what other Nepali vodka brands available in the market. The company says, this rice-based high-end sipping vodka is gluten and glycerin free. Shuvash Lamichhane, the General Manager of the company adds “globally, neat vodka is in the trend and Nude is also meant for sipping neat. Nude is sipping vodka with new taste. With sipping Vodka, we offer completely new flavour to the consumers.”
According to Lamichhane, his company was studying and researching about Vodka for years. “We launched the Nude Vodka after years of research and study and we are confident of winning the consumers in the Vodka segment as well,” he says. Karda is 40 degree UP drink of rum flavor while the earlier versions of rum from the Nepal Distilleries are on 25 and 30 degree UP. While bringing out these two products, the company also received ISO 9001:2015 QMS certification.
While talking to Lamichhane, one can get some idea as to why the company came up with these two products in quick succession. One reason seems to be the seasonal nature of rum market. Rum is consumed mainly during the winter. The new products can be expected to fill the gap in the demand of the company’s products during the non-winter months.
Lamichhane says, his company employees about 160 people in its payroll, but the number goes up during the winter season. One can understand that this seasonality in the production must be making it challenging for the company to arrange well trained work-force during off season so that there would be no problem in recollecting the human resource in the peak season.
The Nepal Distilleries seems focusing on creating space for itself that no other liquor companies may dare to enter. That it has achieved, one should agree, with the Khukri brand. This is the only liquor brand from Nepal that gets exported, particularly to those regions of the world where Nepali diaspora and people who have Gorkha army connections. The brand name Khukri has been perfectly matching the sentiments of this market.
Then is the Khukri white rum, which, Lamichhane claims, no other company in Nepal is manufacturing. According to him, white rum is used to make cocktails and mixture drinks at restaurants and hotels, and it has huge demand in restaurants and hotels. The company employs 160 staffers, says General Manager Shuvash Lamichhane. The intake varies depending on workload. During the chilly season, rum consumption soars. “So, production of the liquor goes up, causing us to hire more staffers. However, the production slows down as weather turns dry. Despite fluctuations, 160 people are employed on average throughout the year,” adds Lamichhane.
The Nepal Distillers’ products such as Khukri XXX rum, Khukri spice rum and Khukri white rum are dominant brands in rum category. “We are the market leader in rum production and sale. Khukri rum is the most favoured product among the consumers,” said Lamichhane. “There are other companies manufacturing rum. However, popularity of Khukri rum has remained intact as rum lovers cherish Khukri rum’s flavor,” he added.
Lamichhane shares that his company has capacity to make 4-5 lakhs cases of Khukri rum in a year. Talking about the market of Nude Vodka, Lamichhane says that for any product liquor, non-liquor it would take certain time to take pick-up. “We have been doing really well in rum. The response to our Vodka has been impressive as well. We are excited from the response we have received from consumers towards Nude Vodka as well,” he said.
Located in Balaju, Kathmandu, The Nepal Distilleries sources most of the raw materials from inside the country. The industry imports raw materials not available inside Nepal. “We only import packaging materials and bottles from abroad,” Lamichhane shared. Nepal Distilleries’ Khukri rums are not just limited to domestic market. But, the industry has been focusing on domestic market right now, General Manager Lamichhane says.
“Our first priority is domestic market. Nonetheless, we are exporting rum and Vodka to Australia, Japan, South Korea, Hong Kong and United States”, said Lamichhane adding “There is a huge market for rum and vodka".
On the availability of skilled workforce, Lamichhane said they hire, guide, and train the employees for the industry. Like every other industry, liquor industry too faces shortage of skilled people, according to Lamichhane. “But, our strategy to hire and train the staffs has helped us to operate the distillery smoothly”, he added. The Nepal Distilleries has been able to retain the old and trained workforce that operates machines and machinery for a long time. This has enabled the industry for smooth operation, Lamichhane shared.
Nepal Distilleries has built a strong distribution network in all districts for the supply of its products. “We have distributors in all districts to supply the products to wholesalers, retailers and finally to the consumers,” Lamichhane said. “Scarcity of the cash in the banking system has directly hit distributors, wholesalers, retailers and consumers alike,” stated Lamichhane.
“Liquor industry is hardest hit by the liquidity shortage as people take in liquor with their spare income. Lack of cash and soaring inflation have pushed the consumers to opt for cheaper alcohol such as home-brewed hooch,” he added. “Cheques are not realized. Sales have plummeted. Distributors, wholesalers and consumers are feeling the pain due to the current financial crunch”, he elaborated.
Complaints against the Government
Lamichhane laments that government policy has hit the liquor industry the most. The government has hiked excise duty by 15 per cent on average in the last five to six years, making the Khukri rum very expensive and unaffordable, he says.
Continuous hike on excise duty has pushed the consumers from premium product to cheaper ones. “You can see more people consuming home-brewed liquor these days. And shops are openly selling hooch due to the hefty price of premium liquor,” Lamichhane said.
Regarding the effect of other government policies such police check for driving under the influence in liquor industry, Nepal Distilleries’ response is optimistic. “We want people to consume alcohol in moderation. Consumers’ number may drop due to such policy for the time being, but eventually, the negative talks about liquor will end too. As a result, liquor industry will see an organic growth gradually,” says Lamichhane.
Nepal Distilleries is ahead in carrying out various social works under its Corporate Social Responsibility (CSR) programme. The industry has been helping students especially from remote parts of the country with various scholarships and stationeries. And its CSR activities don’t advertise about itself claims Lamichhane.
“We provide shoes, clothes and stationery materials in addition to scholarships to the students. But, we don’t expose industry’s name and logo keeping in mind the sensitivity of the education sector,” he says. The Nepal Distilleries honoured more than 120 retired Gurkha armies from India, The UK, and Singapore in recognition of their valour in the war fields at a programme in Pokhara earlier December 2022.
Similarly, the company has announced to provide full scholarships until higher education to two children of former Gurkha army men who lost their lives in the wars. TND has sponsored musical programmes in the tenth edition of “Nepal Literature Festival” organized in Pokhara in December 2022.
Lamichhane terms quality as the major strength of Nepal Distilleries. He says that unique taste of Khukri rum is another great strength of his industry. Lamichhane states continuous hike of excise duty levied on liquor industry is the biggest problem/threat as they cannot do anything to stabilize the tax increase which affects pricing and sales.
Demand for Export Cash Incentive
Lamichhane sees a great opportunity for market expansion of rum and vodka inside and outside the country. Most of the industries that export products receive cash incentive by the government. “But, sadly, the government does not give such incentive to liquor export.