Bira 91, India’s iconic craft beer brand, represents one of the most dramatic startup collapses in recent years. Despite raising over $296 million from prestigious investors including Sequoia Capital (now Peak XV Partners), Kirin Holdings, and Sofina, the company has essentially ceased operations. The founder Ankur Jain was ousted, employees went unpaid for up to six months, and the company faces potential liquidation. This case study reveals how poor unit economics, a fatal legal compliance mistake, weak governance structures, and accumulated losses of ₹2,117.9 crore transformed what appeared to be a promising venture into a cautionary tale for Indian startups. The story offers critical lessons about the importance of sustainable business models, proper compliance procedures, and maintaining healthy company culture even under investor pressure.
The Rise of Bira 91: From Dream to Market Leader
Ankur Jain’s Journey: A Passionate Entrepreneur’s Bold Vision
Ankur Jain’s path to founding Bira 91 was unconventional. Born in Delhi to a family of creative professionals—his father an architect and mother an interior designer—Jain moved to the United States in 1998 to pursue computer engineering at Illinois Institute of Technology. After a brief stint at Motorola, he ventured into healthcare, launching a healthcare revenue management startup in New York that he successfully sold in 2007 to an undisclosed healthcare provider network.
However, family skepticism marked this turning point. When Jain announced his plan to enter the alcohol industry, his father reportedly did not speak to him for five years. This silent disapproval, rather than discouraging him, only strengthened his determination to carve his own path. In 2007-2008, recognizing a gap in India’s beer market, Jain began importing 30 varieties of beer that were previously unavailable in India, eventually identifying the opportunity to launch a domestic craft beer brand.
Market Entry and the Craft Beer Revolution (2015-2018)
When Bira 91 officially launched in 2015, India’s beer market was dominated by hard beers like Kingfisher and Howard. Jain recognized that Indian consumers, particularly the younger demographic, were developing a taste for smoother, fruit-forward craft beers. The company’s first brewery unit was located in the Flanders region of Belgium, manufacturing beer with premium ingredients from France, Belgium, and Bavarian farms before importing it to India.
The name “Bira 91” was deliberately crafted for market appeal. “Bira” means “brother” in Punjabi and phonetically resembles “beer,” while “91” represents India’s country code, symbolizing the brand’s mission to create a truly Indian beer that would be exported globally. The strategy worked remarkably well. In the first year alone, Bira 91 sold 1.5 lakh (150,000) cases—an impressive figure for a new microbrewery. By the second year, this number skyrocketed to 7.5 lakh (750,000) cases, representing a 400% growth rate.
Strategic Investor Backing and Rapid Expansion (2016-2022)
The company’s early success attracted attention from institutional investors. Sequoia Capital invested $6 million in Series A funding, marking the venture capital firm’s first investment in India’s alcohol beverage segment. Angel investors including Kunal Bahl and Deepinder Goyal (founders of Snapdeal and Zomato respectively) also participated.
Momentum accelerated dramatically. By 2018, Sofina led a $50 million Series B round, and subsequent funding rounds brought in $4.3 million from Sixth Sense Ventures and $30 million from Japan’s Kirin Holdings in January 2021. Jain used these funds aggressively to expand:
- Added five new breweries to the existing facility in Indore
- Secured marketing rights for the ICC cricket tournaments (2018-2023), gaining visibility during matches
- Expanded distribution to more than 1,000 towns across 25 countries
- Commissioned four new breweries between 2015 and 2019
The company’s valuation climbed steadily, with the total funding reaching $307.9 million by early 2024. Kirin Holdings alone invested $100 million ($30 million in 2021 plus $70 million in 2022), becoming a major stakeholder.
Bira 91’s Cumulative Funding Growth (2015-2024)
The Strategic Beer Cafe Acquisition (2022)
In 2022, Bira 91 acquired The Beer Cafe, a popular beer retail outlet chain that had already established a strong footprint in urban India. The acquisition strategy appeared sound: the company would use the retail outlets to move from packed beer distribution to serving fresh, directly-brewed craft beer—the traditional craft beer experience. The vision was to build an ecosystem where Bira 91 would manufacture and directly reach end consumers through controlled retail spaces.
The Beer Cafe initially contributed approximately 35% of Bira 91’s revenue in FY24, demonstrating the significance of this investment to the company’s overall business model. However, this strategic acquisition would ultimately become a financial liability rather than a revenue driver, as both segments continued to operate at losses.
The Three Critical Problems That Destroyed Bira 91
Problem 1: Terrible Unit Economics and Relentless Cash Burn
From day one, Bira 91 operated with fundamentally broken unit economics. The craft beer market in India is inherently niche, with limited consumer penetration compared to mass-market beer brands. Rather than accepting this market limitation and building a sustainable business model, the company embarked on aggressive expansion to enlarge the niche itself.
This approach required burning through vast amounts of investor capital. The company continued to rely entirely on investor money to fund operations, meaning any disruption in funding could instantly shut down the business. More critically, as the company scaled, the per-customer acquisition cost continued rising rather than decreasing. In a typical growth curve, acquisition costs should decline as brand awareness increases and word-of-mouth strengthens. For Bira 91, the opposite occurred—marketing efficiency deteriorated as the company attempted to reach markets with insufficient demand for premium craft beer.
The financial statements tell the story:
- FY22: Revenue ₹824 crore, Loss ₹446 crore (54% loss ratio)
- FY23: Revenue ₹824 crore, Loss ₹446 crore (54% loss ratio)
- FY24: Revenue ₹638 crore, Loss ₹748 crore (117% loss ratio)
Bira 91’s Revenue vs. Net Loss (FY22-FY24)
Problem 2: The Beer Cafe Acquisition—A Strategic Move That Backfired
While the Beer Cafe acquisition seemed strategic, it compounded the fundamental problem: the company was scaling losses rather than revenues. The Beer Cafe operations were not profitable despite being part of the company’s intended direct-to-consumer strategy. By FY24, while The Beer Cafe contributed 35% of revenue, the entire entity continued bleeding money.
The acquisition also stretched already-thin management resources and capital reserves. More critically, when the company faced its greatest crisis (the licensing conversion issue described below), The Beer Cafe operations became collateral damage. The retail outlets had no products to sell, further eroding customer loyalty in a highly competitive market.
Problem 3 (The Fatal Mistake): Private Limited to Limited Company Conversion
The third and most catastrophic problem stemmed from a compliance decision that exposed a fundamental lack of strategic foresight. As Bira 91 prepared for an Initial Public Offering (IPO) and needed to accommodate the increasing number of shareholders (investor limit for private companies is 200 shareholders), the company decided to convert from a “Private Limited” to a “Limited” (public limited) company structure in 2023.
This decision, though legally sound in principle, triggered an unexpected regulatory nightmare specific to the alcoholic beverages industry. When a company changes its legal classification:
For most industries: The transition involves routine administrative steps.
For the alcohol beverage industry: All state excise licenses become invalid and must be reapplied for in each jurisdiction.
Bira 91 operates in 29 states and union territories across India. Each state’s excise authority requires fresh registration, re-labeling approval, and recertification. The bureaucratic process consumed 4-5 months, during which Bira 91 essentially vanished from the market. Customers couldn’t purchase the product. Shelf space—the lifeblood of consumer goods brands—was taken over by competitors offering craft beers from emerging local breweries including White Owl, White Rhino, Kati Patang, D Young, and Goa Brewing Company.
This market absence was catastrophic because unlike consumer goods with repeat purchase intervals measured in weeks or months, beer—a discretionary lifestyle product consumed by price and taste-conscious young adults—saw dramatic customer switching. Once consumers adopted alternative brands, the expensive brand building that Bira 91 had invested in became worthless.
The Governance Crisis: A Family-Run Business Structure
Allegations of Improper Corporate Governance
Beyond the three critical operational problems, internal sources revealed that Bira 91 was being run as a “proprietor family business” rather than a professionally managed enterprise. The founder’s wife and mother were reportedly deeply involved in business operations and held the majority voting rights, determining company direction without clear corporate governance structures or transparent decision-making processes.
This governance model created several cascading problems:
Lack of Transparency: Key decisions were made within the family circle without adequate input from independent directors or external advisors, leading to strategic blind spots.
Conflict of Interest: Family interests potentially took precedence over business objectives, particularly regarding capital allocation and operational priorities.
Resistance to External Expertise: Professional advisors, experienced board members, and external consultants struggled to influence direction, creating an insular decision-making environment.
Employee Perception: 250 employees—representing approximately 40% of the workforce—petitioned the board and investors in late 2024 demanding the founder’s removal, citing “corporate governance failures, lack of transparency, and delays in employee dues and salaries.”
The family-governance model, common in many Indian businesses, becomes particularly problematic in venture-backed startups where multiple institutional investors expect professional management practices. The misalignment between founder-family control and investor expectations for professionalism created ongoing tension that ultimately exploded during the financial crisis.
The Financial Collapse: How Cash Burn Became Fatal
Mounting Losses and Debt Accumulation
The company’s losses accumulated into an overwhelming debt burden. By FY24, despite revenues of ₹638 crore, the company reported a net loss of ₹748 crore—meaning the company lost more money than it earned. Cumulative losses reached ₹2,117.9 crore, completely eroding the company’s net worth.
The financial hemorrhaging created a debt spiral:
- Operational cash flow: Negative ₹84 crores (the company burned cash even from regular operations)
- Short-term liabilities: ₹619 crores (due within 12 months)
- Total debt: ₹1,000 crore (by late 2024)
Auditors issued warnings that the company had lost all actual value, with accumulated losses equal to 1,904 crores by their assessment.
Bira 91’s Revenue Breakdown by Source (FY24)
The Employee Crisis: A Sign of Business Failure
By the end of 2024, the financial crisis manifested directly in employee compensation:
Salary Delays: 250 out of approximately 600 employees had not received salaries for 3-6 months
Provident Fund (PF) Non-Payment: Employee retirement contributions had not been paid for 1.5 years, a serious legal violation and breach of trust
Expense Reimbursements: Business travel expense reimbursements worth ₹2 years of accrued amounts remained pending, forcing employees to use personal funds without recompense
This employee crisis signaled that the company was effectively insolvent—it could not meet basic operational obligations. An employee at a company meeting described the situation aptly: expecting employees to work without pay, emotionally invest in a failing business, and personally fund travel on company business represents a fundamental breakdown in the employment relationship.
Leadership Crisis and Investor Takeover
On September 10, 2024, the board of directors asked founder Ankur Jain to step down as CEO. The decision followed months of pressure from major investors including Peak XV Partners (formerly Sequoia Capital), Kirin Holdings, and Sofina. However, Jain’s ouster did not resolve the crisis—none of the remaining shareholders wanted to assume leadership of the company.
The company’s office ceased functioning due to unpaid rent. The website went offline. Reports indicated that Kirin Holdings and debt investor Anicut Capital seized control of The Beer Cafe by taking over pledged shares, removing the company from ownership of its retail channel.
By November 2024, Kirin Holdings was reportedly in talks to exit its investment entirely, having written down the value of both its debt and equity holdings in February 2024. The Japanese beverage giant, which had invested $100 million believing in Bira 91’s potential, had lost confidence in the company’s viability.
Market Context: The India Craft Beer Opportunity
A Growing, Yet Niche Market
Bira 91’s collapse is particularly notable given the favorable market conditions for craft beer in India. The craft beer segment represents a significant growth opportunity:
- Market Size (2024): USD 4.7 billion
- Projected Market Size (2033): USD 33.3 billion
- Growth Rate (2025-2033): 23.43% CAGR
Premium beer sales in India increased 30% in FY24, three times the growth rate of the overall beer category. This growth is driven by rising disposable incomes, urbanization, changing consumer preferences, and the emergence of a younger demographic that values authenticity and unique experiences.
The larger India beer market is valued at ₹483.10 billion (2024) and is projected to reach ₹1,241.69 billion by 2034, growing at 9.90% CAGR. This market context reveals that Bira 91’s failure was not due to market absence but rather to operational and governance failures within the company itself.
Competitive Landscape
During Bira 91’s 4-5 month absence from the market due to license conversion issues, nimble competitors filled the void. New craft breweries and local beer brands seized the opportunity:
- White Owl and White Rhino
- Kati Patang
- D Young
- Goa Brewing Company
- Multiple microbreweries in regional markets
These competitors, many operating with lower fixed costs and more efficient unit economics, captured market share that Bira 91 had built through years of expensive marketing and brand building. Once consumer loyalty shifted, recapturing that market would require even more aggressive (and expensive) marketing—capital Bira 91 no longer possessed.
Critical Lessons for Entrepreneurs and Investors
Lesson 1: Compliance Is Not Optional—It’s Critical
The private-to-limited conversion disaster teaches an essential lesson about compliance. The company had advisors, institutional investors, and experienced board members who should have flagged this regulatory issue. Yet somehow, a conversion process that invalidated state licenses across 29 jurisdictions was not properly planned or executed.
Better approaches existed:
- Creating a holding company structure where the private limited company remains intact while a new limited entity handles public fundraising and IPO processes
- Studying how other beverage companies (like Kingfisher with Diageo) navigated similar transitions
- Consulting with regulatory experts before converting structures
- Securing regulatory pre-approvals before making structural changes
The lesson: Before pursuing IPOs or major structural changes, thoroughly understand industry-specific regulatory implications. One compliance mistake can erase years of brand building.
Lesson 2: Investor Pressure Requires Discipline, Not Blind Expansion
Bira 91 faced intense pressure from venture investors to grow. With hundreds of millions in funding, the expectation was to scale aggressively. However, the company had already identified a niche market—craft beer in India appeals to a specific demographic in urban areas. Expanding beyond that natural market comes with exponentially increasing acquisition costs.
An investor provided this insight: imagine a digital marketing course provider with a natural market of 10 customers from a pool of 100 potential customers. Through investor pressure to grow, instead of conservatively targeting those 10 customers, the company expands marketing to capture 12-15 customers. The per-customer acquisition cost rises dramatically. Beyond a certain point, no amount of marketing optimization can make additional expansion profitable.
Better practices:
- Establish clear unit economics targets and refuse to scale beyond what the market can profitably support
- Communicate clearly with investors about market size and sustainable growth rates
- Focus on profitability within the addressable market before expanding aggressively
- Use investor capital for optimization, not for unsustainable market expansion
- Remember that good investors fund sustainable businesses, not growth-at-any-cost ventures
Lesson 3: Product Quality Must Match Brand Promises
Bira 91 invested heavily in packaging and brand building, creating an aspirational image. However, feedback from markets suggested the product quality didn’t match the premium brand positioning. Craft beer enthusiasts noted that packaged Bira 91 didn’t deliver the flavor experience of fresh craft beer directly from a brewery.
This fundamental misalignment created vulnerability. When competitors entered during the market gap, they could offer better quality-to-price ratios or authentic craft experiences. Customers who had invested in a premium brand based on promises couldn’t justify continued loyalty when the actual product didn’t deliver differentiation.
Better practices:
- Ensure product quality genuinely supports brand positioning before investing in expensive marketing
- Gather honest feedback from core users about product-market fit
- Test assumptions about quality perception through blind taste tests and consumer research
- Remember that brand loyalty is fragile—it evaporates quickly if product fails to deliver
Lesson 4: Company Culture Is Not a Luxury—It’s Essential
The employee petition from 250 workers demanding founder removal revealed a company where employees had lost faith in leadership. Unpaid salaries for months, unreimbursed expenses, and family-business governance created an environment where talented employees departed while remaining staff operated in desperation rather than commitment.
Strong company culture requires three fundamental elements:
Financial Happiness: Competitive salaries, timely payment, fair benefits, and transparent compensation.
Emotional Engagement: Work environment where employees enjoy coming to office, feel motivated, and sense genuine care from leadership.
Growth Opportunity: Clear career progression where an intern can envision becoming a company leader, and employees develop new skills continuously.
Bira 91 failed on all three dimensions during its crisis phase. But more fundamentally, the family-business governance model had likely eroded culture from the beginning—employees sensing that meritocracy took backseat to family relationships lose motivation.
Better practices:
- Treat office staff as family—many founders spend more time with employees than biological family
- Establish clear, merit-based promotion criteria with transparent decision-making
- During financial stress, prioritize employee compensation as a final line of defense
- Maintain open communication rather than hiding problems from teams
The Uncertain Future: What Comes Next for Bira 91?
As of November 2024, Bira 91’s fate remains unclear. Multiple scenarios are possible:
Acquisition: An established beverage company (Indian or international) could acquire Bira 91’s brand, recipes, and remaining assets at a fraction of the ₹300+ million invested.
Restructuring: Investors might orchestrate a complete restructuring, writing down investments and rebuilding the business with new management and realistic financial projections.
Slow Liquidation: The company might wind down operations gradually, with assets sold off piece by piece.
Investor Bailout: Though unlikely given Kirin’s exit discussions, a remaining investor could inject capital to stabilize the company and implement recovery measures.
The most probable outcome appears to be acquisition or controlled liquidation, allowing investors to recover some capital while preserving brand value for a strategic buyer with more efficient operations.
Conclusion: From Ambition to Failure
Bira 91’s collapse represents a tragic convergence of operational mistakes, governance failures, and regulatory miscalculations. The company did not fail because the market was too small or the product was unviable. India’s craft beer market is growing robustly, and Bira 91 was the pioneer that helped create this market.
Instead, Bira 91 failed because:
- Unsustainable Unit Economics: The company burned cash from inception and never achieved profitability, remaining entirely dependent on investor funding.
- A Fatal Compliance Mistake: Converting from private to limited company status without understanding regulatory implications in the beverage industry cost the company 4-5 months of market presence and irreplaceable brand momentum.
- Poor Governance: Family-business management structure prevented objective decision-making and alienated both professional employees and outside investors.
- Strategic Overreach: The Beer Cafe acquisition added complexity without solving the fundamental unit economics problem.
- Culture Collapse: When financial stress arrived, the company lacked the employee loyalty and organizational resilience to navigate the crisis.
For entrepreneurs, Bira 91 offers these essential takeaways: Build businesses with healthy unit economics, treat compliance as strategic priority, establish professional governance from the beginning, maintain company culture even (especially) during crises, and resist investor pressure to expand beyond sustainable market limits.
For investors, the case demonstrates that capital alone cannot overcome fundamental business model issues or poor governance. Bira 91 raised over $296 million but still failed—a powerful reminder that more money does not solve broken business foundations.
Ankur Jain’s passion, vision, and persistence created a brand that transformed India’s beer culture. Yet ambition without disciplined execution, investor capital without sustainable unit economics, and family governance without professional structure could not prevent the collapse. The craft beer market opportunity remains; the next company to pursue it should learn from Bira 91’s missteps.
Bira 91’s collapse, watch the complete case study from Lapaas Voice: https://www.youtube.com/watch?v=xKlFYj3CjFM
