Goa's Distillation Boom Riding Premium Offerings With Desi Twists

For two consecutive years, foreign tourist arrivals in the state have been disappointing. But the coastal state has a secret weapon up its sleeves — distilling premium alcobevs — to ride out the doldrums

There’s a fresh whiff in Goa’s saline air. Liquor distillation is thriving, nay, growing rapidly across the state, with new distilleries being set up every year, while existing ones continue to expand operations. With unique, desi twists.

This, amid claims of decline in foreign tourist arrivals — which are hotly contested by the state government.

While Maharashtra leads among Indian states in terms of volume of ethyl alcohol produced yearly — irrespective of intended usage (petrol-additive, industrial or liquor production) — Goa has nearly as many distilleries. 

But unlike Maharashtra (or Uttar Pradesh, the No 2 state by volume) — whose distilleries are mostly large-scale, owned by liquor biggies, and which mostly produce alcohol from molasses (byproduct of their sugarcane cultivation and sugar industry) — most of Goa’s distilleries are relatively small-scale, with many being family-run. And they produce mostly grain-based alcohol. Although, given the loose Indian excise definitions, it needs to be kept in mind that both distillers and blender/bottlers are categorised as "distillers".

Neither Goa nor its distilleries figure prominently among states that produce extra neutral alcohol (ENA — the basis of the widely-consumed IMFL). The state-wise figures also don’t include Goa's many back-yard stills in family homes that seasonally produce cashew and coconut feni for local consumption.

Anyone with some idea about India’s liquor industry would be able to guess much of the above without any prompting. Still, the important distinction between grain and molasses as raw material gives a hint at the intended usage, even in the realm of liquor. 

Unlike Maharashtra and UP, much of whose potable liquor production ends up as IMFL (Indian Made Foreign Liquor) — an indeterminate flavoured and coloured spirit, blended with artificial flavours and colours — a significant part of Goa’s liquor is bottled as high-end, sipping alcohol.

And that fits right into Goa’s image as India’s party capital. Because premiumisation is what is driving profit margins for India's alcobev producers of late.

Quality, Price To Offset Import Tariff Fall

While every Goan distiller is ramping up production, what none will tell you on record is that they are quietly preparing for the inevitable and ongoing reduction in tariffs for imported liquor, with alternatives/substitutes that are more than a match in quality and price in the price-sensitive Indian market.

“Although Goa has a hot and humid climate, which is believed to be unsuitable for producing high quality liquor, that very climate gives us some unique advantages,” said Michael John D’Souza, the chief distiller and master blender at Paul John Distilleries Ltd, which produces 12 expressions of its now-iconic Indian PJ single malt. 

He continued, “For example, not only does the climate cause faster maturation of our malts, the briny, humid sea breeze adds a unique, mineral-y complexity to it.” While faster maturation and greater evaporation is true for all malt distillers across India, given the country’s hot, tropical climate, the effect of the sea breeze is unique to Goa, and to Paul John.

Keeping It Sustainable

Solomon Diniz, the owner, distiller and blender of the family-run Adinco Distilleries, which produces a range of IMFL liqueurs that are alleged knock-offs of famous international brands, said, “Goa’s numerous small fresh-water rivers and plentiful availability of groundwater are an advantage to distillers. As you know, distillation is a water-intensive industry.” 

On average, a litre of distillate requires between 15-16 litres of water to produce. And there is a growing grassroots movement in the state against rampant overuse of groundwater that activists claimed is “rapidly eating into Goa’s groundwater reserves”. Though many distillers have started recycling their water.

Another stand-out distiller of the state, Desmond Nazareth, the owner of the DesmondJi brand, has an even more holistic approach. He sources raw materials locally, employs marginalised local people, and is putting in place a system that would make the water released as effluents from his distillery in Andhra Pradesh reusable.

Nazareth has gained cult status among Indian distillers for being the first and only agave distiller in India. He can’t call his product tequila or mezcal — not only because Mexico owns the GI tag for the spirit, but also because he uses a raw material that’s similar but not the same as the one used to make the classic Mexican party drink. 

Tequila is made from the piña (heart) of the blue agave (agave tequilana) plant, which is unique to Mexico. Nazareth found a cousin of the blue agave growing wild in the Deccan Plateau — agave americana — which had arrived in India via the Columbian Exchange, was planted by the British as fencing along railway tracks, and has since naturalised. 

This plant has a similar piña that can be “cooked” to extract juices, which are then fermented and distilled to produce a liquor that is uniquely Indian. 

Nazareth, who also produces an orange liqueur from Nagpur oranges, has recently ventured into two other unique products. 

One is Mahua, a refined, fragrant, double-distilled riff on the traditional that is called “liquor of the gods” by central India’s tribals. He claims his production model has a component that “gives back” to the tribals, who also collect the mahua flowers from the forests for him.

The other is a variant on the Caribbean rhum agricole that is distilled from fresh sugarcane juice, not molasses. True to his indigenous mantra, he uses the purple sugarcane that grows in the Deccan for this spirit — another first in India.

Capacity Building

And for all these products, he kept expanding capacity to 30,000 cases per year by 2023. (Each case contains 12 bottles of 750 ml of alcohol at around 40 per cent strength, ie, 9 litres; making for an annual output of around 2,70,000 litres.) That has now been doubled to 60,000 cases per year. 

“When we began, we had planned for possible future expansion, and built the supporting infrastructure in place. We started with one autoclave, four fermentation tanks and two pot stills. When we decided to expand after the Covid lockdowns, we just kept multiplying the units. In fact, we have the possibility within our establishment to double our current production, just by adding supporting infrastructure,” said Nazareth.

Domestic Excise Woes

DesmondJi, whose distribution footprint covers the most important markets in the South, has made only one foray into the North — and “it was a disaster”. Nazareth added, “We ventured into Delhi in 2017-18, but got heavily penalised by excise officials just because they couldn’t categorise us. Eventually, we cut our losses and left.”

Excise trouble is a common refrain among all of Goa’s premium distillers. Since individual states tax alcohol, rates vary, and the trouble of tackling excise officials of each state raises the stakes, especially for craft/boutique manufacturers.

Expansion Plans

DesmondJi’s future expansion plans include partnering with distributors for other parts of India. As the sole agave distiller in Asia, they are already selling bulk liquid to other brands that barrel age or flavour the liquor and sell it under different names, said Nazareth. They are also co-branding their agave with established European brands for the EU market.

Paul John’s PR chief Asa Abraham, who didn’t want to disclose the exact turnover or sales figures, said overall, their sales volumes was 70:30 domestic vs export, adding that the premium PJ single malt is now available in 45 countries abroad. She added that the company was experiencing a 25 per cent year-on-year growth, based largely on the sales of their IMFL products, though it was the single malt that gave them market presence and bigger profit margins. 

To raise money, the company has steadily sold off stake to the second largest US distiller, New Orleans-based Sazerac, and expanded capacity, especially in Goa for its premium single malts. From two copper pot stills in 2008, it doubled capacity to four stills in 2018 and is in the process of installing four more.

Adinco — with a capacity to produce 2,000 casks of liquor per day, which too is being doubled currently — distils only cashew and coconut feni at its distillery for the local market.

For its liqueurs, it buys ENS from out-of-state grain distillers to blend with sweeteners, and essential oils extracted in a small copper pot still in-house. In the early 2000s, when Solomon took over from his father, the relatively modest firm stepped into the untapped market for liqueurs — which, being almost exclusively imported for the Indian market, suffers from supply inconsistencies — to build a presence across Western and Northeastern India, and is now targeting the bigger Eastern states. Meanwhile, it has also spread to Thailand, and with its IMFL whisky ‘Cotombi Reserve’ ventured into the UK.

What is interesting is that none of these three distillers, nor the many other units dotted across the state, seem to be interested in the growing demand for ethanol as an additive to petrol. In good times and bad, Goa intends to live the good life. 

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