Business school sceptics might hail St Erhard, the German beer, as proof of the dictum that it is not what you know but who you know that counts.
The company was founded in 2011 by two MBA graduates in Germany and India who say that access to well-placed alumni helped them more than any book-learning.
“It’s not so much the formal education that helped us,” says Christian Klemenz, who graduated from the HHL Leipzig Graduate School of Management last year with an MSc in business. “The network – and the entrepreneurial sprit – of the schools helped us much more.”
But before those sceptical about MBAs and their ilk celebrate by downing a glass of St Erhard, brewed and bottled in Franconia, northern Bavaria, they should remember that many business schools are increasingly proud of the ethos of mutual help which alumni societies embody. The UK’s Cass Business School last year even named Julia Hobsbawm, its first visiting professor of networking – an alumnus, naturally.
Mr Klemenz met Vikanshu Bhargava, with whom he founded St Erhard’s, in 2010, when he went on a term’s exchange trip to the Indian Institute of Management Ahmedabad. Mr Bhargava was studying for an MBA at Ahmedabad.
The duo’s plan was so simple even a drunk might have stumbled upon it: shipping prized German beer to an ever-thirstier India.
“The world – India included – had Heineken and Corona, but no German brands were widely available,” says Mr Klemenz. “German beer had a great reputation, but you couldn’t buy it. That struck me as very strange.”
So strange, in fact, that he used his passion for German beer as the basis for a business plan project at IIM-A. Mr Klemenz decided to look at how a company might sell German beer in India. Mr Bhargava was drawn to the idea and developed a similar passion for beer.
“As part of the project, we discovered that some Indian beer drinkers didn’t want Heineken or Corona,” Mr Bhargava recalls. “They wanted something special that spoke of luxury.”
On graduation, Mr Klemenz headed to Bamberg in Bavaria, near his childhood home. The town, he says, boasts a higher density of breweries than any other spot on earth. St Erhard, a Bavarian saint, is “good and pronounceable” in the Asian market, adds Mr Klemenz.
Just how to export it? While Mr Klemenz was brewing in Bamberg, Mr Bhargava was tackling the trickier task of getting their special beer in sexy bottles licensed for sale in India. “The Indian alcohol bureaucracy was tough to crack,” he remembers.
Through IIM-A’s alumni network, Mr Bhargava contacted two graduates renowned in the beverages business in India. They helped St Erhard negotiate the pitfalls of the application process, allowing it to boast that it has it has an active marketing department in India, something other foreign speciality beers can only dream of.
“Our German-Indian team really proved complementary,” Mr Bhargava says. After getting its licence in April, the first container of 10,000 bottles of St Erhard beer arrived in New Delhi in May and a second shipment of 24,000 bottles is currently in transit. Investment to date is in “the mid-five-digit [euros] range”, says Mr Klemenz.
Focusing on hotels and restaurants, St Erhard plans to expand from Delhi and Chandigarh in northern India to Mumbai, Bangalore and Hyderabad. The plan is to sell 70,000 bottles by next August and hit break-even a few months later.
The duo’s business school contacts have again proved useful for this growth phase. HHL’s alumni network provided a business partner in Singapore, who will receive a first container of beer before the year’s end.
More importantly, it produced some of the investors who just put up “a small six-digit [euros] amount” to finance this next stage.
St Erhard has received enquiries from inside Germany but is focused on Asia for now. The duo recently visited an investor in Munich before going to the city’s Oktoberfest.
“It was all Munich beer,” says Mr Klemenz. “I don’t think we’ll ever see St Erhard there.” Though maybe with a bit of networking …