The cross-border expansion of Pakistan’s sole brewery brings hope of stronger economic ties with India. But potential for major hiccups remains
Pakistan’s longest-lived public company is an unlikely candidate. In an Islamic state where 97 percent of the population cannot legally drink, the 153-year-old Murree Brewery not only survives, but thrives: its Rawalpindi bottling lines churned out $10 million worth of beer in the first three months of the current fiscal year – 32 percent more than in the same period in 2012. Its total production, which also includes gin, vodka and an award-winning 21-year-old single malt, has trebled since 1995.
Andthe company’s prospects just got even brighter. Last December, following Islamabad’s decision to allow beer exports to non-Muslim countries, Murree Brewery gave a franchise to a Bangalore-based entrepreneur to sell its products in India. Still constrainedby a prohibition regime defined in the 1970s, the company’s official clientele was so far confined to the country’s non-Muslim, a minority of 5 million. It will now have access to a potential market of nearly 370 million people, whose size is expected to double to $9 billion by 2016.
The joint venture sends a strong signal at a time when Pakistan and India try to overcome decades of enmity to boost the tiny volume of trade that trickles across their borders. In November 2011, Islamabad announced its intention to grant Most Favoured Nation status to India, reciprocating an earlier move by its neighbour. President Nawaz Sharif, elected last May on a promise to reach out to Delhi, says bilateral talks will resume this month. Experts reckon trade liberalisation has already allowed Pakistan’s agriculture exports to jump 133 percent in the last five years.
Further progress would certainly be welcomed in Islamabad. Pakistan sold less than 2 percent of its exports to India last year – compared to 56 percent in 1949. The South Asia Chamber of Commerce says the removal of tariff and non-tariff barriers could increase trade between the two countries from its current $2.5 billion to $50 billion. This would likely help Pakistan revive its ailing economy and forestall a balance of payment crisis. Optimists reckon it could even help abate enduring bilateral disputes over the control of Kashmir or the future of Afghanistan.
Yet the road to normalisation remains fraught with potholes. Pakistan-India trade is presently permitted via one land route only, where poor infrastructure and extensive security checks cause major congestion. The process could suffer knee-jerk reactions and policy reversals should problems flare up again on the political or security front. Powerful constituencies, which include the Pakistani farming industry, automobile sector and main opposition party, continue to be wary of opening up borders. Non-tariff barriers are still a major concern.
Not that it dampens the ambitions of Isphanyar Bhandara, CEO of Murree Brewery. Proud to be at the helm of one of Pakistan’s largest enterprises, he is now making concerted attempts to penetrate new markets – including the UK and China. “We are getting queries from many countries, including from North America,” he was recently quoted as saying in the local press. At least you can’t reproach him with seeing the glass half-empty.
Photo Credit: The Sceptical Bureaucrat