United Breweries halts beer supply to Telangana amid price hike dispute
INDIA – United Breweries, a subsidiary of global beverage giant Heineken and the largest beer producer in India, has suspended beer supplies to Telangana, citing the state’s refusal to approve price hikes.
The state, India’s largest beer consumer, has not revised base prices for two years, prompting escalating losses for the company.
In a statement, United Breweries announced the decision, stating: “Despite our continuous efforts over the past two years, there has been no increase in the base prices offered for our products. This has resulted in escalating losses, making our operations in the state unviable.”
Although the company did not disclose specific figures, United Breweries’ shares plummeted by 7 percent following the announcement, the sharpest single-day drop in nearly four years.
CEO Vivek Gupta previously revealed in a May earnings call that the company had suffered 7-8 billion rupees (US$84-$96 million) in lost revenue due to stagnant pricing in Telangana.
Telangana’s Minister of Excise and Prohibition, Jupally Krishna Rao, addressed the issue during a press conference, revealing that United Breweries had requested a 33.1 percent price hike.
“Such a price increase would become a burden on consumers,” Rao said. He added that an independent committee has been formed to review the request, and a price adjustment will be made based on its recommendations.
Telangana accounts for 15-20 percent of United Breweries’ beer sales by volume and consumes around 500 million liters of beer annually, making it a key market for the company.
The state’s regulatory framework requires annual approval for liquor pricing changes, a process that has become a sticking point for the alcohol industry.
The Brewers Association of India (BAI) has long called for price hikes in Telangana to offset inflationary pressures.
Former United Breweries Chief Marketing Officer Samar Singh Sheikhawat commented on the situation, suggesting that a prolonged standoff could harm the state more than individual manufacturers.
This dispute comes as other global players, including Diageo, Pernod Ricard, and Carlsberg, continue to demand unpaid dues of US$466 million from Telangana, adding to the mounting challenges in the state’s alcohol industry.
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