Beer gets costlier in Telangana after United Breweries' supply dispute
Company resumes distribution after 'constructive' discussion with the state government
 "Beer gets costlier in Telangana after United Breweries' supply dispute")
Telangana, India's top beer-consuming state, has from Tuesday approved an increase in prices. The decision follows a supply halt by Heineken-owned United Breweries last month due to a pricing dispute.
According to a government order, all existing stocks of beer must now be sold at the revised rates, bringing relief to manufacturers.
Supply halt and resolution
United Breweries, the maker of the popular Kingfisher beer, suspended supplies in Telangana. The company resumed distribution after "constructive" discussion with the state government, which assured that pricing and payment issues would be addressed in a "time-bound manner."
United Breweries holds 70 per cent share of the Telangana beer market, making its supply cut a significant disruption for consumers and retailers.
Delayed payments and price freeze
On January 8, the company cited financial strain as the reason for the supply halt. It pointed to long-standing issues such as delayed payments and the absence of government approval for a price hike since the 2019-20 financial year. The outdated pricing model had reportedly impacted its profitability.
Alcohol regulation in India
India ranks as the world's eighth-largest alcohol market by volume. However, each state independently regulates alcohol pricing, as liquor sales are a crucial source of tax revenue. In Telangana, alcohol is purchased by the state government and then distributed to retail stores. Officials had previously rationed supplies to prevent hoarding and mitigate shortages.
Market reaction and stock Impact
United Breweries has yet to issue an official statement following the government’s price revision. The company’s stock dipped 1.2 per cent on Monday, after the revision.
With the price hike now in effect, the beer industry in Telangana anticipates more stable supply and revenue streams moving forward.
(With Reuters inputs)