Viability of beer prices set by Telangana has become far too stressed: BAI

BAI DG Giri said that the prices allowed to supplier companies are actually below the cost of goods supplied as these prices are based on the cost of production in 2018-19

A day after the country's leading brewer United Breweries suspended supply to Telangana, beer industry body BAI on Thursday said the commercial viability of prices set by the state government has become far too stressed.

The prices allowed to supplier companies are actually below the cost of goods supplied as these prices are based on the cost of production in 2018-19, said Brewers Association of India (BAI) DG Vinod Giri. 

 

On Wednesday, United Breweries Ltd (UBL), which operates with popular beer brands like Kingfisher, Kalyani Black, Heineken, and Amstel Bier, announced to suspend the supply of its beer to Telangana State Beverages Corporation with immediate effect.

The decision has been taken due to the non-revision of the basic price of the company's beer from 2019-20 by Telangana State Beverages Corporation Ltd (TSBCL), resulting in huge losses in the state, said United Breweries Ltd (UBL), now controlled by Dutch multinational brewing company Heineken NV.

Commenting on the development, Giri said: "We have repeatedly pointed out that the commercial viability of beer suppliers in Telangana has become far too stressed".

However, he also acknowledged that TSBCL set up a price fixation committee last year, which concluded its consultations and sittings in August 2024.

However, there has "not been any subsequent action, and as a result, the supplier companies are now incurring a loss of around Rs 100 per case on supply of beer".

"In addition, the dues to the alcoBev sector for supplies made during the period February to August 2024 remain unpaid to the tune of Rs 3,900 crore, which is adding massive interest costs to operations. This has further aggravated the industry's difficulties," BAI said.

BAI, which represents leading beer markers - United Breweries, ABInBev and Carlsberg, had earlier sent a representation to Telangana government in November 2024 on the issue and had said the production cost has gone up by 40 per cent due to rising input costs.

Giri expects an early resolution as Telangana is known as an industry-friendly and progressive state.

"The current crisis is not to the liking of anyone, and we have faith in the Government that it would urgently intervene to resolve this issue and help the beer industry come out of this existential crisis," he said.

BAI member companies together account for 85 per cent of the beer sold in India.