Telangana approves beer price hike after Heineken’s United Breweries row
The recent price increase was welcomed by the Brewers Association of India, though it noted the hike was below industry expectations and did not cover the rising production costs.
- Feb 11, 2025,
- Updated Feb 11, 2025 4:24 PM IST
Telangana, India's top beer consumer, raises beer prices following a supply halt by United Breweries due to pricing issues and delayed payments, impacting the state's tax revenue and prompting industry concerns.
Telangana has sanctioned an increase in beer prices starting Tuesday. This decision comes in the wake of a temporary suspension of supply by United Breweries, a subsidiary of Heineken, which holds a commanding 70 per cent market share in the region. The halt, initiated in January, was due to delays in payments and a lack of price approvals since 2019/20, adversely affecting the company's financial performance.
The resumption of supply was facilitated by 'constructive' discussions with the state government, which promised to address these issues in a 'time bound manner'.
India ranks as the eighth-largest alcohol market globally by volume, with state-level regulations crucial for revenue generation. In Telangana, the government purchases alcohol and distributes it to retail outlets, a system designed to prevent hoarding and manage shortages.
The recent price increase was welcomed by the Brewers Association of India, though it noted the hike was below industry expectations and did not cover the rising production costs. The Association's director general, Vinod Giri, highlighted that more 'investment friendly' states, such as Maharashtra and Karnataka, allow companies greater pricing autonomy.
Meanwhile, global alcohol giants like Diageo and Pernod Ricard, sought $466 million in unpaid dues from the state. United Breweries had previously threatened to cease supply due to these delayed payments and the absence of government approval for price hikes, which have been pending since FY 2019/20. This financial backlog reveals the dependency of liquor companies on state-run depots for supply and payment, exposing them to fiscal vulnerabilities.
In addition to these financial complications, the Competition Commission of India has been investigating major beer companies for alleged price-fixing and cartel behaviour. This includes a significant probe into companies like Pernod Ricard and AB InBev, reflecting broader concerns over market practices.
Within Telangana, brewers are bound to supply exclusively to state-run depots, a system that has left companies like United Breweries, which reported sales of Rs 18,300 crore in FY24, awaiting substantial payments from the government.
(With Reuters inputs)
Telangana, India's top beer consumer, raises beer prices following a supply halt by United Breweries due to pricing issues and delayed payments, impacting the state's tax revenue and prompting industry concerns.
Telangana has sanctioned an increase in beer prices starting Tuesday. This decision comes in the wake of a temporary suspension of supply by United Breweries, a subsidiary of Heineken, which holds a commanding 70 per cent market share in the region. The halt, initiated in January, was due to delays in payments and a lack of price approvals since 2019/20, adversely affecting the company's financial performance.
The resumption of supply was facilitated by 'constructive' discussions with the state government, which promised to address these issues in a 'time bound manner'.
India ranks as the eighth-largest alcohol market globally by volume, with state-level regulations crucial for revenue generation. In Telangana, the government purchases alcohol and distributes it to retail outlets, a system designed to prevent hoarding and manage shortages.
The recent price increase was welcomed by the Brewers Association of India, though it noted the hike was below industry expectations and did not cover the rising production costs. The Association's director general, Vinod Giri, highlighted that more 'investment friendly' states, such as Maharashtra and Karnataka, allow companies greater pricing autonomy.
Meanwhile, global alcohol giants like Diageo and Pernod Ricard, sought $466 million in unpaid dues from the state. United Breweries had previously threatened to cease supply due to these delayed payments and the absence of government approval for price hikes, which have been pending since FY 2019/20. This financial backlog reveals the dependency of liquor companies on state-run depots for supply and payment, exposing them to fiscal vulnerabilities.
In addition to these financial complications, the Competition Commission of India has been investigating major beer companies for alleged price-fixing and cartel behaviour. This includes a significant probe into companies like Pernod Ricard and AB InBev, reflecting broader concerns over market practices.
Within Telangana, brewers are bound to supply exclusively to state-run depots, a system that has left companies like United Breweries, which reported sales of Rs 18,300 crore in FY24, awaiting substantial payments from the government.
(With Reuters inputs)