The ongoing tension in the Middle East is no longer limited to just the borders, rather its direct impact has reached markets around the world. Due to the looming energy crisis at the international level and huge shortage of gas, there may soon be a big jump in the prices of beer and other liquor in India. According to the report of Economics Times, shortage of raw materials and problems in transportation have spoiled the entire mathematics of liquor manufacturing companies.
Hormuz Strait spoils the game
Even though the battlefield is thousands of kilometers away from India, no country in the global economy is untouched by its influence. According to the report, India buys about 90 percent of its crude oil requirement from other countries. Half of it passes through the narrow sea route named Hormuz Strait, which has become the main center of this geopolitical conflict that has been going on for the last 30 days. Apart from this, most of the LPG used in India is imported from Gulf countries like Qatar and Saudi Arabia. Export capacity has been affected due to attacks on Qatar’s oil and gas facilities by Iran. Due to this, the availability of gas has reduced, due to which the common consumer may now have to bear the direct consequences.
Everything from bottles to cans will be expensive
A variety of raw materials are used to produce a bottle of beer that reaches your hand. Gas is very important to run furnaces in factories and keep production lines running. Due to shortage of gas, the work of many companies manufacturing glass bottles has either come to a complete halt or has been partially affected. According to the data of ‘Brewers Association of India’, a direct increase of 20 percent has been recorded in the prices of glass bottles.
The problem is not limited to bottles only. Due to delays in logistics, the supply of aluminum required for making beer cans has also collapsed. Not only this, there has been a huge increase in the prices of paper cartons, tapes and labels used in the packaging of finished products.
Companies demanded to increase prices by 15 percent
Due to this huge increase in the cost of making beer, there is huge pressure on the liquor companies. According to Vinod Giri, Director General of ‘Brewers Association of India’, in view of the increasing cost of production, it is no longer possible to continue operations at the old prices. The association has advised its member companies, which include giants like Heineken (United Breweries), Carlsberg and Anheuser-Busch InBev, to contact various state governments. These companies are demanding an increase in beer prices by 12 to 15 percent.
Shadow of inflation looming over the season
This crisis has come to light at a time when India is moving towards its hottest season. This is the time when beer sales are at their peak across the country. Although Trump has suggested a ceasefire, the ground reality is that there is no firm deadline for when this conflict will end.
Due to increasing urbanization and improving lifestyle in India, the liquor market is expanding rapidly. According to estimates by Grand View Research, India’s liquor market was estimated to be worth $7.8 billion (about Rs 73,800 crore) in the year 2024. It is expected that this market will double by the year 2030.