United Breweries Limited (UBL) CEO and Managing Director Vivek Gupta has said that the Indian beer industry is facing a serious crisis amid rising raw material costs due to the war, supply shortages and pricing restrictions imposed by state governments. Seeking intervention from the government, Gupta said that not getting adequate regulatory support could affect the growth and innovation of the industry. He said that due to the war, the cost of raw materials, bottles and other raw materials has increased, while companies cannot increase the prices without government permission. Gupta said that the beer industry has been impacted more than other industries. The situation has become more challenging due to the weakness of the rupee, decline in exports and supply shortage.
Problem not solved even after notification
He said that beer prices are mainly controlled by the excise policies of the states and about 75 percent of the business is subject to government regulations. Gupta requested the government to allow companies to increase their selling prices by about 15 percent without burdening consumers. He explained that a large part of the earnings goes in the form of tax. He said that in some states like Telangana, United Breweries gets around Rs 330 per case of beer, while the government taxes are around Rs 1,400.
Increase in cost of aluminum
Regarding the shortage of cans, Gupta said that despite the government notification, this problem has not been solved yet. This will continue in future also. He said that aluminum prices are increasing. Manufacturers have declared a situation of emergency due to gas shortage. Local can manufacturers are also not able to produce at full capacity. Importing cans is becoming expensive. UBL, together with Heineken, is encouraging companies to invest in India. He said that so that people can set up their own plants and we are doing tie-ups with them, but it will take a few years.
Earlier this year, the government had extended the deadline for BIS certification on imported cans. The move was expected to help bridge the gap between demand and supply before the peak of the summer season. It was expected that this step would provide relief to everyone from cola manufacturing companies to beer manufacturing companies from the supply problems. These companies had expressed concern about the acute shortage of cans.
