Hyderabad: Amid the standoff between liquor giant United Breweries Limited (UBL) and Telangana govt over a revision in beer prices, industry sources said basic beer prices in the state are among the lowest in the country.
Earlier this week, UBL, which brews the Heineken and Kingfisher brands, suspended supplies to Telangana Beverages Corporation Ltd (TGBCL) citing sustained operating losses due to unviable pricing and a pile-up of pending overdues for beer supplied earlier.
Industry estimates suggest that the average price range of fast-moving beer brands in Telangana is much lower than what they command in other states. In fact, prices in Telangana are nearly half of those reigning in neighbouring Karnataka. An industry source said basic prices for supply to TGBCL are lower than operating costs for beer makers.
According to the Brewers Association of India (BAI), the apex beer industry body, the basic cost for beer production is around Rs 400 per case (12x650ml), while prices permitted in Telangana range from Rs 290-315 per case. “This basic cost does not take into account the fixed costs pertaining to manpower, licences, among others. Thus, on each case sold, suppliers are incurring losses of around Rs 100 per case,” BAI said.
UBL, which accounts for nearly 70% of Telangana’s beer supplies, said nearly 70% of the consumer price for brands in Telangana comprises state taxes such as duties, VAT, and other levies, while the current basic price, which encompasses the cost of manufacturing and supplies to TGBCL, accounts for only around 16%.
Beer manufacturers also expressed their apprehension that sustained low prices in Telangana may put them under pressure from other states to slash prices, rendering the entire industry unviable. The liquor industry has been pushing its case for a price hike before the Telangana govt as current basic prices are based on cost submissions made in 2019 and since then inflationary pressures have pushed up raw material and operating costs. Industry honchos also met chief minister Revanth Reddy last year to seek his intervention in hiking prices and release of pending overdues that currently stand at around Rs 3,900 crore.
