Telangana has hiked beer prices by 15 per cent with immediate effect from Tuesday, close on the heels of a row where United Breweries Limited (UBL) had decided to halt its supply of Kingfisher and Heineken beers to Telangana Beverages Corporation Limited (TGBCL), citing losses due to the beverage’s stagnant prices in the state.
The hike took effect after the state government allowed TGBCL to implement recommendations of a three-member price-fixing committee.
According to a revenue department memo issued late on Monday night, the revised rates will apply to stocks held by IMFL (Indian-made foreign liquor) depots, including the stock in transit. While beer companies such as UBL had demanded a 33 per cent hike, the government has opted for a 15 per cent increase, keeping consumers in mind. Officials say that beer prices were hiked by only 6 per cent in the last two instances, and thus, a 15 per cent hike should be acceptable to beer companies.
Telangana is one of the largest consumers of beer and holds a unique position as a state where beer is consumed more than hard liquor. According to officials, the price-fixing committee, comprising a retired judge, a retired senior IAS officer, and a chartered accountant, considered the price inflation in raw materials and beer prices in neighbouring states.
“The government wants the public to be happy, its coffers to suffer no losses, and the company to make its profit. This is a common point with which a price hike will be announced,” an official had told indianexpress.com earlier, mentioning a possible 10-15 per cent hike.
“The hike this time is much more than the last two instances. The price hike is applicable only to beers now. Any hike to liquor brands will be announced at a later date,” said an official, adding that there was no shortage of beer and that the government would not bow to any intimidatory tactics from companies. “We sell 450 lakh cases annually. At present, we have 74,000 cases of beer in the depot. The demand for beer will increase in the coming months of summer. Since Andhra Pradesh has also increased beer prices by 15 per cent, there won’t be any chance of smuggling or black marketing,” he said.
According to official data, there are nine distilleries and six beer factories in Telanganaincluding one belonging to UBL. There are seven other beer companies that sell beer in Telangana but manufacture them in other states. Overall, 51 liquor and beer companies are selling 1,031 varieties of hard liquor and beer in the state through 2,620 liquor shops and 1,117 bars and pubs. These include 50 locally manufactured brands and 36 non-local brands. Every month, 45 lakh to 55 lakh cases of beer are sold, making Telangana one of the largest beer-consuming states. In comparison, only 30-35 lakh cases of hard liquor were sold, highlighting that beer is sold more in the state. The excise department’s annual contribution to the state exchequer is about Rs 36,00-Rs 40,000 crore in revenue.
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While suspending its supply of beer to the TGBCL, UBL said the corporation had not revised the basic price of the company’s beer since 2019-20, resulting in significant losses and substantial dues remaining unpaid by TGBCL for past supplies. The government owes Rs 3,600 crore to various beverage companies, including more than Rs 658 crore to UBL. About Rs 2,400 crore of the dues is from the last government’s term. UBL said the Brewers Association of India had made multiple representations to the government regarding industry-wide challenges, urging price increases to offset inflation, but there had been no resolution. UBL also said it contributed more than Rs 24,500 crore annually to the state’s revenue. The company, however, resumed its supply after TGBCL assured it of measures to address issues on pricing and outstanding payments in a time-bound manner.
