United Breweries Warns of Beer Supply Strain

The Indian beer industry is under pressure from higher input costs, supply shortages and state-level price controls, United Breweries Ltd. chief executive Vivek Gupta said on Saturday, warning that the strain could slow growth and disrupt supply if governments do not offer relief.

Gupta said the effects of the war have pushed up the cost of bottles, raw materials and imported inputs, while a weaker rupee has made those pressures worse. He also pointed to export losses and shortages of packaging materials as additional burdens on brewers. Speaking to PTI in Bengaluru, he said the industry was facing “major trouble” because companies cannot freely adjust prices in many markets without government approval.

About 75% of the business is regulated, Gupta said, leaving brewers with limited room to respond to rising costs. In some states, including Telangana, he said, the company receives about Rs 330 per case of beer while government levies amount to around Rs 1,400. He said he had asked state authorities for a 15% increase in selling price to the government, not to consumers, because taxes take up such a large share of the final price.

Gupta said the shortage of cans remains unresolved despite official notifications meant to ease supply. He said aluminum prices have risen sharply and gas shortages have forced some can makers to declare force majeure, limiting production. Importing cans has also become more expensive, he said, adding that new domestic capacity will take time to come online even as companies and partners such as Heineken encourage investment in India.

Earlier this year, the government extended the timeline for BIS certification on imported cans in an effort to bridge the gap between demand and supply before peak summer. The move was intended to help beverage makers that had warned of an acute shortage of cans, including cola companies and beer brewers.

Gupta estimated that the war has added at least 15% to production costs and said the impact would continue for at least six months even if fighting stopped immediately. He said smaller breweries could be hit hardest because they do not have enough financial cushion to absorb higher costs or delays in supply.

He urged regulators to consider temporary relief through excise duty changes or more flexible pricing rules. “We do not have deep pockets,” he said, adding that cooperation with governments would help companies manage working capital and imports.

On consumer demand, Gupta said downtrading has already begun as buyers shift toward economy brands and smaller pack sizes. He said more people are choosing cans because they require less cash upfront. Still, he said overall beer volumes have grown 4.5% to 5% over the past two years, while value growth has been 7% to 8%.