India’s beer makers seek price hikes

Beer makers in India are warning that rising costs and a tighter supply of glass bottles are squeezing margins just as demand for beer begins to recover, pushing the industry to seek price increases of 15% to 20% and faster payment of dues from state governments.

The pressure is coming less from cans than from bottles, which industry executives say account for about 40% to 45% of production costs and are used in roughly 80% of beer sales. Producers say the shortage of glass bottles is making it harder to keep up with orders at a time when consumption is improving after a slower period.

Vinod Giri, director general of the Brewers Association of India, said gas shortages have disrupted bottle manufacturing and added to costs, along with higher carton prices. He said the industry is facing significant price pressure because packaging costs are rising while supply remains uneven.

Beer makers said the situation has improved somewhat as gas supplies have recovered, but availability is still below levels seen before February. That has left breweries dealing with higher input costs and a fragile supply chain at the same time.

The industry has also pointed to state-level pricing rules as a major obstacle. In most states, beer prices are regulated, which limits how much companies can pass on higher costs to consumers. That has made it harder for producers to protect margins as expenses rise across raw materials and packaging.

Vivek Gupta, chief executive of United Breweries, said costs have increased sharply and that supplies of glass and cans are under pressure just as demand is picking up. He said pricing and taxation need to remain balanced if the industry is to stay sustainable, adding that continued talks between companies and policymakers are important for stability, supply and state revenue.

Because excise duty is a key source of income for state governments, any change in beer pricing carries fiscal consequences. Industry groups are arguing that the burden should be shared among producers, consumers and governments rather than absorbed entirely by breweries.

Some states have already started reviewing cost structures and asking companies for more detailed information. Until price increases are approved, executives say governments could ease pressure by lowering levies such as manufacturing charges or by releasing pending payments more quickly.

The concerns come as beer demand improves in India, creating a mismatch between stronger sales and weaker supply conditions. For breweries, that combination is raising the risk that shortages in packaging and delays in pricing decisions could continue to weigh on operations in the months ahead.