By Rishika Sadam and Tanvi Mehta
HYDERABAD, India (Reuters) -India’s top beer-consumer state Telangana has allowed beer prices to be increased from Tuesday, weeks after a brief halt in supply by Heineken’s Indian unit United Breweries over pricing issues.
The order also directed that all existing stock be sold at the revised rates from Tuesday.
In January, the ‘Kingfisher’ beer manufacturer halted the supply of beer briefly, and resumed following “constructive” talks with the government, which assured it would address the pricing and dues in a “time bound manner.”
United Breweries dominates the market in the southern state of Telangana with a 70% share.
The company, in its January 8 decision, said it had decided to halt supply over delayed payments and a lack of government approval for higher prices since 2019/20, which hurt its finances.
India is the world’s eighth-biggest alcohol market by volume, and states individually regulate the pricing of alcohol products, which are major contributors to their tax revenue.
Alcohol is bought by the state government and then supplied to stores in Telangana, where officials had rationed supplies to deter hoarding and tackle shortages.
Brewers Association of India (BAI), a federation of some of the country’s largest beer makers, said it welcomed the hike in beer prices and urged the Telangana chief minister to resolve the issue of pending dues of the beer industry.
Vinod Giri, director general of BAI, said that the price hike being allowed was below the industry’s expectations and was also less than the increase in production cost.
The government should allow companies to price their products as they wish, which is done in “investment friendly” states like Maharashtra and Karnataka, Giri said.
United Breweries did not immediately respond to a request for comment. Shares inched 1.2% lower after the government order dated Monday.
(Reporting by Rishika Sadam, Tanvi Mehta and Kashish Tandon; Editing by YP Rajesh and Mrigank Dhaniwala)
