United Breweries Limited (UBL), which manufactures and sells popular beer brands such as Kingfisher, Heineken, Amstel Bier and London Pilsner, has suspended beer supply to Telangana from January 8, Wednesday.
In a filing with the Bombay Stock Exchange (BSE), UBL said it had decided to stop supplying beer to Telangana Beverages Corporation Limited (TGBCL) due to outdated pricing policies that have not changed since 2019-2020, as well as unpaid dues, which had caused financial strain on the company.
Following the announcement, UBL's shares dropped by 4% compared to the previous day’s closing price, at Rs 1,988 on January 8 — 10% below the company's 52-week high of Rs 2,202. By January 10 afternoon, however, the shares were back up to Rs 2,017.
The state represents a critical market for beer sales, with annual sales amounting to about 55 million cases.
UBL, now controlled by the Dutch brewing company Heineken NV, said that despite multiple attempts to resolve the issue, it has been incurring significant losses in Telangana due to the unchanged base prices for beer.
The Brewers Association of India (BAI) which represents major brewers like United Breweries, ABInBev, and Carlsberg, said that Telangana’s pricing model is still based on production costs from 2019, leading to an estimated loss of Rs 100 per beer case. Additionally, the association raised concerns about Rs 3,900 crore in unpaid dues to the alcoholic beverages sector for the period of February to August 2024, worsening the financial strain on the beer manufacturer.
In November 2024, BAI had urged the Telangana government to address a 40% rise in production costs due to increasing input prices. However, in December, Chief Minister Revanth Reddy rejected beer companies’ demands to increase beer prices by at least Rs 10 per bottle, saying his government wouldn’t give in to beer manufacturers’ “arm-twisting tactics.”