Beer manufacturer United Breweries Limited (UBL) decided to halt its supply of Kingfisher and Heineken beer to Telangana earlier this month, citing losses owing to the beverage’s stagnant prices in the state. Alongside debts of hundreds of crores, the company said it was “unviable” for it to maintain supply.
Kingfisher beer commands nearly 68% of the market share and Telangana is among the biggest beer consumers in India, leading to some concerns about loss to the exchequer over UBL’s decision. Here is what to know.
How did the controversy erupt?
In a regulatory filing to the Bombay Stock Exchange and the National Stock Exchange of India dated January 8, UBL disclosed its decision to suspend its beer supply to Telangana Beverages Corporation Limited (TGBCL), which controls alcohol sales in the state.
The company stated that its decision stems from the fact that “TGBCL has not revised the basic price of the Company’s beer since 2019-20, resulting in huge losses in the State and significant overdues remaining unpaid by TGBCL for the past supply of beer by the Company”.
UBL added, “The absence of price revisions, coupled with rising costs, has led to significant financial strain on the company. Despite our continuous efforts, there has been no increase in base prices, resulting in escalating losses. With each beer sold at a loss, continuing our operations in the State has become unsustainable.”
The Telangana government owes Rs 3,600 crore to various beverage companies (including more than Rs 658 crore to UBL), of which about Rs 2,400 crore is pending from the last government’s term. UBL said the Brewers Association of India (BAI) made multiple representations to the government regarding the 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.
Why do UBL and alcohol sales matter for Telangana?
UBL has a market share of nearly 70 per cent in the beer segment and its exit would create a void for the TGBCL. According to government figures, of the total sales of 5.47 crore cases of beer in Telangana in 2023-24, UBL accounted for 3.82 crore cases. In 2024-25, UBL’s sales accounted for 2.75 crore cases of 4.13 crore cases.
According to official data, there are nine distilleries and six beer factories in Telangana, including one belonging to UBL. Overall, as many as 51 liquor and beer companies are selling 1,031 varieties of liquor and beer in the state through 2,620 liquor shops and 1,117 bars and pubs. Every month, 45 lakh to 55 lakh cases of beer are sold, making Telangana one of the largest beer-consuming states.
Compared to this, only 30 to 35 lakh cases of liquor were sold, making Telangana one of the states where beer is sold more than liquor. The Excise Department’s contribution to the state exchequer annually is about Rs 36,000 crore to 40,000 crore in revenue.
How has the government responded?
Excise minister Jupally Krishna Rao said that the state government would not yield to the “monopolistic pressure tactics” of UBL and that beer prices would be hiked only as per recommendations of a price revision committee. “The company wanted a 33% price increase. This would have burdened beer consumers. We have appointed a committee with a retired high court judge to scrutinise the price hike request,” he said, adding the previous Bharat Rashtra Samith (BRS) government had not hiked beer prices for five years.
He added that beer prices in Telangana were much lower than in neighbouring states such as Andhra Pradesh, Karnataka, Tamil Nadu, and Maharashtra. He accused UBL of taking advantage of its dominant market share, claiming that the company is aware of the price revision committee and yet decided to cease beer supply.
TGBCL officials said there are sufficient stocks of beer for about a week and they are using all available means to increase the production if the need arises. A similar shortage of UBL’s beer was witnessed in May 2024 and with increased production, the government withstood the pressure from the company, the officials added.
While a 33% hike is not acceptable to the government, it may allow a reasonable hike across brands as per the price revision committee. The price hike may be announced after Chief Minister Revanth Reddy returns from his Singapore and Davos tour after January 22, sources said.
What about the outstanding payments to companies?
Overdue payments for the supplies made to TGBCL further complicate the situation, UBL said. According to the Excise Minister, the TGBCL currently owes Rs 658.95 crore to UBL and of this, Rs 407.34 crore has been outstanding since the previous BRS government’s tenure. Since the Congress government took office in 2023, it has cleared bills worth Rs 1,130.99 crore to date, he said.
The minister explained that the government has established a 45-day payment cycle and the company has acknowledged receipt of payments in its communications. He said the dues would be cleared as per the government’s finances.
Former minister and BRS leader T Harish Rao said UBL’s decision raised serious questions and would disrupt the availability of premium brands, asking in a post on X if it was “a deliberate attempt to promote local brands” and giving “preferential treatment” in clearing bills.
How are retail dealers viewing the situation?
Dealers say Kingfisher and Heineken beers would be available for only two weeks if the government and the UBL do not arrive at a common point. The TGBCL is currently rationing beer supply to retailers based on their average sales in the last three months to avoid any panic purchases.
Once the supply completely halts, consumers may start opting for other options, but production cannot suddenly be increased as it takes a minimum of 20 days for beer to ferment between its production and supply. Dealers are demanding the government reduce import duty so that manufacturers can divert their supplies to Telangana to meet the demand.
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