Beer companies are facing a critical bottle shortage that is forcing them to seek significant price increases. According to The Times of India, bottles represent 40-45% of total costs for beer manufacturers and are used in nearly 80% of sales, making them a crucial component of operations. The shortage has prompted companies to request 15-20% price increases and seek release of payments from state governments. Unlike some soft drinks majors, for beer makers, cans are not a worry, but bottles are the primary concern.
While companies are experiencing some aluminium supply issues due to the Strait of Hormuz blockade, the beer industry is not encountering significant shortages. As reported by The Times of India, nearly 80% of beer requirements are met domestically, providing some stability in the supply chain. However, the industry continues to face challenges with gas shortages affecting bottle manufacturers and increased carton costs. According to Vinod Giri, director general of Brewers Association of India, while gas supply has been stepped up, it is nowhere close to pre-Feb 28 levels with companies depending on fuel facing both supply and price challenges.
The gas shortage is creating significant price pressure across the industry, with companies dependent on fuel facing both supply and price challenges. According to Vinod Giri, director general of Brewers Association of India, as reported by The Times of India, companies and the industry body are in discussions with state governments regarding cost sharing. Giri noted that excise is a major source of revenue for states and remains a critical consideration in any pricing adjustments. Some state governments have begun moving and have sought cost details from companies, with industry representatives pointing out that till prices are increased there are several ways in which states can help - some states levy a manufacturing levy, which can be reduced, while others can release some payments quickly.
The beer industry is experiencing sharp increases in raw material costs and pressure on supplies, particularly affecting glass and cans. As reported by The Times of India, companies are seeking a balanced approach where higher costs are shared among manufacturers, consumers, and government entities. According to United Breweries CEO Vivek Gupta, costs have gone up sharply across raw materials and packaging, and the industry is also seeing pressure on supplies, especially glass and cans. He noted that pricing is regulated in most states with limited ability to pass on increases, making it important for pricing and taxation to stay balanced with government support. The industry is managing through cost efficiencies and tighter capital discipline while maintaining continued engagement between industry and policymakers to ensure stability and consistent supply for consumers.
