HYDERABAD, Jan 13 (Reuters) – Telangana, India’s largest beer-consuming state, has begun rationing supplies of Kingfisher, one of the country’s most popular beer brands, after United Breweries (UBBW.NS), controlled by Heineken (HEIN.AS), suspended sales last week in a pricing dispute with the state government.
India, the world’s eighth-largest alcohol market by volume, sees individual states regulate alcohol pricing, as the sector is a significant contributor to their tax revenues. In Telangana, the state government purchases alcohol and distributes it to retailers. Officials are now rationing Kingfisher beer to prevent hoarding and address shortages, according to three local retailers.
Madhusudhan Rao, a liquor store owner in Hyderabad, told Reuters on Monday, “Today we got a notification from our depot that there is no Kingfisher beer stock anymore.” The shortage comes after United Breweries halted supplies to Telangana, citing delayed payments and the state’s failure to approve price increases since 2019/20, which the company claims have severely impacted its finances.
Kingfisher Airlines’ suspension highlights growing tensions in India. The $45 billion alcohol market is being eaten up. Major players including Diageo (DGE.L), Pernod Ricard (Pernod Ricard), Anheuser-Busch InBev (ABI.BR) and Carlsberg (CARLb.CO) are seeking $466 million in unpaid dues from state governments. The companies are also facing regulatory challenges, including antitrust investigations.
Telangana officials have accused United Breweries of using the supply suspension as a “tactic” to pressure the state into approving price hikes. A state panel is currently reviewing the company’s request for higher prices. However, officials did not respond to requests for comment on Monday regarding the ongoing shortages.
Retailers in Hyderabad report varying levels of remaining stock. Purushottam, another liquor store owner, said some outlets have enough Kingfisher beer for 10 days, while others may run out within two days. An industry source familiar with the matter confirmed that depots and outlets in Telangana will likely exhaust their United Breweries stock within two weeks.
United Breweries, India’s largest beer company, dominates Telangana’s beer market, accounting for 70% of sales in a state where 60 million 12-bottle cases are sold annually. The Brewers Association of India noted that beer companies receive approximately 300 rupees per case in Telangana, compared to 500 rupees in Maharashtra. After state taxes and retailer margins are added, consumers in most Indian states pay five to six times the base price.
The current standoff underscores the challenges faced by alcohol producers in India’s complex regulatory environment, where state-level pricing policies and tax structures significantly impact both businesses and consumers.
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