Hyderabad, January 20, 2025: United Breweries Limited (UBL), the manufacturer of Kingfisher and Heineken, has suspended beer supply to Telangana, citing financial losses due to stagnant prices and mounting unpaid debts. The company, which holds a dominant market share of nearly 70% in the state’s beer segment, stated that its operations had become unsustainable in the absence of a price revision since 2019-20.
UBL’s decision has raised concerns about potential revenue losses for Telangana, one of India’s largest beer-consuming states. In a regulatory filing made on January 8, UBL explained that the decision was driven by the Telangana Beverages Corporation Limited’s (TGBCL) failure to raise the basic prices of its beer, despite rising costs and the company’s overdue payments exceeding Rs 658 crore. The brewery emphasized that the stagnant pricing, coupled with inflationary pressures, had led to significant financial strain, with the company facing losses on every unit sold.
UBL further revealed that the Telangana government owes a total of Rs 3,600 crore to various beverage companies, with Rs 2,400 crore of this debt dating back to the previous government’s term. The company claimed that repeated appeals to the government, made by the Brewers Association of India (BAI), for price adjustments to address inflation had gone unresolved. Despite this, UBL pointed out that it contributes over Rs 24,500 crore annually to Telangana’s state revenue.
Impact on the State’s Beer Market
With UBL controlling 68% of the beer market in Telangana, its withdrawal is expected to disrupt the state’s alcoholic beverage industry. According to government data, in the 2023-24 fiscal year, UBL accounted for 3.82 crore cases of the total 5.47 crore cases of beer sold in the state. This figure declined slightly to 2.75 crore cases in 2024-25, but the company’s exit still leaves a significant gap.
Telangana is one of the largest beer consumers in India, with a monthly sales volume of 45 to 55 lakh beer cases, surpassing liquor sales. The state’s excise department generates annual revenue of Rs 36,000 to Rs 40,000 crore, highlighting the financial importance of the beverage sector to the state’s economy.
Government’s Response
In response to UBL’s halt on supply, Telangana’s Excise Minister, Jupally Krishna Rao, dismissed the company’s demand for a 33% price hike, describing it as a monopolistic pressure tactic. The minister argued that such an increase would burden consumers, adding that a price revision would only be made after consultation with an appointed committee. Rao noted that beer prices in Telangana were already lower than in neighboring states, such as Andhra Pradesh and Karnataka.
TGBCL officials have assured that there are sufficient beer stocks for about a week and that efforts are underway to ramp up production if necessary. While the government has indicated that a price hike may be implemented after Chief Minister Revanth Reddy’s return from a foreign tour, it stressed that the price revision committee would play a crucial role in determining any changes.
Outstanding Payments and Retailer Concerns
UBL’s financial troubles are compounded by the outstanding payments for beer supplies made to TGBCL. According to the Excise Minister, Rs 658.95 crore is still owed to UBL, with over Rs 400 crore dating back to the previous government’s tenure. The current administration, however, has cleared bills worth Rs 1,130.99 crore since coming into office in 2023. Minister Rao further emphasized that the government has set up a 45-day payment cycle, with the company acknowledging the receipt of payments.
Retail dealers in Telangana have expressed concern about the ongoing supply disruption, warning that if the government and UBL do not resolve the issue soon, the state will face beer shortages in the coming weeks. To mitigate panic buying, TGBCL is rationing beer supply to retailers based on past sales data. Dealers have also called for a reduction in import duties, suggesting that this could help bring in beer from other manufacturers to meet the demand.
Political Reactions
The political implications of UBL’s decision have sparked debate. Former Minister and BRS leader T. Harish Rao questioned whether the company’s move was part of a strategy to promote local beer brands, suggesting that preferential treatment in clearing outstanding dues could be a factor. Meanwhile, dealers are closely monitoring the situation, hoping for a resolution to avoid a major supply disruption.
As the stalemate continues, the coming days will be critical in determining whether Telangana can find a solution that balances the interests of the state, the beer industry, and its consumers.
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