Vivek Gupta, managing director and CEO of Dutch Parents Managing Director and CEO of Heineken Heineken Controllyed Breweries, said the growing summer early this year “will be more helpful” after the election stuttered during the election, after the last fiscal disruption affected production and transportation across the industry.
As the company “cannot produce or ship beer in many places,” United Brewery (UB) has added its facilities in many places as the summer extends.
For most Indian beer companies, March to June is the main business period, with seasons beginning earlier this year due to unprecedented heat. The company is “absolutely ready for the summer and we’re seeing our demand grow gradually”, but how prices are still to be seen affecting consumers.
In the last quarter, many states increased tariffs and taxes on beer. Gupta said some data indicate a double-digit slowdown in demand. For example, Telangana’s consumer prices increased by 15%, but did not cut tariffs. Karnataka has also raised duties and beer prices.
Rajasthan also raised beer prices. He said how much of it will affect the amount. ” He added that the impact of this change can also be seen in Punjab.
“We can’t say the demand is so strong that (season) will be great. If taxes and responsibilities keep increasing, affordability will be an issue,” Gupta said. “We just have to wait for a while.” “Your beer can’t be 70-80% more expensive than average wine.”
Growth potential
According to beverage consulting firm IWSR, the annual growth rate of beer volume is 7-8%. In 2024, UB volumes grew by 8%.
“Until a few years ago, that number used to be only 2-3%. We accelerated the post-pandemic pandemic behind a massive growth in premium portfolio. We also brought a lot of innovation,” he said.
UB’s premium portfolio grew 34% last year and 33% in the past quarter, according to Gupta. The strongest growth comes from its Ultra portfolio, including Kingfisher Ultra and Ultra Max.
The company aims to see a 30% increase in premium beer this quarter (January to March), which accounts for about 7-8% of the value of its business.
“Young consumers are looking for more, milder beers and stylish beers. That’s why this business is growing,” Gupta said.
UB does not produce premium beer in many states, but “we have invested a lot of money to expand on that”, Gupta said.
In the third quarter ended December, its volume growth was mainly from Telangana, Andhra Pradesh, Uttar Pradesh and Rajasthan, but Tamil Nadu, Goa and West Bengal partially offset this part of the offset.
Net sales rose 10% in the quarter ended December 31, mainly due to rising prices and higher premiums in several states. In lower-priced states, demand for lower-priced products and higher sales has increased.
Rift Valley and Telangana
In January, the company withdrew its supply from Telangana, one of its larger markets, citing a five-year lag and rising losses.
Telangana State Corporation Ltd (TGBCL), which oversees the state’s wholesale and retail alcohol market, has not revised the prices it pays to suppliers since 2018-19, adding financial pressure on the alcohol business, despite rising costs.
While the supplies have been restored, Gupta said the situation in the state can still improve, one of the highest beer consumers.
“We are very simple to the Telangana government because it continues to survive at these expenses. We welcomed them to answer a call that helps business, but still there is no level of surrender for us. We are still working on that plan.”
“We also thank them for rationalizing some beer taxes. But we understand their compulsiveness and we are still interested in investing in building more supply in these states, but we have to see how demand forms,” he said.
South India contributes 40% of the company’s beer sales.
New Project
The company also said it was in advance that it had a conversation with the Uttar Pradesh government and invested in a Greenland brewery with a capacity of 1-3 million litres to meet the additional demands of the northern market, mainly to produce hot gold and other premium brands. It also held talks with other state governments to build more breweries.
“Our business is already doing well there (Uttar Pradesh) and if that speed continues, we may not have supplies. “The policies proposed by the state for the new Greenfield brewery are encouraging,” Gupta said. However, these types of projects take about 2-3 years… The state is also keen to push for a more modest pace (in terms of consumer strong beer), so it is very positive. ”
Currently, the company contracts are manufactured in Uttar Pradesh and brings supplies to other states. UB also hopes to expand its “new economy” sector to launch more affordable beer in states with too high tax revenue.
United Brewery reported revenue from operations for the nine months ended December 31 ₹14.98 million, from ₹13.59 million a year ago. Its profit during this period ₹3.44 million ₹3.29 million a year ago.
Gupta said there is still room for growth in the segment as low as alcohol-free. “It still needs some consumer education. It will happen in the next few years.”
