Brewers Seek Govt Nod to Increase Prices of Beer

Hyderabad:The Brewers Association of India (BAI) has appealed to the state government to immediately allow beer companies to enhance prices, which was last revised in 2019, given the problems they have been facing due to inflation.

In a letter addressed to Chief Minister A. Revanth Reddy, BAI director general Vinod Giri said, “The current basic prices allowed to beer supplier companies in Telangana are based on 2019 costs. Since then the cost of production has gone up by 35-40 per cent. However, the government has not allowed a basic price revision to compensate for this increase in cost of production. This has made operations in Telangana commercially unsustainable and future investments unviable.”

Recognizing the urgent need to increase supplier prices for beer, the incumbent state government had set up a price fixation committee (PFC) in July and directed all beer companies operating in the state to submit their proposal for revised declared prices that is the price at which companies supply beer to the state government.

It also directed BAI to present an industry perspective on the cost of production of beer and other factors that may affect their prices in the state. As per BAI personnel, the process of submissions, presentations and industry consultations was concluded by the first week of August but there has been no further progress on this front.

In its letter to members of the PFC, the association mentioned, “While the government allows price increase to suppliers only after a gap of a few years, the costs keep rising on a regular basis. Suppliers have been permitted price increase only twice in the last seven years-nine per cent-11 per cent in 2018 and 5.5 per cent-7.5 percent in 2022 which, with due indexing, is a net increase of 16-18 percent over last seven years, whereas the average cost of beer production has gone up by 45-50 percent over the same period as per the Wholesale Price Index (WPI) data from the Union government.”

BAI says that average cost of production has gone up by 35-40 per cent since the previous revision.

“Today the declared price for beer in Telangana is 30 per cent -50 per cent lower than that in the neighbouring states. This is not sustainable, and companies are incurring losses in supplying beer to the state. This is coming on top of the massive delays in payments by the government for the supplies made, which has made operations in the state commercially unsustainable.”

The association stated that in keeping with its reputation for being a progressive and business friendly state, the government should allow free pricing and permit companies to determine prices of their beer products as per the costs and brand demand, as is the practice in Karnataka and Maharashtra. Both states saw high investment inflow in alco-bev sector, the report said.

Elaborating further BAI said, “At the very least, the government should link prices with inflation using a credible inflation benchmark such as Wholesale price Index (WPI) and allow supplier companies an automatic increase in the prices of their product Being fair to the suppliers, it will also ensure that the government tax collections are also inflation-adjusted.”