United Breweries bets on premium beer as key states may spoil the summer party

Subscribe to enjoy similar stories. United Breweries Ltd., one of India’s largest beer makers, is betting on its premium brands like Kingfisher Ultra to drive growth even as rising taxes in key states, including Telangana, Karnataka, and Rajasthan, threaten to offset a potential boost from a prolonged summer. After disruptions during the general elections last fiscal impacted production and shipments across the sector, an early and longer summer this year is “going to be more helpful as it will lead to more consumption from a macro standpoint", said Vivek Gupta, managing director and CEO of Dutch parent Heineken-controlled United Breweries.

“We are definitely looking forward to having a year with less disruptions." Since the company was “not able to produce or ship beer last fiscal" in many places, United Breweries (UB) has amped up its facilities in many locations in anticipation of a prolonged summer. March to June is the main business period for most beer companies in India, and the season began a little earlier this year because of unprecedented heat. The company is “definitely ready for the summer and we are seeing a gradual increase in our demand", but it remains to be seen how changing prices impact consumers.

Many states increased duties and taxes on beer in the last quarter. Some data indicates there is a double-digit slowdown in demand, Gupta said. Telangana, for instance, has increased prices for consumers by 15% but hasn't cut duties.

Karnataka, too, has increased the duty and beer prices. “Rajasthan has also increased beer prices. How much of that will impact volumes is to be seen," he said, adding that Punjab could also see an impact from this change.