West Asia war may squeeze profit for India's top beer maker as input costs rise as summer starts

A faraway war may squeeze margins for one of India’s biggest beer makers just as the summer season begins.After two tepid quarters, demand is finally recovering but profitability could be under pressure amid rising input costs due to the ongoing war in West Asia, Vivek Gupta, managing director and chief executive officer of Bengaluru-based United Breweries, which makes Kingfisher and Heineken, said in an exclusive interview.“The growth of the beer category is dependent on not just favourable weather but also on affordability, local policies and raw material supplies,” Gupta told Mint. “Our margins will surely be under pressure as there will be some impact from the war.

We can already see a 5-6% increase in our cost of sales beyond the regular inflationary plan we had accounted for.”The bulk of the brewer’s cost is bottles, cans and freight. Bottle makers are looking for a price increase while freight rates are going up due to higher oil prices.

Cans, too, a part of which is imported to cater to peak season supplies, will also erode margins, Gupta added.Beer prices are set by the state in several large markets, including Telangana, Chhattisgarh, Karnataka and Kerala. This typically means brewers end up absorbing inflation when input costs from glass bottles to freight start rising.In January 2025, the Heineken-controlled company, which commands roughly 70% of India’s beer market, stopped delivering Kingfisher beer to Telangana.

The pause came after a standoff over rising costs and unpaid dues, with the company seeking higher prices that the state government had not cleared.In its Q3 earnings call in February, Gupta said the entire industry in Telangana faces challenges. While some of its dues have been received, new