United Breweries makes truce with Telangana govt for now; Kingfisher beer flows into State

UBL had suspended the supply of its beer to Telangana Beverages Corporation Limited due to non-revision of basic price of the company’s beer from 2019-20

Hyderabad: United Breweries, maker of Kingfisher beer, has decided to resume the supply of beer to Telangana Beverages Corporation Limited (TGBCL) with immediate effect.

In a filing to exchange on January 20, it said: “We wish to inform you that the company has decided to resume the supply of its beer to Telangana Beverages Corporation Limited (TGBCL) with immediate effect. We have been in talks with TGBCL, and these have been constructive discussions. TGBCL has assured us it will address our issues with pricing and outstanding payments in a timely manner.”

It, however, added that, “This is an interim decision in the interest of consumers, workers and stakeholders.”

UBL’s share price jumped over 6 per cent on the BSE on January 20, following the announcement. On Tuesday (January 21), the shares were up 0.95 per cent and were trading at Rs 2,080.30 at 12:20 pm.

UBL had suspended the supply of beer to the state-owned corporation due to the non-revision of the basic price of its beer from 2019-20 by the TSBCL. What irked the company more was that the Telangana government had increased beer prices but did not increase the base price paid to the manufacturers.

Moreover, the inordinate delay in payments from TGBCL has resulted in escalating losses, making its operations in the State unviable. UBL contributes more than Rs 4,500 crore to the State exchequer every year, sources said.

Brewers Association of India Director General Vinod Giri told PTI that the dues to the alcobev sector for supplies made during the period February to August 2024 stood at Rs 3,900 crore.

The Telangana government owes Rs 658.95 crore to United Breweries, according to State Excise Minister Jupally Krishna Rao.

United Breweries’ popular brands of Kingfisher are most popular in Telangana apart from Kalyani Black, Heineken, and Amstel Bier. In fact, Kingfisher beer brands account for 70 per cent of the total beer sales in the State, industry sources say.

According to CNBC-TV18, United Breweries reversed its decision only after the Telangana government confirmed that it will hike prices in 30-45 days. The report also added that the outstanding dues are likely to be cleared in installments in the next 12 to 13 months.

The UBL has appealed to the State government to increase beer prices by 33.1 per cent. However, Chief Minister A Revanth Reddy rejected stating that the government would not give in to pressure tactics.

As a result of the fallout, around 1,500 workers of UBL at its two units near Sangareddy were laid off. CPI (M) leader Chukka Ramulu said the TGBCL was paying just Rs 25 to Rs 30 per beer to UBL while it was being sold at Rs 150 to Rs 160 in the open market.