Telangana government has allowed beer prices to be increased by 15% from February 11 and has directed that all existing stock to be sold at the revised rates, according to a government order.
United Breweries had last month halted supply briefly over pricing and non-payment of dues by the state government.
The price hike is based on the recommendations of the pricing fixation committee headed by retired justice Jaiswal.
At 12:45 pm on February 11, UBL shares were trading 1% lower at Rs 2,032 apiece.
The state government procures beer at a fixed price through its nodal agency Telangana Beverages Corp Ltd (TGBCL).
UBL has decided to stop supplying beer due to two main issues: stagnant prices and unpaid debts. TGBCL owes Rs 658.95 crore for past supplies that have not been paid. UBL also pointed out that the state government has not updated the base price of beer since 2019-2020, even though production costs have risen significantly.
CNBC-TV18 reported on February that government sources said the state has already started releasing pending dues and that UBL has been paid Rs 130 crore in the last 40 days. The remaining dues will be paid in instalments, the channel reported.
The Brewers Association of India (BAI) had expressed concerns about the rising costs of beer production. Vinod Giri, BAI's Director General, stated that production costs have increased by 35-40% since the last price change in 2019. Higher prices for raw materials like glass and barley, inflation, and increased labor costs have hurt the beer industry’s profits.
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