Beer in India is likely to become costlier this summer with brewers planning to hike prices up to 15 percent due to the ongoing conflict between the US and Iran, which has resulted in higher production costs.
The Brewers Association of India has asked brewers to approach the government for a revision in beer prices due to a sharp increase in costs. “We are asking for price increases in the range of 12-15 percent,” Vinod Giri, Director General of the Brewers Association of India told Reuters.
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India’s beer industry, comprising global players like Heineken through United Breweries, Anheuser-Busch InBev, and Carlsberg, is facing pressure due to the shortage of natural gas.
Gas shortage disrupts production, packaging
The crisis has been triggered by disruptions in gas supplies linked to escalating tensions in West Asia. India, the world’s fourth-largest importer of natural gas and it depends heavily on the region, sourcing around 40% of its supply from Qatar.
Industry estimates indicate that glass bottle prices have surged by nearly 20%, while the cost of paper cartons has doubled. Aluminium supplies used for cans have also been hit by shipping delays.
Nitin Agarwal, CEO of Fine Art Glass Works in Uttar Pradesh’s Firozabad, said production at his facility has been cut by 40% due to gas shortages. “We’ve cut production and increased prices by 17-18%,” he told Reuters.
Pressure builds ahead of peak summer demand
The crunch in supplies coincides with the peak season for beer consumption as temperatures start rising. Industry players have already expressed that if price revisions do not happen, it will be difficult to ensure supplies in some states due to delays in seeking approvals for price hikes.
The Indian alcoholic beverage industry is heavily regulated. Any changes in retail pricing have to be cleared by state governments. This has already caused some industry players to voice fears of uneven supplies in the markets. The Confederation of Indian Alcoholic Beverage Companies has written to several state governments seeking relief due to rising costs.
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The effect is already being felt on the surrounding industries. Bottled water firms, for instance, have increased their rates by 11% due to the increased cost of plastic bottles. Beverages are also expressing concerns that the stock they have will only last them for a few months.
India’s beer industry, worth $7.8 billion in 2024, has been growing steadily. The industry has experienced growth due to the urbanisation rate and the number of young consumers. Small breweries such as Bira 91 and Simba Beer are competing with the big brands.
