Hyderabad: The Brewers Association of India (BAI) representing major beer producers like United Breweries, AB InBev, and Carlsberg has urged the Telangana government to approve price increases for alcoholic beverages to offset inflation.
In a letter to chief minister A Revanth Reddy, BAI director general Vinod Giri noted that the current prices allowed for beer suppliers are based on 2019 cost submissions despite production costs rising since then. He stressed that without an adjustment in prices operations in Telangana have become commercially unfeasible and future investments are no longer viable.
While acknowledging that the association cannot speak for individual companies, Vinod Giri proposed a 35 to 40 percent average price increase to reflect the higher production costs. He also pointed out that beer prices in Telangana are currently 30-50 percent lower than in neighbouring states which is leading to losses for suppliers.
A working paper titled “Revenue Mobilisation from Taxes on Alcoholic Beverages,” published by the National Institute of Public Finance and Policy (NIPFP) reveals that Telangana ranks highest among Indian states for liquor spending, with the highest average annual per capita expenditure on alcoholic beverages at Rs 1,623.
In response to the growing issue, the government formed a Price Fixation Committee (PFC) in July and instructed beer companies to submit proposals for revised prices. The BAI was also tasked with presenting the industry’s perspective on production costs and factors influencing beer pricing in the state.
Although consultations and submissions were completed by early August, no further action has been taken.
BAI has suggested that the government link beer prices to inflation using a reliable benchmark like the Wholesale Price Index (WPI) and implement an automatic price adjustment each year based on WPI changes.
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