United Breweries Ltd (UBL) has announced the suspension of its beer supply to Telangana Beverages Corporation Limited (TGBCL), a public sector entity owned by the Telangana government.

“We have decided to immediately suspend supplies to TGBCL due to significant and ongoing operating losses in Telangana. Despite our continuous efforts over the past two years, there has been no increase in the base prices offered for our products. This has resulted in escalating losses, making our operations in the State unviable,” the company said in a statement.  

In a regulatory filing, UBL attributed this decision to TGBCL not revising the basic price of the Company’s beer since 2019-20, resulting in huge losses in the State and significant overdue remaining unpaid by TGBCL for the past supply of beer.

UBL continued, “We have a fiduciary responsibility to all our stakeholders, and with each beer sold at a loss, it has become unsustainable for us to continue our operations.” The overdue payments for the supplies made to TGBCL further complicate the situation, it added.

Multiple representations

The Brewers Association of India (BAI) made multiple representations to the Government regarding the industry-wide challenges, urging price increases to offset inflation.

“Our company contributes more than ₹4,500 crore annually to the State’s revenue. Despite the mounting financial pressures, we have ensured the uninterrupted supply of our beer, driven by our commitment to consumers and customers. We urge the State Government to take swift action and work with us to safeguard livelihoods, restore financial sustainability, and ensure the continued availability of our products,” it said.

UBL, part of the HEINEKEN Company, includes brands like Kingfisher Strong, Kingfisher Premium, Kingfisher Ultra, Kingfisher Ultra Max, Kingfisher Ultra Witbier, Kingfisher Storm, Heineken Original Heineken Silver, Amstel, and Heineken 0.0., as part of its product portfolio.

At 3:15 PM on Wednesday, the company’s shares were at ₹2,012.75, down by 3.02 per cent.