India: United Breweries resumes supplies to Telangana

United Breweries Limited (UBL) has resumed supplies to Telangana Beverages Corporation Ltd (TGBCL) with immediate effect, The Drinks Business reported on January 20.

The move, which follows it having made a decision to halt sales less than a fortnight ago after seeing operating losses in India�s Telangana state, is an about-turn for the Heineken-owned business which is well known for its Kingfisher beer brand.

Addressing the reason for its decision in an exchange filing, a spokesperson for UBL said: �We have decided to restart our supplies� for the time being. This is an interim decision in the interest of consumers, workers and stakeholders,�

Stopping sales, which began on 8 January, had a knock on effect and led to dramatic fluctuations in the company�s shares, which have since leapt up again since the ban has been lifted, despite shares still being down about 3% since the supply suspension news broke.

As things stand, alcohol is bought by the state government and then supplied to shops in Telangana, where officials had looked at ways of rationing products to tackle shortages.

For instance, local reports outlined the knock on effect and identified how the city of Hyderabad was due to run out of beer if the ongoing issues between the state government and industry were not resolved.

The beer giant confirmed that the interim decision was made following what it reported as �constructive� talks with the government, which has since assured it would address the pricing and dues in a �time bound manner.�

Reports on the changed situation via Reuters reiterated how Telangana is India�s top beer-consuming state, where UBL currently ties up 70% of the market share. However, the regulatory environment has reportedly placed strain on the alcoholic drinks sector with businesses like Diageo, Pernod Ricard, AB InBev and Carlsberg already demanding approximately US$466 million in unpaid dues. Despite the challenges, the decision to resume UBL�s supplies in the region now marks a reprieve and is anticipated to give the government time to find a resolution.

India, the world�s eighth-biggest alcohol market by volume, has been cited as a complex growing market since its states still individually regulate alcohol products, despite such items contributing to tax revenue.

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