The Brewers Association of India (BAI), a federation representing some of India’s largest beer makers such as United Breweries, AB InBev, and Carlsberg, on Wednesday, urged the Telangana government to immediately allow price increases for alcoholic beverages to compensate for inflation.

In a letter to Telangana Chief Minister A Revanth Reddy, BAI Director General Vinod Giri stated that the current basic prices allowed to beer supplier companies in the state are based on 2019 cost submissions, and since then, the cost of production has increased by 35-40 per cent.

However, the government has not approved a price revision to reflect this rise in production costs. As a result, operations in Telangana have become commercially unsustainable, and future investments are now unviable, Giri said.

"While, as an association, we cannot speak for individual companies or their specific cost of production and pricing, we believe that an average increase of 35-40 per cent may be necessary just to compensate for the increase in production costs," Giri added in the letter.

Currently, the declared price for beer in Telangana is 30-50 per cent lower than in neighbouring states, making it unsustainable. Companies are incurring losses in supplying beer to the state, he further said.

Recognising the urgent need to raise supplier prices, the government set up a Price Fixation Committee (PFC) in July 2024 and directed all beer companies in the state to submit proposals for revised declared prices—the price at which companies supply beer to the state government.

The government also asked the BAI to present an industry perspective on the cost of production and other factors that could affect beer pricing in the state.

According to the BAI, the submission process, presentations, and industry consultations were concluded by the first week of August 2024, but no further progress has been made since then.

BAI also suggested that the government should at least link beer prices to inflation using a reliable benchmark, such as the Wholesale Price Index (WPI), and allow companies an automatic price increase each year based on the change in WPI from the previous year.

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