Sunday, 17 August 2014

Beer prices may soar

Beer price rise is in the offing as the governments of Telangana and Andhra Pradesh are contemplating demands from breweries to revise retail prices keeping in view increased production costs. The move, if implemented, would also bring in additional revenue to the exchequer in both states.

According to breweries' owners, proposals were sent to the governments to increase the basic price of a 12-bottle case of strong beer from the present Rs 235 to Rs 296, which in turn would escalate MRP by Rs 10 per bottle. Currently, consumers pay Rs 95 for 650 ml strong beer and Rs 85 for lager beer, which accounts for only 30% of the consumption.

Manufacturers say the demand to increase prices was made last June when contracts expired. Though the contract was extended for a year, prices were not increased. When the extension expired this June, the demand to increase prices surfaced again. Manufacturers said the last price revision was in 2010.

Data obtained from manufactures show six breweries in Telangana produce 42 lakh cases of beer while one in AP produces eight lakh cases. Owing to large number of breweries in Telangana, it is AP's prime supplier of beer and its production cost is said to be lower than other southern states. Telangana accounted for 62% beer consumption in undivided AP.

Undivided AP was earning Rs 55 on every bottle which amounted to Rs 330 crore annually on total sale of 50 lakh cases. If the manufacturers' proposal is accepted, an additional revenue of Rs 22.8 crore would be generated.

When contacted about the proposal, Telangana excise commissioner Ahmed Nadeem said the proposal is pending with the state government. "The government is said to be contemplating the proposal of brewery owners. I cannot say what the final revision would be," Nadeem said.

Breweries' owners said that while they have asked for a revision in tune with increased production costs, estimated at around Rs 61 on every case, they are not sure how the state governments would respond. "We are currently supplying every bottle at Rs 20 to the governments. Ever since our contract expired this June, we have been asking government to revise the price," said M Kameshwar Rao, general secretary of Association of Liquor and Beer Suppliers. He also said that they would persist with their demand so that the government incorporates higher prices in the new contracts which would govern beer sales in the next two years.



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