Business

IIE DIGITAL DESK : India’s alcoholic beverage industry is pushing for a significant upward revision in product prices, citing mounting pressure from global supply chain disruptions and sharply rising raw material costs triggered by geopolitical tensions in the Middle East.

Industry bodies such as the Confederation of Indian Alcoholic Beverage Companies and the Brewers Association of India have formally approached multiple state governments, urging them to allow price revisions across Indian Made Foreign Liquor (IMFL), beer, and wine segments. The associations have also called for interim policy relief to help manufacturers absorb escalating production expenses.

The centre of their demand is a proposed price increase of around 15–20%, which industry representatives say is necessary to partially offset the surge in input costs that has affected nearly every stage of production, from packaging to logistics.

The Brewers Association of India Director General Vinod Giri, the ongoing conflict in the Middle East has disrupted key supply routes and driven up global commodity prices. He noted that glass bottle prices have risen by nearly 20%, while packaging materials such as paper cartons have become almost 100% more expensive. Other critical inputs, including LDPE, BOPP films, and adhesives, have also seen cost increases in the range of 20–25%.

Giri further highlighted that the situation has been worsened by a shortage of liquefied natural gas (LNG), which has put significant pressure on glass manufacturing units. Many of these units are reportedly operating under severe constraints, with some facing partial or full shutdown risks. Industry stakeholders warn that the supply of glass bottles and aluminium cans could remain unstable for an extended period.

The beer segment, in particular, is facing added strain due to rising aluminium costs, as can suppliers grapple with global supply disruptions. Industry officials have cautioned that prolonged instability in aluminium supply chains could threaten production continuity and even lead to temporary plant shutdowns.

Beyond raw material inflation, freight and logistics costs have increased by approximately 10%, adding further pressure on manufacturers. The depreciation of the Indian rupee against the US dollar has also amplified import costs, making key inputs even more expensive for domestic producers.

The Brewers Association of India has also proposed a temporary reduction in manufacturing levies of around ₹3–5 per bulk litre. The industry believes this measure could provide immediate financial relief and help stabilise operations amid ongoing cost escalation.

The association represents major beer producers including global and domestic market leaders such as United Breweries,  which together account for a dominant share of beer sales in India.

On a parallel track, the Confederation of Indian Alcoholic Beverage Companies has also written to state governments seeking revisions in ex-distillery and ex-winery pricing structures (EDP/EWP). The body argues that inflationary pressures are no longer temporary but structural, driven by sustained global disruptions.

CIABC Director General Anant S. Iyer pointed out that the Middle East region, which plays a critical role in global crude oil supply and international logistics, has become a key source of volatility. He added that the resulting inflation has spread across supply chains linked to India, intensifying cost pressures for beverage producers.

The industry body also flagged severe stress in glass manufacturing hubs such as Firozabad, where gas supply restrictions have reportedly reduced availability to nearly 60% of contracted levels. This has forced some suppliers to depend on costlier spot LNG or LPG procurement, further pushing up production costs.

CIABC, glass manufacturers have already implemented price hikes of 10–20%, while PET and aseptic packaging materials have also become significantly more expensive. Additionally, shipping and ocean freight rates have risen, with carriers imposing emergency and conflict surcharges on routes connected to West Asia and the Indian subcontinent.

The industry awaits responses from state governments, stakeholders caution that continued cost escalation without corresponding price adjustments could severely impact production viability and supply stability across India’s alcoholic beverage sector.