Kingfisher Beers Resume Supply in Telangana Amid Pricing and Payment Disputes

In a significant development, United Breweries Limited (UBL), the maker of Kingfisher beer, has announced the resumption of its beer supply to the Telangana Beverages Corporation Limited (TGBCL), effective immediately. This decision follows constructive discussions between the two parties, according to a filing made by UBL on January 20. The company stated that TGBCL has assured them of addressing the concerns regarding pricing and outstanding payments in a timely manner.

Despite this, UBL emphasized that this is an interim decision made in the interest of consumers, workers, and stakeholders. The announcement led to a surge in UBL's stock price, which rose by over 6% on the Bombay Stock Exchange (BSE) on January 20. On January 21, the shares continued to show positive momentum, rising by 0.95% and trading at Rs 2,080.30 by 12:20 PM.

UBL had previously suspended its beer supply to TGBCL due to issues related to the non-revision of the base price of beer, which had remained unchanged since the 2019-2020 period. The situation was aggravated when the Telangana government raised beer prices without adjusting the base price paid to manufacturers, leading to mounting losses and rendering operations in the state unsustainable. UBL contributes over Rs 4,500 crore annually to the state exchequer, making the matter crucial for both the company and the state's economy.

Industry sources also revealed that the dues to the alcohol beverage sector from February to August 2024 amounted to Rs 3,900 crore. The Telangana government reportedly owes Rs 658.95 crore to UBL, according to State Excise Minister Jupally Krishna Rao.

Kingfisher beer, along with other UBL brands like Kalyani Black, Heineken, and Amstel Bier, are highly popular in Telangana, with Kingfisher accounting for 70% of the state's total beer sales.

The resumption of supply comes after the Telangana government confirmed plans to hike beer prices within 30 to 45 days. UBL also indicated that outstanding dues would likely be cleared in installments over the next 12 to 13 months. However, the Telangana government has rejected a request for a 33.1% price hike, with Chief Minister A Revanth Reddy stating that the government would not yield to pressure tactics.

The standoff between UBL and TGBCL led to the layoff of around 1,500 workers at UBL's two units near Sangareddy. CPI (M) leader Chukka Ramulu criticized the situation, claiming that TGBCL was paying UBL just Rs 25 to Rs 30 per beer, while the retail price in the market is between Rs 150 to Rs 160.

This ongoing dispute highlights the complexities surrounding pricing and payment issues in the alcohol beverage industry in Telangana and underscores the importance of timely resolutions for both businesses and workers alike.