Can crunch hits United Breweries' growth as demand for canned beer surges
United Breweries Ltd
is facing an unprecedented challenge -- shortage of cans leading to frequent stock outs when consumers now prefer to drink canned beer. The company has lost at least 1-2 points of growth due to this over the last six months, said managing director
Vivek Gupta
.
"The shortage of cans is a challenge. Cans as a segment is growing at a certain pace, and there is no quick fix for the supply of cans. So that is a little bit of something for us, in the next quarter. This is definitely (an issue) for us, and for the industry as well. Those are some of the factors that make me nervous,' Gupta told analysts during the company's first quarter earnings call on Wednesday.
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Despite this, the manufacturer of Kingfisher and
Heineken brands
grew volumes by 11% in the April-June quarter and gained market share in both overall and premium segment. The premium portfolio, in particular, grew at 46%.
Gupta said there is a fixed supply of cans in the market, whether it's for the beer industry, or some of the other industries. Even within beer industry, there is a fixed quota while the demand is more than that, he said.
"So we definitely have stock outs, because we are not being able to supply cans. Or that we cant get cans,' he said.
The MD said importing cans will also take time. "The government of India, along with multiple associations are working on that, but that also will take time, the backward integration in the beer industry needs a lot of work. Whether it's bottles or cans. We are actually actively working with international suppliers for long term on that. We would have atleast lost, I would say, 1-2 points growth because of lack of cans over a 6-month period," said Gupta.
Last year the company imported new bottles as supplies remained tight. "The recycled bottle supply chain was very much disturbed by high cullet demand," the company said in its latest annual report.
United Breweries has posted its standalone profit after tax for the first quarter ending June 30th at Rs 184 crore which grew by 6% on a year-on-year basis, and the net sales for the period grew by 16% to reach Rs 2,862 crore.
The company invested Rs 136 crore in the first quarter as compared to Rs 89 crore during the same period last year. The investments were primarily focused on commercial and supply chain initiatives.
On Wednesday, United Breweries' shares closed at Rs2,020 a piece on the BSE, down by 0.78%.
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