Excise duty biggest challenge for beer industry: Kingfisher maker's CEO

Economic Times

08-05-2025

United Breweries faces challenges due to rising excise duties, particularly in Karnataka and Telangana, impacting beer prices. Despite this, the company remains confident, planning to expand production capacity and cooler installations. While Q4 standalone revenue declined, net profit increased driven by premium brand demand, with overall volume sales rising by 5%.
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Bengaluru: Excise duty remains the biggest challenge to beer business in the country, Vivek Gupta, managing director and chief executive officer of United Breweries , said on Thursday."The worry part is the increase in duty. We saw the impact of that in Telangana and Karnataka. Duty is posing to be the biggest threat," Gupta told analysts in the earnings call post fourth quarter results.Karnataka last week increased tax on the manufacturing cost of beer to 205%, from the earlier 195%, thereby impacting the MRP of both mass and premium brands. In Telangana, too, prices went up 15% in February.However, "despite the disruption, we are in the middle of the season, (and) we feel confident," Gupta said.The country's largest brewer plans to increase its production capacity this fiscal, he said.United Breweries will also increase cooler installation in retail outlets across the country this fiscal. In Maharashtra alone, it plans to increase cooler penetration from the current 10-15% retail outlets to 50% over the next couple of years, according to Gupta.He, however, declined to share the proposed capital expenditure figure for 2025-26.The maker of Kingfisher and Heineken beers had a capex of ₹254 crore in 2024-25, up by ₹64 crore from the previous year, which was used in commercial and supply chain initiatives to drive growth.Its standalone revenue for the fourth quarter declined 7.5% year on year to ₹4,425.5 crore. Its net profit grew by 20.5% to ₹97 crore, buoyed by increasing demand for premium brands.The company posted 24% volume growth for its premium portfolio during the quarter while its overall volume sales rose 5%."We see strong growth from Kingfisher Ultra, Kingfisher Ultra Max and Heineken Silver and we continue to drive premium volume growth," the company said in its earnings report."After receiving an overwhelming response in Maharashtra and West Bengal, we also introduced Amstel Grande in Uttar Pradesh, a vibrant market with a growing demand for premium beverages," it added.For 2024-25, UBL sales grew by 5.6% on year to ₹19,400.8 crore and net profit rose 7.8% to ₹441 crore.United Breweries' shares closed at ₹2,159 on the BSE on Thursday, down 1% from the previous close.