The country’s leading liquor and beer makers have sought price increases of 12–15% from state governments, citing a sharp rise in input costs triggered by the ongoing conflict in West Asia and resulting supply disruptions.
Alcohol is a state subject, with state governments regulating production, distribution and pricing, and levying excise duties. Taxes on liquor and beer remain outside the Goods and Services Tax framework.
Pricing rules vary across states. Markets such as Maharashtra, Karnataka and Goa allow relatively freer pricing, but companies are still expected to seek government approval for any increase or decrease as it has a direct bearing on excise revenue. In several other states that operate on annual supply contracts, companies are allowed price revisions within a defined band at the start of the year, but require explicit approval for any mid-year changes.
The Confederation of Indian Alcoholic Beverage Companies (CIABC) and the Brewers Association of India (BAI), which represent major distillers and brewers, have written to states seeking permission for price revisions in Indian Made Foreign Liquor (IMFL) and beer.
“The current crisis highlights the need for a flexible and pragmatic policy environment. Holding prices back when costs are rising works to no one’s benefit. Inability to pass on cost increases disincentivises a supplier, especially when there is a shortage and supplies need be rationed,” Vinod Giri, director general, BAI, told Fe. He added that brewers may prioritise supplies to states such as Maharashtra, Karnataka and Goa, where pricing flexibility is relatively higher.
Supply Rationing Risk
“Timely and calibrated price adjustments are essential to ensure continued investments, maintain stable supply, and support the long-term sustainability of the IMFL sector. Against the backdrop of escalating geopolitical tensions in West Asia and its impact on input costs, we are writing to state governments seeking consideration for price revisions,” Anant S Iyer, director general, CIABC, said.
The domestic market is estimated at around 410 million cases for IMFL and 440 million cases for beer. Companies said the inability to pass on costs could pressure margins and affect supply decisions.
40% Packaging Squeeze
Industry bodies said input costs have risen sharply across categories. Plastic packaging materials such as caps and PET resins have seen increases of 31–40%, glass costs are up 8–20%, while paper cartons have nearly doubled. Crude-linked derivatives including LDPE, BOPP and adhesives have risen 20–25%.
The conflict has also disrupted aluminium supplies from the Middle East, affecting can manufacturers. At the same time, shortages of commercial LNG have put pressure on glass bottle makers, raising the risk of partial or full shutdowns of production units.
Alcohol stocks have mirrored broader market weakness since the conflict escalated on February 28, with a basket of listed companies declining about 8% over the past month, broadly in line with benchmark indices, according to Capitaline data.