Heineken-Controlled United Breweries Suspends Beer Supply To Telangana Over Operating Losses

United Breweries highlighted that despite continuous efforts over the past two years, there has been no increase in the base prices of its products since the 2019-20 fiscal year.

The suspension of supplies has had an immediate impact on the company's stock with shares falling 7% marking their worst trading day in nearly four years.

Source : Pixabay

United Breweries, the maker of popular beer brands such as Heineken and Kingfisher, announced on Wednesday that it has halted the supply of its beer to the Telangana Beverages Corporation Limited (TGBCL), the state-run liquor distribution entity. This move will cease the sales of its products in Telangana, one of India's top liquor markets.

In a statement, the company cited "significant and ongoing operating losses" as the primary reason for its decision. It highlighted that despite continuous efforts over the past two years, there has been no increase in the base prices of its products since the 2019-20 fiscal year. "This has resulted in escalating losses, making our operations in the state unviable," the statement read.

United Breweries said, "In compliance with Regulation 30 of the SEBI Listing Regulations, we wish to inform that the Company has decided to suspend the supply of its beer to Telangana Beverages Corporation Limited (TGBCL) with immediate effect. This decision of the Company has arisen because (a) TGBCL has not revised the basic price of the Company's beer since 2019- 20, resulting in huge losses in the State and (b) significant overdues remaining unpaid by TGBCL for the past supply of beer by the Company. As a result, the continued supply of our beer to TGBCL has been rendered unviable."

The suspension of supplies has had an immediate impact on the company's stock, with shares falling 7%—marking their worst trading day in nearly four years.

Meanwhile, Excise and Prohibition Department reported record-breaking liquor sales in Telangana with alcohol worth Rs 282 crore sold on December 31. The highest single-day sales were achieved on December 30, totaling Rs 402 crore, as per a report on Deccan Chronicle. On that day, 3,82,265 cases of liquor and 3,96,114 cases of beer were sold. Hyderabad and its neighboring districts, including Rangareddy and Medchal, led the state in liquor consumption.