Alcobev suppliers face high inflation pressure

The delay in announcing the policy is putting a huge burden on the suppliers. During last 3-4 years, there has been a significant increase in the input costs for the BIO manufacturers with a meagre price increase of 6% after ten years

Hyderabad: While India’s alcoholic beverage industry is witnessing growth in volumes and an increase in the State excise collections, the alcobev manufacturers and suppliers are severely impacted by steep hike in input material costs. The key raw materials such as extra neutral alcohol (ENA), packaging material and overhead costs have increased multiple folds in the last five years

The International Spirits and Wines Association of India (ISWAI) appeals to the Telangana government to avoid any further delay in announcing inflation-led suppliers’ price increases and provide immediate relief in terms of supplier pricing to the industry for both Indian-made foreign liquor (IMFL) and Bottled In Origin (BIO) products.

As the inflation and supply chain pressures added a burden on the suppliers impacting availability and consumer choice, the ISWAI urges the State government to consider establishing an inflation-based pricing index for the alcobev industry, thereby minimising the arbitrariness of the supplier price-setting process for the industry.

Nita Kapoor, CEO of ISWAI, said: “Telangana is a progressive State for our sector and leads the premiumisation trend with a 52 per cent combined share for IMFL and BIO products. Telangana’s premiumisation trend is a reflection of consumer preference, particularly post the pandemic, where consumers are keen to drink good quality products.

She further said, “The suppliers and manufacturers were hopeful of being granted a price increase in 2022. This has not been considered, resulting in no supplier price increase for the IMFL industry since 2020. Inflation on just two key input materials, namely ENA and Glass, is at 25 per cent and 28.7 per cent respectively.”

“The alcobev manufacturers have not been able to pass on the impact of inflation to their consumers leading to severe financial erosion for the suppliers,” Kapoor said, adding “ISWAI has made representations on this issue to the excise department and urges the state government to take note of the burning issues faced by the alcobev industry and grant an immediate relief.”

Suresh Menon, Secretary-General, ISWAI, said, “The inordinate delay in announcing the policy is putting a huge burden on the suppliers due to which supplies of premium brands are also getting affected. During last 3-4 years, there has been a significant increase in the input costs for the BIO manufacturers with a meagre price increase of 6 per cent after ten years.”

“The BIO extracts the highest revenue per case for the government, and their non-availability could negatively impact state revenues. ISWAI urges the Telangana government to allow suppliers of IMFL and wines an inflation-led increase to compensate for the increase in their individual brand-pack-wise production cost,” he appealed.