United Breweries Faces Setback as Beer Supply to Telangana Suspended Amid Pricing Disputes

Shares of United Breweries Ltd, the maker of Kingfisher beer, fell over 7% on Wednesday, January 7, 2025, following the company’s announcement of an immediate suspension of beer supplies to Telangana Beverages Corporation Ltd (TGBCL). This decision was driven by ongoing financial issues, including unresolved pricing concerns and unpaid dues.
Suspension of Supply to TGBCL
TGBCL, a government-run entity, holds a monopoly over the sale and distribution of alcohol in Telangana, including both Indian Made Foreign Liquor (IMFL) and beer. United Breweries expressed concerns about TGBCL’s failure to revise the price of its beer since the 2019-20 fiscal year, leading to substantial financial losses. Furthermore, the company highlighted significant unpaid dues from previous beer supplies to TGBCL.
“This decision comes after TGBCL has not adjusted the basic price of the beer since 2019-20, resulting in mounting losses for the company in the state and unpaid dues for past deliveries,” United Breweries stated. The company further emphasized that these unresolved issues made continuing beer supply to TGBCL financially unviable.
Stock Market Impact
Following the announcement, United Breweries’ stock experienced a sharp decline of 7.4%, reaching an intraday low of ₹1,920. It is now trading about 13% below its 52-week high of ₹2,202.90, recorded in September 2024. Despite this drop, the stock has gained 16.6% from its 52-week low of ₹1,645.80, reached in February 2024. Over the past year, the stock has risen by more than 11%, but it has reversed some of those gains in January 2025, with a drop of over 2%.
Financial Performance
For the second quarter of FY25 (July-September), United Breweries reported a 23% year-over-year increase in net profit, reaching ₹132 crore. EBITDA grew by 21% to ₹237 crore, and net sales rose by 12% to ₹2,115 crore. The company’s upcoming October-December quarter results are eagerly awaited, with analysts focusing on the impact of the TGBCL issue on its overall financial performance.
Looking Ahead
The suspension of beer supplies in Telangana presents a significant challenge for United Breweries, potentially impacting its market share in the region. While the company remains strong financially, addressing the pricing disputes and overdue payments with TGBCL will be essential for its continued growth. Investors will also be watching closely for any updates in the company’s upcoming quarterly results, which could provide more insight into its long-term strategy and performance.