Expects 6-7 pc volume growth, GST reforms to spur alcoholic beverage consumption: UBL CEO & MD

Bengaluru, Sep 14 (PTI) Leading beer maker United Breweries Ltd (UBL) expects a 6 to 7 per cent volume growth this fiscal despite the impact of rains in some of the key states during the second quarter, said its Chief Executive Officer and Managing Director Vivek Gupta.

Besides, premiumisation is also expected to grow by 25 per cent and the long-term outlook for UBL, now controlled by Dutch multinational brewing company Heineken NV, is "very strong", Gupta told PTI.

He expects recent GST reforms, in which the government is lowering the taxes on most consumer goods and some services, effective from September 22, will also help increase the consumption of alcoholic beverages.

However, this will also depend on state governments. If they "work objectively, where they do not just increase taxes (excise) because they feel about a revenue shortfall coming of GST (changes), I think it should help in consumption of Alco-Bev because consumers will spend money on coming together, connecting together, going outside, eating food".

Gupta also said, current tariffs imposed by the government need to be reduced and rationalised on the beer industry, which is a local one and associated with the farmers.

"One of the problems in India we have is that we have put all Alcho-Bev as one thing (for taxation). Beer is natural, has less than 6 per cent alcohol, and is compared with (whisky and other products having) 40 to 45 per cent alcohol," he said, adding "there is a lot of reforms required here".

The beer industry, which has invested substantially in breweries, generated employment and is paying a "huge amount of taxes to the government, which is actually helping in the development of the country. If they get some "ease of working", they can make it bigger, as the opportunity is huge, he said.

"There is a huge amount of work required for the government to separate beer, which is actually a natural product. Beer is made up of barley, which helps in crop productivity," he said, adding, "We will have to think beer differently with spirits." Gupta said India is at a stage where the youth population is on the rise, new families are coming, cities are expanding, new infrastructure is taking place, and in such a situation, the government should reduce taxes on beer, having moderate alcohol, so that it becomes people's choice.

"So we don't want people to get drunk. We want them to socialise and beer does that," he said.

Over the trend of state governments commonly compensating for the fiscal deficit caused by lucrative cash transfer schemes by raising taxes on alco-bev (alcoholic beverages), Gupta said it is not helping.

"By taxing beer, you make it unaffordable. In actuality, sales of beer go down, which is a highly capital-intensive industry," he said, adding this is also making local manufacturing and the business "unattractive".

When asked about the commodity inflation, Gupta said "prices are stable, but there is a lot of volatility" in the international market and is more concerned about the supply of packaging materials as aluminium cans.

"I think it's more than the inflation, it is supplies, especially on the packaging material, because we have a can shortage in India... Plus on top of that, there's a lot of volatility in the global market on oil pricing... ," he said.

UBL, which owns iconic beer brand 'Kingfisher', 'kalyani Black' etc. had in the June quarter of FY26 reported an 11 per cent volume growth, while its premium portfolio grew by 46 per cent.

Over the outlook, Gupta said the current quarter looks tough because of the rains, which has been significantly higher in many states.

"So half the country, we are seeing a significant rain impact on the business, where the category is actually down double digit. In August and July, specially in the beer, the north of India is diverged... So we really need to see how September shape up," he said.

Despite this, Gupta said, even after normalising rain, UBL is geared up to have a very good 6 to 7 per cent volume-based growth.

"The rains are impacting there. But if I normalise the rain, I think we are in all geared up to have a very good 6 to 7 per cent volume growth. Premiumisation of 25 per cent growth, and longer term outlook looks very strong," he said.

When asked about the Capex by UBL, Gupta said the company is expanding and there is absolutely no doubt, but it depends on state to state.

"In some states where the taxation is going up so much, we do not even... We have to review our plans. In other states, we are working on it," he said, adding, "But I think the biggest one is we have to reform, make reforms and make it easy to do business and have beer fair versus spirits and other things there." PTI KRH HVA