Higher Raw Material Costs, Elections Hurt United Breweries’ Volume Growth
Costlier raw materials like barley and glass increased the beer maker’s costs.
United Breweries Ltd.’s volume growth for the quarter ended June was hurt by the 2019 Lok Sabha elections, rising cost of raw materials like barley and glass, according to its Managing Director Shekhar Ramamurthy.
“The current environment has been challenging on two fronts. Firstly, the elections that happened in the April-June quarter, our peak season, posed challenges through restrictions on supply and production. This caused muted volume growth throughout the industry. Secondly, an increase in cost push because of costlier raw materials like barley and glass has had a very steep impact on our costs,” he said, adding that recent floods also made some regions inaccessible.
The Bengaluru-based beer maker’s MD, however, hopes the company to achieve at least mid-to-high single-digit growth. “The prices of glass and barley are not likely to come down. Pricing challenges like the strict control of state excise has also limited our freedom to pass on costs to consumers. For this reason, we need to look at cutting our costs internally,” Ramamurthy said.
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