Perno Ricard, Anheuser-Busch InBev, Heineken and Carlsberg were among the alcohol companies part of a European lobby requesting the Centre for an exemption from from a 10% import duty imposed on glas bottles and cans, according to a Reuters report on Thursday.
The lobby, named 'The Federation of European Businesses in India' reached out to the government on April 2 saying that they were facing a supply crunch on glass bottles and cans as local manufacturers were unable to work at peak efficiency.
The lobby sent a letter that drew attention to the problems India's alcohol market (worth $65 billion) is facing, which is facing ramping costs with regards to glass bottles, cartons and labels due to the ongoing war in the Middle East. Passing this expense on to consumers is challenging in India due to retail price changes need government approval in two-thirds of India's states.
The alcohol industry is also seeing a 15% uptick in expenses owing to higher raw material prices such as cartons and adhesives. The industry is set to grow 8% a year until 2033, according to Coherent Market Insights data sited by Reuters.
The Brewers Association of India stated that beer firms have already requested states to increases prices to weather these higher costs.
Indian liquor companies are considering imports from Southeast Asian countries due to concerns over potential shortages of cans and bottles starting May, according to a global liquor industry source cited by Reuters.
Glass bottle manufacturers have stated that the LPG supply crunch has lead to disruptions that have costed individual firms up to Rs 150 crore in settling them.
"Supply chains, especially in energy-intensive industries like glass, do not normalise overnight.
We are currently operating with nearly up to 50% cuts in commercial LPG supplies across our six plants. While we are navigating this through increased reliance on LNG and limited substitution with furnace oil—currently up to about 20%—these are not seamless transitions in the short run," Suraj Mehta, chief strategy officer of Hindusthan National Glass & Industries Ltd. said.
Mehta stated that a brief disruption risks damage, and a full restart can take up to six to twelve months and cost between Rs 50 crore to Rs 150 crore. He said that a ceasefire provides opportunity but is no short-term solution.
"As a result, capacity utilisation across our plants is currently in the range of 40% to 70%. This is beginning to impact high-demand sectors like beer and soft beverages, especially with the summer season approaching, where demand is strong but supply remains constrained," Mehta said.
"Input costs have risen significantly, and there is a limit to how much each stakeholder in the value chain can absorb before these increases are eventually passed on to the end consumer," he added.
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