The ongoing tension between Iran and Israel is now going to have a direct impact on the Indian market. Due to the war situation in the Gulf countries, the global supply chain has been affected, which has had the biggest impact on the beer industry. The Brewers Association of India (BAI) has warned that there could be a shortage of beer in the coming weeks and there could be a big jump in its prices.
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What is the main reason for the increase in beer prices?
A large part of the natural gas used to make beer bottles in India comes from Qatar and other Gulf countries. There have been problems in the supply of gas due to the Iran-Israel conflict, due to which the cost of glass bottles has increased by up to 20 percent. Apart from this, prices of other packaging items like cardboard boxes and labels have also seen an increase of up to 25 percent.
The total production cost of beer companies has increased by 12 to 15 percent. Work in glass factories has stopped due to the supply of natural gas coming from Qatar being affected. Logistics and freight expenses have also increased by 10 percent. The companies have sought approval from the state governments to increase the prices.
How much shortage can there be in the summer season?
In India, the demand for beer is highest from March to June. Big brands like Heineken, AB InBev and Carlsberg are facing difficulties in production due to supply chain disruption. According to the glass manufacturers of Firozabad, there has been a decline of up to 40 percent in production due to shortage of gas. If state governments do not allow changes in prices soon, there could be a severe shortage of beer in the market.
Material Price Increase Glass Bottles 20% Packaging (Carton) 100% Logistics 10% Total Production Cost 12-15%