United Breweries makes a major announcement on beer supply to Telangana; Stock surges

Shares of United Breweries Ltd. surged as much as 5% on Monday, January 20, after the company announced that it will resume the supply of its beer to the Telangana Beverages Corporation Ltd. (TGBCL), with immediate effect.

"We have been in talks with TGBCL, and these have been constructive discussions," United Breweries said in an exchange filing, adding that the TGBCL had assured the company to address their issues on pricing and outstanding payments in a timebound manner.

Based on thee assurances, the company has decided to restart supplies to TGBCL for the time being. "This is an interim decision in the interest of consumers, workers and stakeholders," United Breweries said.

The company will continue to engage with TGBCL during this period.

Last week, United Breweries, the manufacturer of Kingfisher Beer had decided to suspend the supply of its beer to the Telangana Beverages Corporation Ltd. with immediate effect.

"This decision of the company has arisen because TGBCL has not revised the basic price of the company’s beer since 2019-20, resulting in huge losses in the State and significant overdues remaining unpaid by TGBCL for the past supply of beer by the company," the beer maker had said in a statement.

In response, Telangana's excise commissioner had told CNBC-TV18 that no dues are pending to the beer industry since September 2024 and that they have been following a 45-day cycle for releasing the payment.

For the price revision, the commissioner said that a fixation committee is looking into the matter and a decision will be taken once the committee makes its recommendations.

"Telangana is a big state for UBL. In terms of volume market share, Telangana could contribute anywhere between 15%-20% of volumes for UBL. Also, they have got 60% plus kind of market share over there. So, I think this suspension is going to be a near-term negative," Karan Taurani of Elara had told CNBC-TV18 last week.

Shares of United Breweries are currently trading 5.5% higher at ₹2,057.85.