United Breweries Seeks to Mitigate Potential Rs 500 Crore Cost Consequences of West Asia Conflict

United Breweries Sees Rs 400-500 Crore Impact from West Asia War

Bengaluru-headquartered United Breweries has estimated a significant impact on its input costs due to the ongoing war in West Asia. The company anticipates a Rs 400-500 crore impact, with plans to offset at least Rs 200-250 crore of this through productivity drives, selective pricing measures, and reducing trade spends in some markets.

The rising crude oil costs, a direct result of the war in West Asia, are negatively affecting freight costs and export volumes for the company. The increase in gas prices is also contributing to a rise in bottle costs. United Breweries, the maker of Kingfisher and London Pilsner beer, has announced its Q4 results, reporting a 31.4 per cent drop in net sales to Rs 2,250.07 crore during the quarter from Rs 2,322.98 crore in the year ago period.

However, the company's quarterly net profit rose 4.31 per cent to Rs 101.78 crore from Rs 97.57 crore in the same period last year. United Breweries has also highlighted that it is not facing a supply issue of aluminium cans, which will be a competitive advantage for the company in the coming quarters.

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The company, which has seen a return to 10 per cent growth in the beer category, is working to increase production with a greenfield plant in Uttar Pradesh and two new can lines in Maharashtra and Telangana expected to go live in July. United Breweries has also expanded its investment behind brand by 27 per cent year-on-year to build momentum ahead of the peak season.