Ways the Iran war is continuing to impact India’s beer supply
India is facing continued supply disruptions and higher beer prices due to a surge in costs for producers following the conflict in the Middle East.
The disruptions, which are said to be primarily affecting global brewers operating in India, are leading to a rise in costs driven by a gas shortage linked the Iran war. db assessed the way that this was already a possibility earlier this month as further reports unfolded across the Indian marketplace.
Disruptions
Production has also been disrupted by a boost in the price of glass bottles. Additionally, supply chains have been hit by shipping delays for aluminium used by breweries canning beer, slowing the process and making it costly.
db has reached out to The Brewer’s Association of India for further comments on how it is navigating the crisis after the association revealed that it is doing what it can on a national level to assist the sector in its beer supply and cost issues.
India, which is currently the world’s fourth-largest importer of natural gas, has been flagged for being at a weak point while facing fuel availability issues. As such, the market has, until now, relied heavily on the Middle East, with Qatar being named as one area necessary for supply chain synchronicity.
This is why the knock on effect of the Iranian attacks have led to India’s vulnerability in beer supply as Qatar’s export gets hit, gas becomes unavailable and Indian manufacturers get caught in the middle.
Affecting the rest of the drinks sector
Following the February airstrikes by the US and Israel on Iran, the wider drinks industry was also affected and db looked into how the ongoing conflict is impacting businesses, from producers and merchants to closure manufacturers.
In a recent report via Reuters, the Brewers Association of India openly revealed that glass bottle prices have risen by around 20%. Added to this, packaging such as beer cartons have doubled while labels and tape have also become price affected..
Gas shortages are now also forcing a raft of glass bottle makers to slow or stop their operations. Plus, aluminium can suppliers are also signalling that there will possibly be imminent reductions in the lead up to summer.
The Brewers Association of India director general Vinod Giri told Reuters: “We are asking for price increases in the range of 12-15%z We have advised our member companies to individually approach states.”
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Giri also reportedly stated that the rising cost of production is making some operations unsustainable.
According to Grand View Research, the beer market in India was worth US$7.8 billion in 2024, and is expected to double by 2030.
“Beer businesses are particularly vulnerable when oil and gas prices rise because the impact is felt at several different points in the chain,” Molly Monks, insolvency expert at Parker Walsh, recently told db.
Big and small brewers affected
The Brewers Association of India revealed that Heineken alone accounts for roughly half the market, while AB InBev and Carlsberg each account for 19%. According to national reports, while the three global beer companies predominantly serve India’s beer supply there are also smaller breweries and brand owners affected by the same issues, such as Bira and Simba which also have a foothold in the market.
Beer sales in India have grown steadily of late alongside its rising middle class demographic and increasing urbanisation leading to a more affluent population. Plus, across India there are already several states seeking price adjustments to offset rising costs as has been evidenced by the Confederation of Indian Alcoholic Beverage Companies doing what it can to push through approvals for adjustments to keep the sector afloat.
Despite this, India’s alcohol sector is still tightly regulated and raising any prices requires significant steps before approval. For instance, approximately two-thirds of India’s 28 states must authorise changes to make any real difference.
The association said: “Brewers may find it difficult to maintain supplies in states that do not allow price increases.”
Meanwhile, glass suppliers are warning of reduced stock and have also increased their prices. For instance Uttar Pradesh-based glassmaker Fine Art Glass Works CEO Nitin Agarwal has admitted that he has cut production by 40% at his glass bottle making factory due to gas shortages. Agarwal’s customers include many drinks companies, noting that the domino effect of these issues impacting the sector further. By way of displaying how things have already taken shape on the pricing front, Agarwal explained: “We’ve cut production and increased prices by 17-18%.”
db has reached out to brewing arms across the Indian marketplace for further comment and will update on the situation as it unfolds.
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