Beer industry saw challenging times during FY26 due to West Asia crisis, says UBL MD

The operating environment for Indian beer industry became increasingly challenging during fiscal FY26, particularly due to the escalation of tensions in the Middle East, said Vivek Gupta, Managing Director & CEO of United Breweries Ltd (UBL).

“And it [market] continues to remain complex and evolving. Volatility across global supply chains, impacting input costs, packaging materials, and energy prices across the industry, supply-side disruptions, including can shortages, partly due to regulatory changes and more recently due to middle east related geopolitical tensions which have impacted global energy markets, logistics networks, and supply chains, have led to elevated input costs and increased uncertainty across manufacturing ecosystems,’’ Mr. Gupta said in the company’s annual report released on BSE on Monday.

For businesses, these disruptions directly influenced key cost drivers such as freight, packaging, and energy, he said adding, a pragmatic approach towards pricing and trade investments would ensure business sustainability and ability to navigate near-term volatility.

However, he said, India remained one of the most attractive beer markets globally, driven by favourable demographics, rapid urbanisation, and evolving consumption patterns.

“With nearly 23 million consumers entering the legal drinking age each year, along with a shift towards nuclear households and increasing social occasions, the category continues to offer significant headroom for growth. However, affordability and accessibility remain key constraints in several states due to pricing and taxation structures,’’ Mr. Gupta commented.

The fundamental growth drivers in the beer sector were found to be favourable demographics, rising aspirations, increasing disposable incomes, premiumisation, and evolving consumer preferences toward responsible choices, all of which continue to be firmly in place, he added.

Anand Kripalu, Chairperson, UBL said, in a year impacted by weather-related disruptions and affordability pressures, conviction in the category’s long-term trajectory continues to remain strong. “We remain confident about the long-term prospects of the beer category in India.”

According to Mr. Kripalu, beer continues to be one of the most underpenetrated segments within the broader alcoholic beverages landscape in India, presenting a significant opportunity for both volume growth and more responsible, balanced consumption.

Additionally, an increasing number of States are acknowledging beer’s dual role, not just as a driver of economic growth but also, importantly, as an offering for responsible consumption, he observed. ``This has led to the adoption of progressive policy measures aimed at nudging consumers towards lower-alcohol beverage choices such as beer, aligning public policy objectives with broader socio-economic benefits. This is a move which could unlock the true potential of the Beer category,’’ he added.

The USL executives further said, the industry continues to operate within a complex, state-led regulatory environment, where pricing controls, high taxation, and policy uncertainty remain key challenges. Several states, including Maharashtra, Karnataka, Jharkhand, Uttar Pradesh, Andhra Pradesh were seen moving towards more progressive and reform-oriented schemes, creating a more conducive environment for long-term growth.

Several states were increasingly recognising the economic potential of a well-regulated and investment-friendly beer ecosystem. Uttar Pradesh stands out as a strong example in this regard. This investment reflects confidence in India’s long-term growth opportunity and investor’s intent to invest proactively where policy support, demand potential, and infrastructure readiness all align. This also reinforces a broader reality - progressive and transparent policy frameworks not only attract investments but also drive employment, strengthen local value chains, and enhance sustainable revenue generation for the State, they opined.

Encouragingly, Mr. Gupta said several states have begun adopting more progressive policies, including taxation parity measures in Maharashtra and the introduction of the alcohol-in-beverage (AIB) taxation framework in Karnataka.

“These developments support the long-term growth of the category by improving affordability and accessibility, which are critical to unlocking the next phase of growth in India,’’ he added.