Liquor manufacturers seek price hike amid US-Iran war disruptions
What's the story
India's liquor manufacturers are seeking a price hike, citing rising costs due to the ongoing West Asia conflict. The International Spirits & Wines Association of India (ISWAI) has requested the Karnataka government to intervene in the matter. They want action on rising input and packaging costs that are affecting the spirits industry, as well as a fair price revision by state governments.
Cost escalation
ISWAI highlights impact of West Asia conflict on spirits industry
ISWAI has highlighted that the ongoing conflict in West Asia and the resulting global energy and commodity crisis have led to a sharp rise in input and packaging costs for the spirits industry. The association noted that the volatility of oil, gas, coal, and petrochemical feedstocks has caused a structural increase in packaging costs across several categories.
Industry impact
'Significant inflation' in key packaging materials
Sanjit Padhi, CEO of ISWAI, emphasized the need for a balanced and pragmatic approach toward price revisions. He said this would help maintain business viability, ensure uninterrupted consumer supply, safeguard employment across the value chain, and sustain the industry's contribution to state excise revenues. Padhi also noted that key packaging materials such as glass bottles, closures, labels, PET resin, and cartons have seen significant inflation over two years.
Price surge
Price surge in primary packaging format
Glass bottles, the primary packaging format for spirits, have been severely impacted due to the energy-intensive nature of glass manufacturing. Elevated soda ash prices and volatility in natural gas and coal have significantly increased furnace operating costs, resulting in a price rise of approximately 11-17%. Similarly, plastic caps and closures have seen a similar price surge due to global polymer market increases.
Market instability
Industry experts warn of alcobev sector breaking point
John Distilleries Chairman Paul John stressed that a balanced approach toward price revisions in regulated markets would help support business sustainability. Abhay Kewadkar, Director of Tetrad Global Beverages and CEO at UB Wines, warned that the AlcoBev sector is at a breaking point due to market destabilization. Aditya Khoday, Director of The House of Khoday, said fuel price volatility has led to steep increases in transportation and logistics costs.