The Hindu Business Line : SABMiller warns of beer shortage this summer

SABMiller, which manages Shaw Wallace Breweries Ltd, has warned that the country could face a beer shortage in the approaching summer, the peak consumption season, as the industry was crippled by short supply of bottles.

Mr Richard Rushton, Managing Director of SABMiller India Ltd, told Business Line in an interview that he feared industry would not be able to adequately service the demand in the summer months on the back of "an inefficient bottle pool management" in a market that is heavily dependent on recycled bottles.

He said the price of recycled bottles had soared and the shortage assumed serious proportions as hoarding and profiteering tendencies surfaced in the run up to the peak season. This comes at a time when the beer sales had returned to modest single digit growth - after last year's bountiful monsoon blip - and the brewers remain cautiously optimistic about the summer sales.

"The industry has not injected fresh bottles into the system for a while. As we speak now, both SWBL and UB are investing heavily into new bottles. And we plan to do in perpetuity. Most brewers, big and small, have felt the impact of bottle shortage on their profits and volume. At least we are not going to watch it happen," Mr Rushton said while indicating that company may look at importing bottles to ease the pressure.

The recycled bottle prices have touched Rs 5 - appreciating by Rs 2 in the 18 to 24 months - and in some places were even higher making it as expensive as new ones. The Indian beer market is pegged at 80 million cases annually with UB leading with 45 per cent share followed by SABMiller with 35 per cent. The pressure on recycled beer bottles has increased over the two to three years as beer consumption has expanded - except last year's wet summer - at roughly 11 per cent.

He said the bottle pool management in the industry remained tardy and added there was urgent need for concerted action by the brewers' along with the State Governments. " I think we should highlight the global practices in this regard and how the soft drink industry here has executed it to a large extent," Mr Rushton said. "The route which the bottle takes to the trade and ultimately to the consumer should be the same it takes back to the brewer through the value chain. But in India, it gets fragmented and dispersed to spend a lot of time in the trade and results in high incidence of breakage," he added.

Meanwhile, SABMiller's top honcho also argued that States should let the brewers pass on cost pressure to the consumer. "In the free market spirit, we should be allowed to pass part of the cost pressure prudently enough to the consumer," he said.