SAB, UB file lawsuit against AP Govt

SABMiller India and United Breweries (UB) have jointly filed a lawsuit against the Andhra Pradesh government for not revising the beer procurement price since 1997. This is despite the fact that the retail price has seen a 300-400 % jump in the same duration. The two brewers in a joint petition filed with AP high court argued on the ground that such policies were adversely hurting the companies as the cost of the raw materials and the logistic costs have gone up dramatically and the 1997 procurement price of Rs 200 per case is not at all justified.

AP is the largest beer market of the country with SAB deriving 30% and UB deriving close to 18% of their annual beer revenue from the state. The recent hikes in the price of malt, sugar and the increasing oil prices are having a drastic effect on the bottomline of the two companies. Earlier this year SAB was forced to close its brewery in AP for about a month as it was not able to cope up with the increased costs. Only after a dialogue with the government that the brewer decided to continue its operations in the state.