The Hindu : Business : United Breweries threatens to stop supplies to T. Nadu, A.P.

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Wednesday, Sep 29, 2004

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United Breweries threatens to stop supplies to T. Nadu, A.P.

By Our Staff Reporter

BANGALORE, SEPT. 28. The Chairman of United Breweries, Vijaya Mallya, threatened to stop selling its liquor, including beer to Tamil Nadu and Andhra Pradesh by January to protest unviable prices in the states.

At the company's fifth annual shareholders' meet, Mr. Mallya said his repeated requests to the chief ministers of the states had fallen on deaf ears.

The country's leading beer maker had "swallowed inflation for over six years," he complained, stating that UB had continued to sell its products in the states "to maintain market share."

"I can't go on selling at loss. I may wait for another quarter, if the same situation continued, then I have no other alternative but to stop supply of liquor to these States," he said.

UB's alcoholic beverages accounted for a quarter of all such products sold in the two states, Mr. Mallya said. He urged these States and New Delhi, where it was battling the excise department, to allow price hikes proportional to the actual rate of inflation. The industry turned over some Rs. 22,000 crores, and government regulation of the prices was hurting the sector, he said. Beer sales had declined in some states mainly because of the price factor and hence registered a slower growth or stagnated. But there was "bound to be a metamorphosis" and the governments would have to accept price hikes if the industry had to survive, he said.

Meanwhile, sale of Kingfisher Strong, one of UB's popular brands of strong beer had crossed the ten million cases mark last year, in just five years of its launch despite many hiccups faced by the brewing industry, he said.

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