Brewers in India are grappling with rising costs and supply disruptions as a gas shortage-linked to geopolitical tensions around the Iran-US conflict-hits the supply chain. The shortage has pushed up prices of glass bottles and has also slowed aluminium imports used for cans.

With gas supply tightening, some glass manufacturers have either cut back or temporarily stopped production. This has led to a roughly 20 per cent increase in glass bottle prices. At the same time, aluminium can suppliers have warned that supply could tighten further, just as the peak summer season approaches and beer demand usually picks up. Paper carton costs have also doubled, and other packaging materials are becoming more expensive.

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Gas is essential for running furnaces and production lines, and India depends heavily on imports for its needs, with about 40 per cent coming from Qatar.  Disruption in Qatar has reduced gas availability, putting additional pressure on manufacturers.

Vinod Giri, the director general of the Brewer Association of India, said, "We are asking for price increases in the range of 12-15 per cent, and advised our member companies to individually approach states." 

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In the glass manufacturers' context, some factories have cut output by up to 40 per cent due to gas shortages. This is affecting the supply of beverages and other industries. "We've cut production and increased prices by 17-18 per cent," stated Nitin Agarwal, CEO of Art Glass Works.

Brewers are asking for price increases of 12-15 per cent to manage higher costs. But these price increases need state governments’ approval, which can delay decisions. Some companies say supply may be affected in states that do not allow price rises.

India’s alcohol sector is regulated, and price increases need state approval. About two-thirds of states must agree. Brewers may find it hard to maintain supply where price rises are not allowed.

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The beer market of India is valued at about USD 7.8 billion in 2024 and continues to grow. Major companies like Heineken, AB InBev and Carlsberg, along with smaller firms, are also being affected. Industry groups want prices to go up because costs are higher.

The shortage is also affecting other sectors. Bottled water producers have raised prices by around 11 per cent. Some companies have only a few months of plastic stock, showing the problem may spread.