Beer rivals join hands to ease 'bottle' neck

In a classic case of foes turning into friends in an hour of crisis, the two major beer players "" the UB-Scottish & Newcastle combine and Shaw Wallace-SAB Miller combine "" have joined hands to deal with the issue of rise in beer bottle prices which is denting their margins.

A common pool of bottles is formed for both the parties to source their requirements.

The domestic beer industry is estimated to be around 75 million cases. Together, both the players control 75 per cent of the market.

Says Kalyan Ganguly, president, breweries division of the UB group: "The rise in bottle prices has crippled the beer industry. There is a disequilibrium in the demand and supply situation in the market. The prices have increased because of the consolidation by one major player Hindustan National Glass."

"Bottle prices contribute 50 per cent of variable costs for UB," Ganguly adds. The price increase per case is between Rs 11 and Rs 13.

The spokesperson for SAB Miller-Shaw Wallace was unavailable for comments.

The stratege is to push down the prices of bottles. The common pool, created by SAB Miller-Shaw Wallace and UB group, buys both new and old bottles.

"We source our requirement as needed," Ganguly explained. The rise in cost is not yet been passed on to the consumers, he said.

According to industry analysts, the shortage in supply for bottles is on account of small size bottles introduced by cola companies that has booked order with bottlers.

The UB group has recently introduced pint packs in several critical markets of the country. For instance, in Bangalore if the consumer returns the empty bottle for its UB Export brand, he is reimbursed Rs 3. The same strategy is replicated for London Pilsner in Mumbai. Soft drink majors used to follow a similar strategy before the "chotta" ones made appearance.