United Spirits seeks single pricing policy linked to inflation

United Spirits, India’s biggest spirits firm, said it is seeking a standard pricing policy linked to inflation from the government instead of frequently approaching every state individually for price revision and to offset increased costs. “Medium to longer term, if they were able to give us an inflation-indexed pricing policy, that would be amazing for the industry as well as their revenues,” Hina Nagarajan, managing director at USL, told ET.

“We have started a lot of advocacy on this model and also as an industry and we are looking at how we can help the government arrive at a model that works with the states. Even the pharma industry gets annual pricing indexed to inflation.”

Liquor companies have seen a record surge in raw materials such as extra neutral alcohol (ENA), glass and packaging materials. In India, state governments control retail, wholesale and pricing in states that account for over 65% of the overall market, making it difficult for firms to raise prices quickly.

The maker of Johnnie Walker and McDowell’s said it is seeing inflationary pressure, especially on ENA driven by the geopolitical impact on grain as well as temporary supply disruptions on imported products.

“So, in this very volatile and uncertain environment, we will be focusing on dialling up productivity initiatives and pricing advocacy to mitigate the inflationary pressures to meet our margin guidance,” added Nagarajan. Over the past year, several states have adopted a more progressive policy.