Key Points
New Delhi: Feeling the pinch from shrinking margins due to increasing input costs and restrictions on rising prices to offset these, the alcoholic beverages (alco-bev) industry is seeking an inflation-linked pricing model from state governments...
Stressing that its a myth that liquor companies make a lot of money, the industry says its seeking the change to cover up its costs and not for commercial gains...
However, the reality is that the ratio between the gross turnover and profit after tax is probably the lowest for Alco-Bev companies in the entire FMCG space, she said.. Till the time a company reaches significant volume and that too in the premium space, its impossible for the smaller and newer companies to survive, she said.. Kapoor stressed that while companies try to rationalise costs and keep squeezing till the bottom of the barrel and then there comes a point of time where sustaining the business becomes a challenge...
Another industry body, the Confederation of Indian Alcoholic Beverage Companies (CIABC), had previously written to some state governments to allow free pricing..
That is unlike other consumer products, which can change their prices depending on changes in the cost of production and according to the demand/brand pull of products, the letter said.. Asking state governments to allow free pricing and permit companies to determine prices of their products according to their costs and brand pull, the industry body had said that the apprehension that suppliers would increase their prices substantially in a free pricing regime is misplaced because there is immense competition in the state with the presence of hundreds of brands...
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