CIABC urges IMFL price hike amid rising input costs from West Asia crisis

The CIABC has urged state governments to revise IMFL prices. The industry body cites sustained pressure on margins due to increased input and logistics costs driven by geopolitical tensions in West Asia and a stronger US Dollar.

The Confederation of Indian Alcoholic Beverage Companies (CIABC) urged state governments to consider price revisions for Indian Made Foreign Liquor (IMFL) as geopolitical tensions in West Asia drove up input and logistics costs.

The industry body noted that the volatility in global crude and fuel prices, alongside significant disruptions in shipping routes, created a broad-based increase in expenses across various sectors in India.

Mounting Cost Pressures on Alco-Bev Industry

According to a press release by the CIABC, the alcoholic beverage industry faced sustained cost pressures across its value chain even before recent escalations. The ongoing conflict in West Asia added further inflationary strain on supply chains, specifically impacting petroleum products, freight, and logistics.

The industry also managed the consequences of a rising US Dollar against the Indian Rupee, which caused additional spikes in the cost of production.

Anant S Iyer, Director General of the CIABC, stated that in addition to higher fuel and transportation expenses, manufacturers witnessed significant cost escalations in packaging materials such as PET, aseptic formats, and other polymer-linked inputs.

Impact of West Asian Tensions on Indian Markets

The escalating geopolitical tensions in West Asia, a region that supplies nearly 20% of the world's crude and serves as a key supply chain hub for India, began to have a pronounced impact on Indian energy markets and trade flows. He noted that the resulting volatility in crude and fuel prices, along with disruptions in shipping routes, drove a broad-based increase in logistics and input costs across sectors within India.

Iyer explained that these materials remained closely tied to global energy price movements, making the increases cumulative in nature. These developments occurred within an already inflationary environment where the costs of raw materials and distribution rose steadily over time.

Sector's Inability to Absorb Costs

Iyer highlighted a disparity between the alcobev sector and other consumer goods. He pointed out that this was unlike other industries across FMCG and paints which effected price increases as they were devoid of government price control mechanisms. With base prices of products in several markets remaining largely unchanged, manufacturers had a limited ability to absorb these increases, which resulted in sustained pressure on margins and overall business viability.

A Plea for Calibrated Price Adjustments

The Director General of CIABC formally requested state governments to evaluate timely and calibrated price adjustments for the sector. The industry emphasized that these revisions were essential to ensure continued investments, maintain a stable supply, and support the long-term sustainability of the industry.

The organization expressed a commitment to working closely with state authorities to ensure a balanced approach that safeguarded consumer interests while also protecting state excise revenues. (ANI)

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