UB expects Q3 profit growth to moderate on rising costs

The maker of Kingfisher beer reported a 16% rise in volumes and a 24% increase in net sales in the September quarter but cautioned against extrapolating the performance, which benefited from regulatory changes and a favourable comparison with a weather-hit year-earlier period.

The company expects input-cost pressures linked to the Middle East conflict to persist, with sugar prices also rising. It forecasts gross margins of 43-45%, compared with 44.7% in the September quarter.

"If I'm honest, my expectation is that even if we will hopefully find an end to this war, we won't go back to pre-war pricing if we see that infrastructure in the Middle East has also been heavily impacted. So I don't think that that will happen," he added.

The Heineken-owned company had initially highlighted a ₹400-500 crore margin hit in the last quarter of FY26, which it later revised down to ₹350-400 crore.

Pricing remains a challenge in key markets for the brewer. Nearly 30% of the company's business, including Telangana, Andhra Pradesh and Tamil Nadu, has yet to receive price increases as it seeks government approval to offset higher costs.

"Almost 30% of our business, we have not taken any pricing yet," Kersten said.

The regulatory hurdles reflect the fragmented nature of India's beer market, where taxation and pricing policies vary by state. Heineken global CFO Harold van den Broek said that while India remains a difficult market to navigate in terms of regulation, recent policy changes in states such as Karnataka were a good indicator of the "market opening up".

"We're very positive on the India outlook but the consumer is still very price conscious, so we're not getting yet the price leverage or the mix leverage that we would like to see coming through. In the longer term. We need to be a bit more patient on that," he added.

In Telangana, delays in price revisions have constrained investment, UBL chief executive Vivek Gupta said. The company has also lost some market share as competitors continued spending.

"Until that pricing happens, it is very difficult to make more investments and also make investments which don't really drive the category expansion," Gupta said.

United Breweries is prioritising profitability over market share in some regions, even as competition intensifies. "We are okay to lose shares in Telangana if it is a question of buying shares to show very good numbers," Gupta said.