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Boby Kurian

Bangalore , Oct. 8

BREWING majors are pursuing alternative packaging solutions as glass bottle prices have steadily climbed in the last one year.

The leading domestic brewers United Breweries Ltd (UB) and SABMiller-Shaw Wallace combine separately disclosed that they had set up teams to come up with alternatives, as soaring bottle costs had dented their profitability in recent times.

Mr Kalyan Ganguly, President, UB, said the company had constituted a team to work on developing packaging solutions other than glass bottles. Acknowledging that glass bottle inputs costs have eaten into the company's profitability, he said alternative packaging had assumed urgency and was a priority project for the country's largest brewer.

Mr Richard Rushton, Managing Director of SABMiller India Ltd, which currently manages Shaw Wallace Breweries, also confirmed plans for new packaging stating that the present structure of the glass bottle market did not benefit the beer business.

Industry observers said the glass bottle industry had been skewed towards soft drinks business on account of better profitability and its steady growth over the years. The domestic brewers had also cut back their investments into new bottles even as the beer market picked up momentum resulting in a scenario where recycled bottles now cater to over 70 per cent of the industry demand pegged at over 80 million cases annually.

The glass bottles and cans are the only mode of delivery for pasteurised beer in the country with the latter accounting for a fraction of the market. The Indian glass bottle industry has been in the midst of consolidation with the Kolkata-based Hindustan National Glass controlling over 60 per cent of the supplies to sectors like brewing often adding to the discomfort of the latter. Other notable players include Excel, Associated Glass Industries and Larsen & Toubro.

It is learnt that inducting a new bottle in the system would cost a brewer Rs 5 in the prevailing conditions as against roughly Rs 4 till two years ago. More alarming is the fact that recycled bottles cost between Rs 3.50 and Rs 4.50, a steady climb after nearly a decade of price stability when prices used to fall within the bracket of Rs 2.75 to Rs 3.25 depending on seasonal variations.

Even as UB and SABMiller look for alternative packaging solutions in the domestic beer industry, it is not clear what could emerge from their search.

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