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    United Breweries Q1 FY27 earnings call

    UBL
    Fast Moving Consumer Goods·5 Aug 2026
    Management Summary

    United Breweries Limited reported a resilient Q1 FY27, with industry and sell-out volumes growing by 13%. Despite significant cost inflation from the Middle East conflict, the company improved its EBITDA margin to 10.9% and achieved accretive premium portfolio margins for the first time. Strategic network optimizations and pricing interventions were implemented across 22 states, positioning UBL for continued double-digit growth, though inflationary pressures remain a key focus.

    Highlights

    5

    • Industry growth at approximately 13% and sell-out volumes increased in line with this, indicating strong market demand.

    • EBITDA margin improved materially to 10.9% in Q1 FY27 from 6.5% in the previous quarter, despite significant cost shocks.

    • The premium portfolio became accretive for the first time, with premium volumes increasing approximately 17% and Heineken Silver growing approximately 28%.

    • A recovery program delivered over INR50 crores through accelerated pricing, revenue management, and trade spend optimization.

    • Full year cost impact from the Middle East conflict was revised downward from INR400-500 crores to INR350-400 crores.

    Concerns

    3

    • Gross margin was down approximately 155 basis points year-over-year to 41%, primarily due to a ~300 bps impact from the Middle East conflict.

    • Working capital grew by 38% versus the same quarter last year, reflecting external headwinds.

    • Sell-in volumes (9% growth) lagged sell-out volumes (13% growth) due to a deliberate choice to reduce in-market inventory by approximately 20%.

    Key financials

    Single quarter

    15 metrics
    1. 01Industry Growth13%
    2. 02Sell-in Volumes Growth9%
    3. 03Sell-out Volumes Growth13%
    4. 04Gross Margin41%
    5. 05Gross Margin Decline155 bps

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Capex

    Capex disclosed

    Liquidity

    Liquidity disclosed

    Management emphasized 'cash is king in the scenario' and focused on strengthening free operating cash flow.

    Guidance & targets

    4
    CategoryTargetPriority
    Category Growth
    Industry growth
    high single digit
    		High
    Volume
    Volume growth
    high single-digit
    		High
    Cost Management
    Cost impact from Middle East war
    INR350 crores to INR400 crores
    		High
    Premiumization
    Premium share of revenue
    almost 20%
    		Medium

    What to watch in Q2 FY27

    4

    Impact of pricing interventions in 22 states

    Next quarter (Q2 FY27)
    CurrentAll implemented by end of August 2026
    TargetFull reflection in financials, positive impact on margins

    Why it matters

    These interventions are crucial for recovering cost inflation and improving overall profitability, directly impacting margin trajectory.

    We actually -- the most important thing is we actually took pricing interventions in 22 states and that have been all implemented. So -- and when we take the pricing implementation, it takes time, it takes transition. But by end of this month, we are now live in 22 states with the pricing implementation, which again tells us that we were not chasing business at any cost, which is the right thing.

    Risks & concerns

    3
    RiskSeverity

    Elevated inflationary pressure

    Middle East conflict created ~300 bps impact on GP margins, affecting packaging materials, logistics, and foreign exchange rates. Full year impact revised to INR350-400 crores. — Management acknowledged

    high

    Seasonality of beer demand

    Beer consumption is seasonal, but management noted that strategic reforms are accelerating growth beyond just summer demand, with Q1 FY27 growth at 13% vs. 7-year CAGR of 6%. — Analyst acknowledged

    medium

    Volatility in state-level policies and pricing viability

    Business in states like Haryana was impacted by reduced trade spend due to unviability, and West Bengal faced challenges from inflated import costs. UBL is negotiating with governments for sustainable margin structures. — Management acknowledged

    medium

    Q&A highlights

    6

    “I think it's very difficult to see the data on how much is the MML impacting beer. Based on the recent data, we haven't seen much of the impact. But one thing we are definitely seeing in Maharashtra, there is strong growth happening at economy segment. So there is definitely affordability is becoming extremely critical for the consumers.”

    Addresses the competitive landscape and consumer behavior in a key market, highlighting the importance of affordability in the economy segment.

    asked by Ashutosh Jain

    2 min read6 chapters

    Detailed Narrative

    01

    Q1 FY27 Performance and Market Dynamics

    United Breweries Limited reported a strong Q1 FY27, with the beer category growing at approximately 13%, matching the company's sell-out volume growth. Sell-in volumes increased by around 9%, a deliberate choice to reduce in-market inventory by approximately 20% compared to the previous year. The company achieved a material improvement in EBITDA margin to 10.9% from 6.5% in the prior quarter, despite significant cost headwinds.

    02

    Strategic Focus on Premiumization and Brand Power

    A key highlight was the premium portfolio becoming accretive for the first time, driven by a 17% increase in premium volumes and a 28% growth in Heineken Silver. Management emphasized strengthening brand power, with Kingfisher, Ultra, and Heineken brands showing improvement. The premium segment now contributes 10-11% of revenue, with an aspiration to reach 20%.

    03

    Network Optimization and Capacity Expansion

    UBL completed several structural improvements, including the commissioning of a new can line in Telangana and brownfield expansions in Maharashtra and Telangana. The company also closed its Punjab brewery, transitioning to a partnership, and plans a greenfield brewery in Uttar Pradesh. These initiatives aim to optimize the network and ensure efficient production in a capital-intensive business.

    04

    Regulatory Reforms and Category Growth

    The company noted a revolutionary shift in the beer category, with states like Karnataka showing over 30-50% growth following ABV-based tax reforms. Maharashtra also saw over 20% growth after policy interventions, and Jharkhand experienced significant category size increase post-retail privatization. These reforms are creating a more favorable environment for long-term growth, with UBL implementing pricing interventions in 22 states.

    05

    Cost Management and Inflationary Headwinds

    UBL faced significant cost shocks, with the Middle East conflict impacting gross margins by approximately 300 basis points. However, a recovery program, including accelerated pricing and revenue management, mitigated this impact to a 155 basis points decline, delivering over INR50 crores. The full-year cost impact from the conflict was revised downward from INR400-500 crores to INR350-400 crores, reflecting ongoing cost efficiency efforts.

    06

    Retailer Engagement and Market Execution

    The company is shifting from a push-driven approach to building category and business for retailers. This includes placing 50,000 coolers, improving go-to-market execution in states like Karnataka and Maharashtra by clearing retailer claims within 20 days, and using technology for out-of-stock prediction. Efforts to expand into Tier 2 and Tier 3 cities through activations like BCCI Fan Parks have shown massive responses.

    This is an AI-generated summary of a publicly available earnings call transcript.