United Breweries Ltd (NSE: UBL) Q1 2026 Earnings Call dated Jul. 23, 2025
Corporate Participants:
Unidentified Speaker
Jorn Elimar Kersten — Chief Financial Officer
Vivek Gupta — Chief Executive Officer, Managing Director
Analysts:
Unidentified Participant
Natika Chopra — Analyst
Jay Doshi — Analyst
Abneesh Roy — Analyst
Krishnan Sambamurthy — Analyst
Vishal Punmya — Analyst
Latika Chopra — Analyst
Ashutosh Jain — Analyst
Sanjay Manyal — Analyst
Presentation:
operator
Ladies and Gentlemen, good day and welcome to The United Breweries Limited Q1 FY26 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing Star then zero on your touch tone phone. I now hand the conference over to Mr. Yohen Kestin, CFO. Thank you. And over to you sir.
Jorn Elimar Kersten — Chief Financial Officer
Thank you. Good afternoon. Good day everyone. Thank you for joining this earnings call on the first quarter of three year 26. I’m here together with Siebert Gupta, our MD and CEO and we’re happy to discuss the developments of quarter one for this financial year. I’m sure there’s quite a few questions that will pop up, so we’ll keep the introductory comments relatively short. I will address a few highlights, hand over to Vibek and then we’ll open up for the Q and a volume Q1 we increased by 11%. Note that we are lapping the impact from the elections during peak season last year, but this comes coupled with strong estimated market share gains in the quarter, predominantly coming from Andhra Pradesh, Assam UP and Telangana, but also partially offset by Karnataka and West Bengal and it’s something that we probably come back to later on the call as well.
Premium volumes very strong with 46% ahead of the segment in the quarter. Within the segment we see the strongest growth coming from the Kingfisher Ultra franchise, Amstel Grande and Heineken Silver. So across the premium portfolio we see very strong growth and after receiving a very overwhelming response in the initial launch in Maharashtra, Bengal and Uttar Pradesh, we’re quite excited to bring Amstel Grande also to Karnataka, our home market and an always evolving market where consumers will be eager to try something new which is international premium. As you know, Amsterdam Grande was developed especially for the India market, so we’re super happy that we’re now also bringing this to Karnataka.
Back to the quarter, net sales increased by 16% driven by price increase in multiple states, but also a mixed from premarition and Gross margin in Q1 is 42.5% which is 50 basis points below last year. And I think we’ve mentioned this before as well, driven by some short term margin pressure which we see from interstate transfers during the season, but also an unfavorable state mix on a profit level or gross profit level and the bubble infusion late to the premiumization. As you would know, we grow in premium but the Margin extension is something that is a long term play.
Heba delivery at 259 cores which is 10% ahead of last year. While we still continue to invest behind both the brands and the organization as well as in our supply chain and the quality of our beers. Now moving forward, we will remain to focus on category growth and winning across segments with the importance of our supply chain network and the quality of our BAER being our guiding principles. And we’ll pay a lot of attention to building a winning culture in the organization and of course keep an eye on profitability and capital efficiency. This will continue to guide us as we work towards a long term sustainable growth in the market and also to continue our role as a market leader in the beer category.
Now before we move to the Q and A, I have to hand over to Zvek for his comments on developments.
Vivek Gupta — Chief Executive Officer, Managing Director
Yeah, thanks John. And good afternoon everyone. I think, as you can hear from my voice, I think we are very excited about this quarter and I think while John has given the overall result. But I think there are two contexts which are very important to even add on to that. I think one important context is I will not talk macro about Weber and some of the other factors which you see from other companies. I think in this case the beer industry, actually the whole market effect in divide there were states which were declining double digit categories and there were states which were growing more than double digit.
And in this context state like Karnataka, which is a highly profitable state relatively our business declined almost 16 to 17% though we grew shares in Karnataka which means category further declined. States like West Bengal where because of the taxation we saw a double digit decline in the Caribbean. And we also saw some of our competitors did not take pricing on economy even in that model like brands like companies like Abi. They did not take the economy price which is. It doesn’t make sense at all because you know, on one side the government is increasing taxation and you’re not taking the prices and of course they continue to flee the growth but it’s their strategy.
So in that competitive environment and also in the context where, you know, there were certain states where we had to, you know, or certain states where there was a lot of disruption because you know, the supply network was not yet ready. And in between we had this whole operation in the middle of IPL which was our biggest program where we had to relook at our investment and relook at the execution. Keeping all of this context, I’m extremely proud of the 11% growth on volume and 16% growth on net sales and also 10% EBITDO for TG is able to deliver.
I think the key points I want to mention this growth is behind fundamentals. Our Premium business grew 46% last earning call. I talked about that. We are preparing for the season. We are making lot of investment in warehousing and all of these investments. And you see that that really helped us. Despite all of this, we were having massive supply issues, especially on cans and also in certain states like up where we had limited capacity. And I would say in all of this context, you know, we feel pretty good as a team that our strategic choices are working.
Our cooler communication. We place more coolers in India in the first six months that we did in last year. And cumulatively we have placed more coolers what we placed in the last five years. So we are investing in cold beer, we are investing in premiumization, we are investing in localization and we are also having a good price mix. So we feel pretty good about the quarter. Can we. Things would have been better on margin, absolutely. But we will continue to reinvest because there’s so much of opportunity for category growth. The last thing before I open for Q and A, there is a lot of learning for us as we go for explosive growth.
Because as I mentioned, there were places we were declining and there were places we were growing. One big learning which I got that even the government infrastructure is not ready for this growth. So in many states where we went for explosive growth, the corporation market, they don’t have their warehouses, they don’t have their depots, the trucks are standing outside. So that also while we have to spend a lot of money on retention of trucks outside government warehouses, that’s a real expense. But it also gave us a lot of learning for next year of how to plan inventory, how to plan for growth.
Because we may plan growth from one side, but system is not geared up for the growth. So keeping all of this aside, I think we feel very positive about the quarter we just delivered. And we are already focusing on the current quarter where we are already down 30 days. I think with this we can open up for questions.
Questions and Answers:
operator
Sure. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions may press STAR and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking questions. Also before we begin, a request to participants to please limit your questions to two per participant. Should you have a follow up question, we request you to Rejoin the queue. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from Jaya Doshi from Kotak.
Please go ahead. We seem to have lost the line from Mr. Jay Doshi. We move to the next question. The next question is from Natika Chopra from JP Morgan. Please go ahead.
Natika Chopra
Yeah, hi. Thank you for the opportunity. Two questions from my side. The first one is on revenues. Could you share how much of the 11% volume growth would you attribute to low base impact from elections in the base quarter and what in your view would be the normalized volume growth which you anticipate in remaining quarters of this fiscal and on revenue front, if you could also add your comments regarding sustenance of 5% price mix growth which looks steady so far as we look through rest of the fiscal year. That’s the first question.
Vivek Gupta
Yeah, I think our estimates are it’s 2 and 2.5% growth you can attribute to low base because of election. But I also say that the low base was for everyone. We had a little bit more impact. But when we look at our share market share, I think our calculation is we have grown more than 300 basis points of market share all India level in this quarter. So we have definitely grown much faster than the Caribbean even with that context. But if you have to take a number out, it’s 2% to 2.5% which is because of mobile on the price mix.
I think I would say yes. Four points is what we are planning in our own internal plan and some of the pricing as we go in the second half we’ll be cycling some of the pricing and we’ll do that. But yes, we think the price mix of 4% to 5% is what we are going to stretch about. It will also depend on the premium mix as well.
Natika Chopra
Sure. So Vivek, is it right to assume that adjusting for this base impact you would be confident of delivering a high single digit kind of a volume growth even in rest of the year if that’s the pace of growth you’re seeing in the industry?
Vivek Gupta
I think it really depends on three things. I think the first thing is what happens in some of these states like West Bengal, Karnataka, where the category continues to tank. Right. Even this month when I look at the data, the category is further decelerating in Karnataka. So I think it really depends on the policy intervention. It’s no new surprises. There are some states which are used to devise their excise policies and I think we think we should get to high single digit if everything comes Together I think the second one is there is a shortage of cans which we are dealing with and cans as a segment is growing in certain states and there is no quick fix on supplies of cans and there is a government of India rule around BIS imports and all which is also further delayed.
So that is a little bit of, I would say headwind in the next quarter and definitely for us and I am pretty sure for the industry as well. So Those are the two factors which make the nervous and I think 5% to 6% volume growth is still possible despite these factors. But if you get the tailwind on these Factors I think 7 to 8% volume growth is very much possible.
Natika Chopra
Sure. And the second bit I had was on margins and I heard you saying margin expansion is a long term play. But despite a 16% revenue growth, despite the price increases that you received in Telangana and sustained outperformance of portfolio, you know gross and EBITDA margins have been lower. You did call out some of the aspects which affected this. But just wanted to understand on a full year basis do you think you will land at margins which are higher than the last fiscal year means? On a full year basis do we still anticipate profit growth to be ahead of revenue growth?
Vivek Gupta
I think I’ll ask Jan before Sansa.
Jorn Elimar Kersten
And then yes, I think historically we see that this quarter is relatively high versus the full year margins that we deliver on EBITDA which is historically around 200 basis points. We don’t see any reason to think this is different but this is just a ballpark adjustment between the quarter and the full year and we do medium term still aim for double digit EBITDA margin. If we look at the margin complexion that we now report on, I think a big factor here to highlight is the development in Karnataka which we estimate has roughly 50 basis points of impact on the margin that we deliver in the quarter and where we absolutely see that needs to come back to growth because it’s one of our most profitable markets.
So that should be a big factor in what we reported so far. Underlying we do see that there’s let’s say around 100 basis points of GP margin improvement versus the same period last year where we continuously improve on the return on bottles. We have actually positive development on raw materials. We get some pricing as we also saw in some of the comments. So the underlying developments we still think are absolutely the right ones. However in the quarter it’s muted by Karnataka and then again, and we’ve mentioned this before also in premium because it’s growing, we don’t get the efficiencies on the bottle.
We turn on premium yet and for that to happen we need quite a bit more growth. So as long as the premium grows disproportionately and doesn’t reach the scale, that’s still dilutive. On margins where currently we see that premium delivers roughly two thirds of the profitability from a margin perspective versus the. Rest of the portfolio. So we need to grow that and that’s the long term play. But underlying we still see that the right developments are there.
Natika Chopra
Understood. Thank you so much and I’ll get back into queue.
operator
Thank you. The next question is from Jay Doshi from Kotak. Please go ahead.
Jay Doshi
Yes, hi. My question is also first of all, congratulations on good market share gain and consistent sort of healthy growth in premium segment. Now on margins, Vivek, about a year ago, year and a half back you had indicated that your aspiration is to get to double digit EBIT margin. And broadly I think you were around 6, 7, 6, 6 and a half percent back then. So there was hope of about 300 to 400 basis point improvement over a two year period. Now we see that you made some progress in bottle recovery and in today morning’s interview you’ve given a target also for bottle recovery.
By end of this year you’ve managed to get price increases in Telangana. On the other side you’ve had some, you know, regulatory challenges in Karnataka. So when we, when you put together all these tailwinds and headwinds, are you still sort of, you know, comfortable of that, you know, reaching 10, 11% EBIT margin in FY27 or you know, the external environment has changed and maybe, you know, you would like us to moderate our expectations on that front.
Vivek Gupta
See if you see this quarter margin has been 9% right? And look, as I said that, you know, the plan we have is also about consistently growing to expand the margin. Our goal is to hit that double digit number sooner than later. But having said that the investment required, we will continue to do that like what Yaun said that we have, you know, last year we grew premium by 34% first quarter we UI to 24%. This quarter we grew 46% in the season which is a very healthy sign for both the brand and our brand.
Power is also going up, I’m pretty sure. And in our financial modeling the return model is a big part, especially as the premium side coming in, becoming the scale part of it. And I think getting our business right in states like Maharashtra, Karnataka, which are high gross margin states is also super, super critical. I think this quarter in particular and this year so far, Karnataka has been a big headwind. And I think Yong said there’s basis point of margin, but what we’re also doing is we know that this will keep happening one state down, one state up is going to happen.
So we’re also creating other pockets where we can actually create a sustainable business model. To give you an example, like this quarter, we had to import a lot of stock to Andhra Pradesh because our brewery had only limited capacity. But we also made an announcement that we are going to actually lease a brewery. And I’m happy to say that the first case of Kingfisher will be out of that brewery by end of this month. So that localization will also help us in terms of margin. There are six locations where we have started producing our premium brands locally in our brewery in the first six months.
There are four locations which are going live in the last in the next few weeks where we’ll have further localization of our production. So we also did network design work as you see, and there’s a lot of work happening on the. So expanding margin is absolutely top of our agenda and absolutely we have a glide path to get there. But what we are also doing is we are not compromising on the fundamentals despite the headwinds we get. Because for us it would have been very easy saying okay, Karnataka is going to give a 50 crore dirt in the profits or whatever, let us stop investing in IPL or let’s not do some of the other stuff that choices we are not making yet because we still are prioritizing growth but with responsible margin expansion.
So I really hope some of these tailwinds will really land us somewhere. What we talked before and if I.
Jay Doshi
Can add to that to Vivek’s point on the fundamentals, that’s also about premiumization. If we see the speed at which the premium growth accelerates versus where we were say a year ago or 18 months ago, we love it from the fact that we want to premiumize and. We think long term that’s really where we want to go. And there’s a lot of room for growth there and a lot of opportunity.
Vivek Gupta
From a margin perspective that tilts the. Environment slightly differently from what we anticipated before because again the marginal premium will take some time before they catch on. So as that growth accelerates at a higher pace from what we expected about a year ago, yes, that has a lot of positives. But on the short to medium term we need to sort of swallow that impact on margin and longer term, again, good feedback on what are we aiming for, which requires quite an extension in terms of basis points versus where we are today. And if we look at a basis point increase on EBIT margins where somewhere between 200, 300 basis points on the longer term I think we can split it into a number of big buckets as mentioned, MBI and premium, where we get to a savings of premium, where we get actually the synergies of the results.
Our belief is that that’s roughly one third of the gap. One third we will also get from just growing scale but also optimizing, like Tvek said, the network capacity. In the past quarter, a large chunk of the growth, the majority of the growth came from volume sourced from contract breweries which we like because it allowed us to deliver the beer to our consumers. But for next year and years to come, we also expect that the growth is more balanced between our own breweries and the CBS with trauma percentage margin perspective would have a positive impact for the year, this year.
And lastly, and I think that’s more the context, we still aim for continued price mix. So the pricing and the top line pricing will also definitely play a part in the overall margin expansion. And we need to continue to have these conversations and make sure that we play that role of category maker and really meet the category growth as well. Also in the conversations with the regulators.
Jay Doshi
Thank you. That was detailed. I have two follow up questions here. One is one Q is a seasonally strong quarter and what we have observed in the past, at least past couple of years is that full year margins tend to be lower than 1Q margins. So will it be different this year or the same seasonality will apply this year as well?
Jorn Elimar Kersten
I think we can say similar seasonality will apply. However we have the Karnataka piece which is impacting the quarter quite heavily. So I don’t see reason aside from how Karnataka develops for a different development in the full year versus this quarter. Than what we have historically.
Jay Doshi
Sure. And one more Heineken at a global level. In one of the presentations I remember had sort of highlighted that premium segment, probably some other part of the world garners about 3x EBITDA per case as compared to mainstream. I understand that today premium is growing much faster and you’re infusing more new bottles there, but on a like for like basis. If you assume bottle recovery to be similar for premium and mainstream, what would be the margin differential in India? And I know that you know it will vary from state to state, but if you can give me some ballpark sense either in terms of gross margin or EBITDA per case.
Which helps us sort of better appreciate, you know, the improving mix.
Vivek Gupta
Yeah. And you’re, you’re absolutely right that it will differ state by state. But if we would put the bottom. Returns as far we could say on a per case, it’s about 2x percentage margin. It will be lower than that.
Jay Doshi
Understood. Absolute EBITDA per case will be 2x. Like for like comparison. Yeah. Thank you very much and good luck for rest of the year.
Jorn Elimar Kersten
Thank you.
operator
Thank you. The next question is from Abneesh Roy from Nuama. Please go ahead.
Abneesh Roy
Yeah, thanks. And congrats on excellent volume growth. My first question is on Maharashtra, how big an opportunity do you see this tax hike which has happened in spirits and has not happened in beer, taking example from Bengal and Karnataka. So in Bengal and Karnataka beer industry has been close to double digit decline. So where is the consumption shifting? Is it beer being cut or customer is moving towards other forms of alcohol consumption? And do you see in Maharashtra also similar development or Maharashtra will take its own course of where exactly consumer behavior will change?
Vivek Gupta
Yeah, I think we’ll be very buoyant on Maharashtra if the policy is able to stabilize. It’s very early days because you know the Maharashtra used to be the fourth, the single largest state on the earth many years ago and now it became fourth largest. So there is, and Maharashtra is one of the unique state where there is, there are a lot of beer stores also. And if you remember last time we presented, we have done a special RTM effort to actually optimize the distributor and coverage network in Maharashtra. So we are absolutely set to win in Maharashtra.
I think so far we haven’t seen much uplift because there was a delay in implementation of that policy because of spirit companies, they declare their pricing only in the first week of July or second week of July. Actually I traveled to Maharashtra in the first week of July, spent few days there in different markets like so there is enough stock in the retail. So what has happened is retailers have actually stocked up a lot on spirits in anticipation of price going up. So right now lot of inventory is full in detail on spirits I think, you know, and they were probably hoping that this policy will get reversed or something because there was a strikeout for digit.
But having said all of that, if this remains stable, it is definitely going to be a very big list for the year because affordability is key on beer. As I said, all the examples I give you linked to affordability where we are seeing gain is also linked to affordability So I think it will be absolutely good for the beer category. How much is the upside? The good part is that most of the beer manufacturers have local capacity. In Maharashtra we have three breweries. We know competitors have it. So it will not be because of the lack of shortage of supply, you know, so.
So we expect a very solid, at least a double digit volume growth in Maharashtra if this comes the right. But for me it should be much more than that.
Jorn Elimar Kersten
Everywhere where the gap between spirits and beer changes, there’s a shift in consumption. Overall if the average pricing for consumption go up, it will also have an impact on the total alcohol category. But I think usually that’s more of a temporary sort. But we see the gap and everywhere that the gap becomes smaller, more consumers ship to beer. But we still see across many states there’s disproportionate taxation on beer versus other alternatives. So I think we think Maharashtra is definitely a step in the right direction. But there’s still many places to follow because beer is still extremely expensive for consumers.
Abneesh Roy
Thanks. That’s my second question is on the premium segment. So two year CAGR is around 46%. Extremely explosive numbers. So how is the competition reacting? Because I think you are the number three player or maybe now close to the number two. Now 400 gain in market share in the premium. How is the competition reacting? Because obviously those are also good large multinational companies. So if you could say is the cost of business in the premium going up? I understand bizicular services, even the March end, you have also invested in the ipl. So if you could tell us how is the competition reacting given such explosive growth? You are seeing 46% in terms of the premium portfolio.
Vivek Gupta
I think first of all, I think credit to our competitors who actually created a very good premium segment here and did a very good job. Budweiser did a very good job, did a very good beer. Even Carlsberg, Elephant, even Beerus, you know, brought some innovation and favoured the market. So I think first of all a lot of respect for competitors, no doubt about it. And I think, you know, and they’ve done it. I think a lot of it was lagging. We were lagging behind. We know we are doing, we are catching up. You know, as I mentioned to you, it was because we did have local sourcing, lack of focus, being very strong.
So I would say even with 40% growth I was not happy because we have so much of fundamental work to be done and to really do that. On how competition is reacting, I’m actually quite surprised because what we are Seeing is in certain markets some of the competitors like they are actually playing an economy game that we see a lot of investment by Abi Leasing on RP brand in Karnataka which is the entry level economy or Hayward brand in West Bengal, which is an economist. It is a bit confusing because if it’s just buying volume then it is not building category or the category profit is a category.
The country where the profit pool is so low. So I think probably, maybe I don’t know, it’s the strategy of the company but I do think if everyone keeps investing behind premium, there is a huge opportunity for premium growth because we are just capping the surface based on what we learn in China, in Mexico, in Brazil to do so. That’s one part of it. I think the second part is I do think there is good innovation coming from competition as well. And we have a strong pipeline. Our Amazon brand is doing extremely well. We are expanding stage by state, Heineken Silver.
Now we have local production in Karnataka. We see the growth coming behind it. But having said that I’m little bit. We are actually a little bit confused when the market is offering opportunity and premiumization and all why there’s so much of focus on actually value deception around economy. And also that’s what we are observing. But let’s see. But maybe there’s a volume pressure everywhere.
Abneesh Roy
So thanks. One quick follow up and that’s my last question. So on the cans, if you could elaborate the shortage, is it a cost implication for you so the cost goes up or is it a stock out also? So your growth could have been faster if the can availability was better and is it impacting other forms of consumption, say the coffee cans, the carbonated drinks cans, is it impacting everywhere? And when do you see this fully normalizing in terms of the supply side?
Vivek Gupta
Look, our assessment, which may be completely unique internal assessment, our assessment is there is a fixed supply of cans in the market whether it is for beer industry or for some of the other industries within beer industries. We have our fixed quota or whatever we have negotiated and our demand is more than that. So we are definitely having stopouts because we are not able to supply cans or we are not able to get cans. Second is importing cans also the standards have changed. I think you would have heard about BIS standard and some approval which Government of India introduced from April 1 and multiple associations including Bureau’s association of India working on that to get some exemptions.
But that also will take time. So once you get the exemption it will take time to. So these are. I Call it challenges of growth. So if we start doing double digit and we have started accelerating growth, the backward integration in industry needs a lot of work whether it is bottles, whether it is cans, whether it is long term. And we are actually actively working with a lot of international suppliers and local suppliers for long term on that. But today I would say we are actually heading out of stocks. We would have at least lost I would say one to two points of growth because of lack of cans over a six month period.
So there is an out of stock as well in terms of cost because we don’t have much options to import yet. So we are looking at some options but it has less impact on cost but more on the availability. Definitely an impact.
Abneesh Roy
So thanks. That’s all from my side.
Vivek Gupta
Thank you.
operator
Thank you. The next question is from Krishnan Sambamurthy from Nirmalbang Institutional Equities. Please go ahead.
Krishnan Sambamurthy
Hi Vivek one follow up on the cans portfolio. How significant is cans as a visa vis bottles as a proportion of your. Of your. Of your overall BSAs?
Vivek Gupta
Yeah, cans is around 20% of our business and in some of the states like UC it is 75, 80% of the business. The problem happens is you know, at a state by state level. Right. So in certain states like Madhya Pradesh and up the cab is a big part of the business and it’s also growing, you know as a category is also growing in certain parts. So it is 20, 22% of our business.
Krishnan Sambamurthy
Understood. A few questions regarding Telangana. The quarter, the performance in Telangana was actually good. I, I remember you were expressing some concerns that there could be some impact on volumes after the price increases that were granted by the state. Maybe that has not panned out so. Or is that is that because of a lower base that Telangana did well on a VI basis.
Vivek Gupta
Could you just clarify at lower base. So when I talk about 2% impact to the lower base, most of it was Telangana because remember we didn’t get the third shift in Telangana last year year and we have the biggest volume there. There is definitely a 5 to 6% category decline. If I on a basis because of the price reduction. It varies by month. But 5 to 6% cumulative category decline. We are looking at. Okay.
Krishnan Sambamurthy
And secondly you were also anticipating a second round of price increases from the state government. Has that come through yet?
Vivek Gupta
No, there’s no discussion on that yet. We have, we consistently asked pursuing it but I think the both issues are still open issues. One is getting the payments on time and second is the pricing.
Krishnan Sambamurthy
Okay, yeah, that is going to Be my last question. Receivables were also a major issue in Telangana. What’s the latest update there?
Vivek Gupta
The situation is better than what it was in the last quarter. You know some old deals have definitely come down. But the new deals have more territory. So definitely the money is coming back. But the old outstanding is still there. I think we made progress on that versus last quarter. But there’s more to be done. Okay, thanks.
operator
Thank you. Before we take the next question, a reminder to participants that you may press star and one to join the question queue. The next question is from Vishal Punmya from yes, securities. Please go ahead.
Vishal Punmya
Yeah, thank you. Firstly, just a clarification on the volume growth. So there seems to be a change in calculation for the volume growth that we are reporting. So just wanted to understand if the calculation was done as per the earlier way what would have been the volume growth for this quarter? Would it be 9%?
Vivek Gupta
10%. So if you were wrong by it would have been 10%. But because we have moved to hector details which is the right measure because of canned Indians growing. That’s the real beer volume. So it is 11%. But if you go by just cases it will be 10%.
Vishal Punmya
Understood. Thank you. And secondly in terms of market headings, congrats on a very strong gain this quarter. But if you could give some idea in terms of which player would have lost market share during the quarter. Any views on that?
Vivek Gupta
Sorry, I didn’t get the last part of the question. The voice was decaying. On the market share.
Vishal Punmya
Which player would have lost market share? Would it be Bidda or any other the bigger players would have lost?
Vivek Gupta
Look, you know again as I said, I think it varies state by state from a proper mix. Because many players don’t have a presence in many states to do that. But we know that major players have lost market share. At least one out of the two major players have definitely lost market share. And we also know in certain markets local players have lost market share. Andhra is a good example where we have gained market share and our local player has lost market share significantly. But we also know on our all India basis because the Premium is going 46% we also grew 328 basis point of share growth.
We definitely know at least one out of the two major players have lost market share.
Vishal Punmya
Understood. And lastly any news on Caribbean the change in control of the business going to the parent entirely. Now is there any intensity that we have seen in terms of investments in sales and marketing or even in terms of Capex? Any news on that?
Vivek Gupta
We are so busy in our own plans and execution. And I said for me there is such a huge opportunity in India, you know, if you can, if most of the companies have streamlined, you know the number one is the continue to pursue the agenda of tax rationalization, affordability of beer. And that way there’s a lot of upside. We talk about how it can do category again if the growth is going to happen, if the country will need a lot of infrastructure both in terms of backward integration of cans, bottles, malting, all of these areas.
And I think players investing here will be good. Third is even with the government infrastructure because 65, 70% of the business goes to corporation market if they don’t have infrastructure for their depots to stock up the beers in their stores to have coolers. And also I think the more players are welcome. On your specific question, I think we have been quite busy on managing our own, you know, program and all. We haven’t gone that deeper if there’s something different they’re doing. But definitely I think they are great companies with good brand. I’m pretty sure you know that, you know what you hear in India is what we also read.
Vishal Punmya
Understood, thank you.
Vivek Gupta
And thank you.
operator
The next question is from Avesh Bakshi from Sundaram Mutual Fund. Please go ahead.
Unidentified Participant
Hey. Hi team. Am I audible? Yes, thank you for taking my question firstly. So just one clarification you mentioned. Gaining scale, especially in the premium segment is going to be a major swing factor for our margins currently. What’s the cadence of premium across our portfolio? 10%. 10%. And at what salience level would the real impact start flowing in on a company level margins?
Jorn Elimar Kersten
Yeah, we think we need to, we have. Well, I think if we go to 15% then we get closer. But again here this is a state by state and localization because we need to have sufficient salience within the facility of a production location in terms of consumption to get the upside on returns. But we think we need to go to at least 50% before we start being able in some places to see this translate into better margins because the bottom returns reach that sort of tipping point where it really takes off the growth and then again even if we reach the scale, but the growth in that specific location continues to be disproportionate, then it still requires a lot of new bottles.
So it’s a combined development that releases the margin. Right, got it.
Unidentified Participant
And just another follow up. So your comments on taking the ebit margins from 9% to double digit trajectory, any ballpark timeline you have in your, you know, Trajectory on this or it’s just a direction. Where do you want to see the ebitda?
Jorn Elimar Kersten
Yeah, I think the answer is going to be that it’s directional but we missed your question ballpark and then you dropped off.
Unidentified Participant
Sorry, I’ll just repeat myself. So on the 9% debit margins to double digit, so what’s the timeline for this?
Vivek Gupta
If you ask our company or anyone, they’ll say yesterday. But I think as I said, look, you know we are consistently working on it and of course in the glide path you have to have sequential improvement so you can do the math. I think we should be, we have a timeline on this and we should be able to get there keeping all the other context in mind. Sure.
Unidentified Participant
Thank you for answering my questions. Those were the questions from my point.
operator
Thank you. Participants who wish to ask questions, please press star and one at this time. The next question is from Latika Chopra from JP Morgan. Please go ahead.
Latika Chopra
Hi, thanks again. A few follow ups. One was on Karnataka, you know, if you could talk about, you know, incremental trends here. I believe there was some change in you know, pricing or taxation for entry level beer. If you could walk us through, you know, what are you observing in this state and how do you are you sensing any improvement in volume of state progressively? The second question was around your capex plans for this fiscal year and the next year and if you could split it across investments in greenfield capacity, groundfield and investments in coolers.
Thank you.
Vivek Gupta
Look, I think the data I have as of yesterday is month to date. The strong economy where the price rollback happened is down 50% versus year ago. I’m talking the category data. Right. So which means the total Karnataka category is down 22% still. So I think while there has been some change in that but I think you know, probably we have missed the bus a little bit during the season as a category. Also there were a lot of issues around licensing and license fee with the retailers to so there is a problem there still and we know that then it is a comparison versus low end spirit.
So maybe we have to wait and watch because there’s a lot of issues and stability in the detail there. But the initial read is still not great in Karnataka. So we continue to see a decline in high double digitization means the category decline.
Jorn Elimar Kersten
On capex. You recall that we come from low single digit capex as a percentage revenue and we’ve expressed in previous calls that we want to move that to mid to high single digit as a percentage of revenue. We announced the greenfield in Uttar Pradesh, which we expect to deliver the first case of beer in the first quarter of 2027. So that obviously from an extension point of view is our main focus in terms of CapEx. And then Vivek mentioned we do the network planning, so we continue to do that, which in some cases will require smaller investments to make sure that we extend in a smart way and in environment the way we are in these calls, we speak a lot about the volatility and also how regulations and policy updates sometimes are a step forward and sometimes are a step back or a step sideways.
So we want to caution the CapEx investment. Absolutely. And that’s what we see in UP. We see that there’s a progressive policy. It leads to doubling the number of stores for consumers. So the availability of beer, which we see as a big driver for category growth, is doubling in up and therefore that’s for us the right place to really invest big on capacity. So we see the opportunity. We will. But we also want to make sure that we spread the assets that we have because obviously new capex will lead to depreciation. So we want to do it in a smart way and next to capacity extension, also make sure that we have sufficient firepower to continue the growth of our commercial asset base.
Mentioned at the beginning of the call that over the past couple of periods we more than doubled the number of coolers in the market. Yeah. And we’ve actually only just started. This is a continuous project where we really want to make coolers the standard in every store.
Latika Chopra
All right, thank you so much for detailed responses.
Jorn Elimar Kersten
Thank you.
operator
The next question is from Ashutosh Jain from Barclays. Please go ahead.
Ashutosh Jain
Hello. Yawn, I’m Vivek. Thanks for taking my question two from me, please. If my understanding is correct, the recent personal income tax benefits of no income tax up to 10 lakhs of income is broadly aimed at your core consumer segment. Given that these effects came, you know, was it more effective from April 1st? Could you share your best estimate of how much of the recent volume growth, if any, can be attributed to this?
Vivek Gupta
I don’t know. It’s very difficult. It’s a difficult question for me to answer, but definitely, I think, as I said, it’s a combination of still affordability and effective. Because let’s take an example where the taxation of beer didn’t go up and there was not a significant price increase like a SAM, for example, we actually saw very healthy certified 40% growth and even more on our business. And in UP, where the fundamentals were increased like number of stores increased but not much taxation increase on beer we also saw a significant 25, 30% category growth. So but where there was high taxation increase despite this income tax issue we saw a double decline.
So I don’t know how much of this sensitivity is to the income tax but I’m pretty sure especially with our core consumers who are buying Cleanfisher strong and mainstream brands it would have helped but you know there are a lot of other things out there. So it’s an interesting question. We haven’t looked into that but we haven’t seen any correlation. Also because it’s a state by state business and we see much more impact because of the duties and other factors versus this but something we will ask our consumer insights team to pick it up. I noted the question on that.
Ashutosh Jain
Yeah I think it’s a good question but indeed for every consumer it will be a mixed bag of basically what’s.
Vivek Gupta
Affordable income versus what’s happening on the actual beer pricing on the shelf which.
Jorn Elimar Kersten
Is of course much more visible and it’s a state by state thing. But again I think it’s an interesting question. Yeah, not just for.
Ashutosh Jain
Yeah cool. Thank you so much. And you know it would be good you know if we can always have a follow back on this. I was also very surprised because we haven’t heard many commentaries from the companies. I guess Unilever was only one of the few apart from I guess Dhabar to mention this. So just a parting thought. Is it because the impact of the consumption is not that meaningful which I guess you will still figure it out or is it just like companies like your are just being cautious to avoid fueling overly optimistic expectations on the street.
Vivek Gupta
Yeah, I think it’s also about the sanitation of the category because it’s not a staples category, not an everyday consumption category where people do it you know while the people so I think it is also a factor of that and those people who do everyday consumption are anyway you know I’m assuming they don’t worry about the pricing anyway on that one. But it is just the penetration is so low of the category. But it’s an interesting question we need to check maybe in Telangana if this would not have happened maybe the cost would have been much higher.
That’s why we’re not building this impact into our plan yet.
Ashutosh Jain
Thank you so much.
operator
Thank you. Next question is from Sanjay Manyal from Dam Capital. Please go ahead.
Sanjay Manyal
Hi sir, have a few questions. One is if you can give some color on major commodity pricing specifically barley and glass and what is the Outlook in the rest of the year?
Vivek Gupta
Yeah, sure we can. I think for the rest of the year we have pretty good coverage with our key partners there. So we expect that to be relatively stable and definitely not ahead of any inflationary impact. And I think going into 2026 our current view is relatively the same, but we think it’s stable. Of course we’ll see some impact on general cost increase, on some of the conversions in the marketing, etc. But nothing out of the ordinary. So for those commodities we think we’ve reached a relatively stable state thanks to also building on the relationship with our suppliers across different categories.
Sanjay Manyal
Right. And one specifically when you mentioned that some of the states like UP where the policy has been a lot favorable. So if you can give what kind of a saliency you have in the states like UP or Assam, where the policies is favorable and where you expect probably you can double your revenues or you can double your volumes in these states. I would say, you know, I wouldn’t say policy is favorable or the good policy, it can be more to be done. I would say that the growth in these states can be 20, 25% and these states, I would say a quarter of our business can have this 80% plus growth. A quarter of our business can have double digit growth and the rest would be, you know, again quarter declining double digit and quarter in the mid single digit varies completely state by state. For example, Jharkhand coming with a new private retail policy. You know, if they really implement there should be an impact to the category group which should be much higher than what we saw in Andhra when the policy change is actually the category has doubled.
So it really depends. Right. And is it possible to give saliency of say UP specifically means? Because that’s probably one of the states where the. Okay, thank you. Thank you very much.
operator
Thank you. The next question is from Bismuth Nayak from Xhosa Park Advisors. Please go ahead.
Unidentified Participant
Thank you. Sir, if I recall, post Q4, FY25, we were hopeful of improving our gross margin by around 40 days. Do we still maintain that? Post Q1, sorry, could you repeat the question? It’s about margins. What was the exact question?
Vivek Gupta
Sure, sure. What I require is post Q4 the management commentary was that for the full year, FY26 we were hopeful of improving our gross margin by around 40bps for the full year.
Unidentified Participant
Are we still on track for that?
Vivek Gupta
Do we still think. I don’t think we gave such a specific guidance on margin for the full year. So I can’t comment to that.
Vivek Gupta
Sure. On a yoy basis for this quarter, what would be the improvement in recycled water was. Your voice is actually quite baking. Are you on a speaker phone?
Unidentified Participant
One moment.Is it better now?
Vivek Gupta
Yeah, definitely better, yeah. So on yoy basis, what would be the improvement in recycled bottle rates for this quarter?
Jorn Elimar Kersten
This quarter we improved 70 basis points versus the same quarter last year and 300 basis points versus the previous quarter, which is seasonality. So stocking up inventory in the previous quarter and now with the high turnover in the peak season, we also seasonally get better returns on the models. One last understanding is if you can.
Unidentified Participant
Give us a sense of relative margin of all the flow geographies in northeast west cloud, if you have to arrange it on our descending order of margin, how would that look like? Sorry, I have trouble hearing. What is the question? Can you repeat one point?
Vivek Gupta
The fourth geography is that we report growth northeast, west and south. If you can arrange it, if you can give us a sense of how they are placed when it comes to gross margins. Which one is higher? Lower in that order?
Unidentified Participant
I think it’s a state by state, it’s not a region. And as you know, Karnataka, Maharashtra, those are the high margin states. They really stand out on the other states. It’s a bit of a mixed bag I think states like Telangana, more on the bottom side. Everything else is in between. Thank you.
operator
Thank you very much. We’ll take that as the last question. I would now like to hand the conference over to Mr. Vivek Gupta, MD and CEO for closing comments.
Vivek Gupta
No, thank you for the great question. We’d also make up think. And thank you for joining us. As I said, you know we have a plan. We have been putting the plan. This was almost seventh or eighth quarter of consecutive profitable growth for us. Our premium strategy is working. We are making Capex investment in India. We are looking at lot of backward integration opportunities as well. And we are learning about challenges of growing beer category here. So I think this is going to be a good ride where we will have to consultantly do a lot more hard work to continue to grow this category and also expand the margin.
But we feel pretty confident on the strategic plan we have and the delivery of that plan. So thanks everyone for joining.
operator
Thank you very much on behalf of United Breweries Ltd. That concludes the conference. Thank you for joining us ladies and gentlemen. You may now disconnect your lines.