United Breweries Ltd (NSE: UBL) Q3 2025 Earnings Call dated Feb. 14, 2025
Corporate Participants:
Jorn Elimar Kersten — Chief Financial Officer
Vivek Gupta — Chief Executive Officer, Managing Director
Analysts:
Jai Doshi — Analyst
Latika Chopra — Analyst
Abneesh Roy — Analyst
Krishnan Sambamoorthy — Analyst
Ashutosh Jain — Analyst
Ajay Thakur — Analyst
Vishal Punmiya — Analyst
Presentation:
Operator
Ladies good day, ladies and gentlemen, good day, and welcome to the quarter three FY ’25 Conference Call of United Breweries. 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 conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference call is being recorded. Thank you. I now hand the conference over to Mr Vivek Gupta and Mr Kirsten from United. Thank you, and over to you.
Jorn Elimar Kersten — Chief Financial Officer
Thank you. Thank you. Thank you very much. And hello, everyone. Thank you for joining this call. We’re very happy to discuss the developments of quarter three of the financial year ’24 ’25. I will give some of the highlights on the quarter before handing over to Vijak for some comments and then of course, we will open up for Q&A as well. Thank you. So looking at Q3, we see continued strong fundamentals, while we’re also investing for the future.
In our volume growth, we accelerated in Q3 and we’re very happy with the 8% overall volume growth, driven by a broad-based growth across the entire footprint in India and positively impacted by recent policy changes in states like Pradesh. We gained share at an overall basis, but also in the premium segment, continuing the growth trajectory from the previous quarters. Premium volumes on the base of that grew 33%, where we saw the strongest growth coming from our Ultra portfolio, both Kingfisher Ultra and Kingfish Altra Max and we recently launched Amster Grande.
And we are happy by the early but still very promising consumer response and growing momentum in the market. Overall, volume growth was predominantly coming from Telangana, Pradesh Pradesh in Rajasthan and partially offset by and West Bangalore. If we look from volume to net sales, net sales increased by 10% on the quarter as well as in year-to-date, driven by price increase across multiple states, but also a mix from premiumization, which is partially offset by growth in the economy segment and a negative state mix in terms of volume growth.
Okay. On the EBIT side, we delivered an EBIT of INR90 crores, which is significantly lower than last year. So a contraction on the like-for-like, but we have continued investment in the organization as well as into our supply-chain, making sure that we are ready for the peak season and Vivek will also be able to shed some light on that later in this call. Thank you. As part of the ongoing efforts we put in to enhance our operations as well as drive growth, we’ve implemented a productivity program in Q3.
This program and the related change initiatives are there to improve our efficiency, but also productivity and competitiveness in the market. Towards we’ve incurred a one-time exceptional cost of INR26 crores in Q3, but the overarching goal is to deliver annual gross savings that we estimate to be around INR50 crores annually kicking-in, in 2025. So in addition to unlock growth opportunities, we’re very happy to announce a major investment in the state of Untra Pradesh for a greenfield brewery of which has been approved as well here, will shed some further.
Now before I hand over, I do also want to mention from a portfolio perspective that we’re very excited to announce the launch of Fisher Flavors, which targets a younger, more experimental consumer who is seeking a sweeter and less better taste in the beer options. We introduced two flavors, masala and mango berry Twist and the brand draws inspiration from popular Indian street food flavors. Currently, we launched in Mumbai Goa and Aman and Kingfisher flavors will gradually expand to other regions as well in the months-to come.
Our key areas will remain as they have been over the last quarters, really looking at category growth and winning in all segments, making sure that we leverage and increase the importance of our supply-chain network, the quality of our beer and really bring a winning culture to investments behind the organization as well as continue to look at profitability and capital efficiency in the choices that we make to sustain long-term growth in the India beer market.
This continues to be the pillars of our strategy as we work towards the growth path across all of India. So we’re happy to take some questions, but first, let me hand over to for some comments from his side.
Vivek Gupta — Chief Executive Officer, Managing Director
Yeah. Thanks, John, and good afternoon, everyone. I know John talked about our continued strong momentum and actually building on the momentum, the growing the full shares. But I want you to talk three things before we get open for Q&A, and I know these will be on-top of your mind as well. The first, I want to talk about the investment in Uttar Pradesh. I’m very, very happy to announce that after almost 12 years, United Breweries is actually investing in a greenfield.
So while we have been a company of — we have so many there, but it is — it’s a very important moment for the company to do that. And one of the work we did last year, around six months back, we put our business development team who are exploring that to meet our future capacity requirements as we want to be the category maker, where are the opportunities of growth and where can we do that. Currently, we actually do business in UP through a contract manufacturer, Waves.
So we actually buy it from them. And based on the category growth and positive policies where the stores are going to double of our beers, we wanted to make sure our premium brands and we have a long-term supply there. So we actually work the design and I’m very glad to share that the Global Board of as well as the UBL Board has approved it. We are in advanced-stage of conversation with the government. We have even identified the land and this will be probably one of the world-class beauty at an optimum cost because as we have designed the beauty, we have also don’t want to create a palace.
We actually want to make sure we use the local technology, local machinery wherever possible, but we have the right standards and we will have our premium brands as well as Kingfisher to be produced there. So — and the capacity of beauty is going to be modular, we you know we are looking at anywhere between 1 million to 3 million depending on there, because the beauty is set-up for many, many years. So very excited to talk about that and this will not be the only investment we will be doing.
We will also be — we are also in talks with other state governments on various models of how do we expand our capacities and be ready — be future-ready. The second important thing, I also want to talk, I’m pretty sure there’ll be a lot of concerns on why the profit is down, what has happened structurally and I’m sure we will address some of them, not to all your Satisfaction. But I want to tell you that one of the critical choice we made was to really prepare ourselves for 2025 summer season. And the reason I would say that because if you remember in 2024, when I came to you, we mentioned the impact of elections and why election had more impact on us. So elections really slowed down our growth rate in certain states during the April, May, June quarter. We are expecting summers and we’re expecting a higher-growth rate. And to prepare ourselves for the growth rate, we wanted to make sure we are setting up beauties for success. So we did a lot of investment in repair and maintenance of our beauties. To give you an example, in Andhra Pradesh, we had a brewery for last four or five years, it was operating at one-third the capacity. Now suddenly, if we want to utilize the full capacity, we realize that since we have not invested in maintenance and repair, our boilers were giving up after know, 50% capacity increase and there were filters were giving up, we started having some quality issues. So we actually took a step-back and actually made a significant investment in making sure the are ready. So in fact, I’m very happy to say that from this month itself, the same Andhra Pradesh will give us 2.5 times versus we were getting 1.5x to 1.7x from Andhra. Similarly, we did that in many other to make sure we are future-ready. We also invested in warehouses so that the places where we have shelf-life of a beer is nine months, we actually can bring the stocks forward, do the production in the non-season. So we are ready to fill-up the market when the summer start and we are lucky that you see February already is getting hotter in many places. So — and usually March is the time when the inventories are built-up, but it has started building up now also. So we made investments in the peak season. We also made investment in the organization, you know, our fixed-cost is high because trade marketing, corporate affairs, all of these are investments where you have to work on long-term. At the same time, we also worked on a productivity plan, which the impact you will see this year because most of the people who left us were there till December to bring together, but we didn’t let to do that. So the other thing I wanted to say is we have actually invested and we feel pretty good about our preparation for the season, given the constraints we had on the capacities and how to maximize it. The third topic I wanted to address was the Telangana. I know this was a big, big topic of discussion. Look, I would say extremely proud of the organization and proud of to do the right things. We hate — we are there to serve consumers. We absolutely want to make sure that consumers are served with the full capacity. But at the same time, the viability of the business because the pricing was getting delayed and the outstandings are high. So we were left with no options after multiple negotiations to be very reasonable and say, look, we will not be able to supply to the corporation because there is a limit to that. I would say that we had very constructive conversations with the bureaucracy as well as the government. You know, some of us were personally there for many days. And I think happy that they have shown some progress. I think our 15% price increase does make our red P&L there to umber P&L. We are not fully out-of-the red, but it is definitely it helps you know, gross margins, it also helps the EBIT. Unfortunately, all of this price increase has gone to consumers. I think I would have — we had recommended and I would have loved if they would have done some tax restructuring so that the consumer impact is minimum. But the consumer impact is going to be — is quite high, though it’s still in-line with the neighboring states, the consumer MRP, but we have to see INR30 and INR40 how much that impact in Telangana. We still have outstanding in Telangana, but we have started getting regular payments from September like everyone in the industry and we also got couple of payments, which has reduced our outstanding balance to do that. And we have got an assurance or a plan that over the next few months, we will get back our outstanding. We are — the reason I said we are proud because even after this, we are in talking terms with the government and the bureaucracy. We are discussing with them. I have told them the impact that look very thankful for the progress, but the impact is still — we are still not out of spread. At the same time, the consumer impact is very, very big and let’s monitor it so that the category doesn’t tag in one of the most important places to do that. So that’s about, but it’s again should give you the confidence that we structurally want to improve our profitability of this business. We structurally want to build the categories. And as a UBL, we will go state-by-state, state-by-state where we have structural profitability issues for the category, we will elevate that and we will continue to work with the government and through the association so that we can have a better investment climate in those states. So with this, I hand over back to the moderator for any Q&A.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press RN1 on the touchdown telephone. If you wish to remove yourself from the question queue, you may press R&2. Participants are requested to use handsets while asking a question. Please limit your questions to two at a time per participant. You may join back the queue for further questions.
We’ll take our first question from the line of Jay Doshi from Kotak. Please go-ahead.
Jai Doshi
Yeah. Hi, Vivek. Thanks for the opportunity and congratulations on good progress on both volumes and premium portfolio. I’ve got three questions. First is just checking if I heard you correctly. So even after 15% price increase, your Tri Lankana operations would still be EBIT negative
Vivek Gupta
Yes.
Jai Doshi
So then what is the way forward in terms of because Sri Langana is a state that is known for not giving price increases for three years, four years, five years. So then why would you want to sort of you know of continue operations if you don’t have any commitment or if there is no visibility on further increments to make the business at least some minimal profitability.
And partly because again, I agree with you on restructuring the kind of price tax increases that they are — if they are not changing the taxes, then even if you — they give you another 10%, 15% price increase, then it will — there will be a lot of headwinds from demand perspective. So basically the problem for this state sort of doesn’t get addressed with this.
Vivek Gupta
Yeah. No, let me address your first question because. I think — look, I think I would say that at an operating level, at a local state-level, we are just slightly okay, okay. If I not put the overhead cost because your question was at an EBIT level, if I don’t put the head office under the other overhead cost, I’m okay, right? And on certain SKUs, I’m okay. So if I die some mix, I can do that. Having said that, as I said that without revealing much, our discussions have been wide-open and they know that.
And we have to be little bit more pragmatic also here because we — all the complex issues will not get solved in one goal. From where we are coming of five years of no pricing and having a massive hole to having a little hole now which can be worked at a local level for some time, but I think we would be expecting a Phase two you know, in very, very near foreseeable future because we have we have been telling government that, look, with this pricing, it is not a investment-grade you know, we can make some cost-savings to at least avoid our operating losses.
But at the same time, we are also working very, very closely to also show the impact for the consumer pricing and what are the other options to do that. So it is like you have to work consistently on this. This is not a one though where we asked something, we’ve got it, but I think it’s a significant progress from where it has come now. So that is what I would say.
Jai Doshi
It’s the first step and you’re hopeful that there’ll be some more on this front?
Vivek Gupta
Absolutely, because we will be — we will be consistently engaging with them, you know, and I would say it will definitely won’t take two years to get the another one or five years to get there. So it will be a consistent one. And I think the — if you ask me the government or the officials will also agree to that, not of giving pricing, but yes, they have more work to be done on this.
Jai Doshi
Sure. Second question is, there is an excise duty increase in Karnataka and more importantly at the economy end? And then there was a media article that indicated that United Breweries has commented that they’ll absorb a part of excise duty. First of all, is that accurate? And if not, could you give us some color on what is your exposure to the popular end or economy portfolio in Karnataka and What is the premium portfolio? I know you will benefit relatively, but on an absolute basis, this may still be a headwind. So if you could share some color on how big is Karnataka for you, how big is your popular portfolio? How big is a premium portfolio? And are you going to absorb any of the excise beauty increase or are you going to pass it on?
Vivek Gupta
Yeah. No, absolutely. I think, first of all, it’s very unfortunate what is happening in Karnata for the industry. I think it’s not only Karnata in many other states like what we saw, the beer is becoming less affordable for consumers. So it means the market-leader or the category maker like us will have to work much harder. So in economy segment, it is 25% of our business today. So our volumes like brands like Bullet and UB are 25% of our volume to do that.
So we have passed on the beauty increase to consumer in those brands. However, we have made a strategic call that Kingfisher brand on the mainstream and Ultra, which is Kingfisher and is the Life, we are not passing on the duty to consumer and we are absorbing the price increase. Why are we done this? I think three reasons. First of all, as I said, as a category leader, we really need to make sure that the category growth is there.
And we believe that in the past, when the economy segment was there, when the lower-price point came in the market, Kingfisher was the biggest donor. And it happens, right? The biggest brand becomes the biggest donor in the economy. Yes, we had 25 share, but on share. So this is a bet we are taking, which means that the trade-up should happen to Kingfisher and because the delta between the economy brand and the Kingfisher is much lower now. So think about a INR35, INR40 delta versus INR80, INR80 delta.
So this is a business call we have taken to make sure that we offer the — we do the value reframing and offer a the legendary beer at the same price when all consumers are thinking the beer is becoming very expensive. I can tell you the early read is very positive. Too early to say, but at least what we are seeing in the stores, what is there, you know, there is a momentum on this and we have made a — made a call on that. How will this whole react and pan-out?
We don’t know. We have assumed a category contraction at the economy end and we think many of these consumers will go to low-end spirits and we just need to monitor it and then continue work with the with the government. But we do think that if we get our plans right, we should be able to accelerate premiumization with the launch of Silver last year here with our continuous momentum on in future launch of Amsel Grande and at the same time, we should be able to flow-back our shares on and get at least consumers a better experience.
Jai Doshi
Sure. Could you tell us what is the volume salience between economy where you’re going to pass-on the price increases and segment there is Kingfisher, Kingfisher Ultra, where you are absorbing the exercise beauty. And are you absorbing entire exercise beauty or is it partial increase?
Vivek Gupta
See, sir, first of all, the beauty increase on the economy is much higher than the mainstream segment. So just to give you an idea in the economy, we could not price anything below 145, you know, and our price was 120. So just to give you an idea, because the way the duty is structured at the economy is a much bigger increase, but at the mainstream, it is a much smaller increase. So that’s what I would say that.
Jai Doshi
Lastly, is it possible to give us an update on where your recovery rates are today and any roadmap, any — what are your plans as you get into the peak season? How do you expect it to sort of improve versus what it was maybe last year.
Vivek Gupta
Yeah. I’m actually happy to report that all the efforts we are putting this quarter, we had actually 5% improvement versus the last year. So it is improving in our bottle network. But at the same time, sales volumes are growing, we are also putting more new bottles in the system and especially for the premium launches, we are pushing the bottles in the system. But the good part is all the operational measures we have put together, they are going-in the right direction.
And last quarter was actually 5% above the previous quarter. We have to do much more work, like for example, as the — as a — like Andhra Pradesh is one state where our bottle return is very low in the past. So we are working on a new model of having more distributors and scale distributors of bottle collectors so that we can actually improve that significantly. Similarly, you know the places where there were floods like Kerala and all, we are also working on a plan for a better recovery, but it’s in the right direction now.
Jai Doshi
But will it — will it be close to 70% in FY ’26, you think you’ll get close to that number or still not too early to say?
Vivek Gupta
It is too early to say. Our goal is to get there, but also you know the — this is why we are working with the state governments to say they have more permit rooms because if the permit rooms are not there, then it becomes very messy. So what we are learning is where they are permit rooms, the consumer can actually sit and drink the bottle collection and is much better. When consumers just take it from the store and go is there. So actually we are working with a lot of state governments to show that data and to see how if they can follow Maharashtra kind of model, it could really help in bottle returns and cost of doing business also. Apart from sustainability.
Jai Doshi
Sure. Thank you so much.
Operator
Thank you. We’ll take our next question from the line of Latika Chopra from JPMorgan. Please go-ahead.
Latika Chopra
Hi, thank you for the opportunity.
Operator
Can you use your handset mode, please? Your audio is not clear.
Latika Chopra
Is it better now? Yes, I’m using my handset only.
Operator
Yeah, please go-ahead.
Latika Chopra
Yeah. My first question was on gross margin. There are a lot of moving parts there. The mix is improving, which is good. There is a state mix, which is tough to call, but with developments in, it looks like it’s moving in the right direction. And then you know the kind of capex you’re putting up to scale-up large capacity.
So where do you think gross margins could look like down the line is some of your productivity programs and capacity and whatever tax changes that we’ve seen in recent months in certain spaces. Can we can really aim for, say, a high 40 kind of gross margin in this business? Thank you.
Vivek Gupta
, you want to answer?
Jorn Elimar Kersten
Yeah, yeah, I’ll answer this one. Look, this is something that we continue to look at. And also in previous calls, we mentioned that we’re in this for the long-run. So if you look at the mix development and the salience of premium and there we have a lot to gain in terms of premiumization, which will first and foremost improve our revenue mix. But then as Vikak mentioned earlier on the call, it will require a lot of infusion of new bottles to grow SKUs that are not available to that extent or not sold them to that extent in all states yet.
So in the short-term, the premiumization mix will do a lot for our revenue and for our market-share, but not necessarily immediately for margins. But as we go along, this will get better and same goes for the translation of the investments that we’re doing in our breweries. We said we have premium capabilities available in many more places coming season than we had last year and that obviously also impacts the margins as we are closer to the consumer.
So these things long-term will help us to further develop the gross profit margin. The state makes that something that obviously is partly in our hands. We try to grow volume across states where we keep an eye on where we make the strategic choices. I think Karnataka that just commented on is also an example of that where we don’t only think that Karnataka is the home of Kingfisher and therefore it’s a consumer-centric choice to absorb on Kingfisher duties, but it’s also in our state mix, one where we really want to drive volume.
And so that’s something that’s developing. And obviously, things that happen such as in Telangana, despite the fact that we are not where we want to be yet, that will definitely help our margin delivery in the short-term.
Latika Chopra
So fair to think that probably gross margins will improve, but it could be a more gradual progression, right?
Jorn Elimar Kersten
Yes, and that’s also how we look at it. We want to build a sustainable, profitable business and we take small steps where we can, but we also want to keep our focus on the share development and the volume growth to really make the category.
Latika Chopra
Sure. And the second one was on volume growth. What is the 8% of growth that is purely going to be so you and with all the? Share. No. Okay. Can you hear me better now?
Operator
Yes, please go-ahead.
Latika Chopra
Yeah. So my question was on volume growth. 8% is fairly impressive and clearly there are lot of capability build-outs done and the aggression is very much visible. So are we now in a relatively more comfortable space to say that 6% to 8% kind of volume growth Is minimum for you when you’re looking at the next year — next fiscal year?
Jorn Elimar Kersten
I think overall, we look at similar rates moving forward and we think that’s where the category will grow. Obviously, with all the efforts we put into shape the category and also look at beer as a drink of choice for consumers, we do obviously hope to push it forward and also with the premium share gains that we’ve been showing.
For UB, it means that we’re happy with the 8%. We think that’s for a quarter a really good and a really good delivery. We aim to be ahead of the market, of course, moving forward as well. But I don’t think that necessarily given the volatility of policies, et-cetera, that we see a huge acceleration in overall growth. Also this is a long-term play where we’re sustainably building the category.
Latika Chopra
Understood. Thank you so much.
Operator
Thank you. We’ll take our next question from the line of Abneesh Roy from Nuvama. Please go-ahead.
Abneesh Roy
Yeah, thanks. My first question is on the first greenfield project in 12 years. What is the main reason behind doing this? Is it more for production of the premium portfolio quality improvement or there is a cost advantage? And second is, when do we start seeing the manufacturing of this because the project is yet to start because you identified the land, but obviously approvals are pending. Will it be more of FY ’28 where we see the benefit of this.
Vivek Gupta
Yeah, hi, Nish, I’ll answer that. I — you know, it takes almost 24 to 30 months-to set-up the to do that. So our goal is we should have this set-up by ’27, sometime in ’27. Of course, the team will work as accelerated paces there, but the fastest really setup, it still takes, I’m told 12 to 18 months-to really do that. Why are we doing it? Because as John said, we are in the long-run in India. We expect the beer category to grow. We want to continuously be the category maker to really do that.
We see in UP, which is the highest population state, we see the — with urbanization happening, with the infrastructure development happening, our projections are that category growth rate will be strong. We have assumed the similar 6% to 8% in UP to really do that. And as we look at that, then we will need more beer and more beer to be produced locally.
The second thing is, it’s always you know it’s always a trade-off, but based on the environment, the number of stores, the policy excise policy, positivity of the government access to raw-material because UP is one of the states where we also get barlet on to do that. The cans versus bottles because UP is more cans versus bottles as well. So when we look at all of this, we think there is a net present value, which is positive for us also.
Third is, I don’t know if you know UP government last two years back, they introduced a franchisee fee, which is basically if you don’t produce it locally, you actually end-up paying more fee than that. So putting all of this together, of course, when everyone is approved it, it is a financial sense to this project. But we actually think this is — and this is also to produce our premium brands, produce, you know, produce a local, but it is to invest in future based on the category growth. Just to give you some data, in ’24, UBL volume grew almost 20% in UP.
Abneesh Roy
Understood. Sir, one follow-up question here. So you have done very well in UP last one year, this quarter Q3 also. Is premium also doing well here because I do see almost one is to four difference in terms of pan-India mass versus premium, 8% versus 33% growth. But is the premium growing largely in the big urban cities and UP is more of a mass-market. So if you could tell us how is UP doing in terms of premium and the stores getting doubled in UP, when is that fully happening? Has that already played out in terms of distribution?
Vivek Gupta
No. So the UP excise policy has only come last week. As per the policy, if you see in UP earlier, they were separate stores which were selling IMFL and separate stores were selling beer. What the new policy has said is composite stores. So the beer stores will go up from almost 6,000 stores to 10,000-odd stores. The composite number is 10,000 to 11,000. So both the stores will sell both IMFL and beer. So the stores are doubling for the branded category.
So that’s a very positive new because in the last stage, you need to have beer for beer accessibility is very, very important. So this implementation will happen from April 1. So the government is going through the e-option and all process. So the future is looking quite right there. In terms of the premium number, I don’t have the category numbers, but our business on premium doubled in UP.
Our Ultra brand is growing 157% and Ultramax is doing and there is much more scope of premiumization as well. And that’s what we see around in the other states also. When the supplies are available, the execution gets better with urbanization, there is a — there is a faster growth in the premium brands than what we only see only in the urban centers.
Abneesh Roy
Sure. That’s helpful. One follow-up question to my first question is Delhi is adjacent to UP market and UP has done so well. Now BJP end-to-end in Delhi in terms of the government, do you see at some stage Delhi also seeing lot of reform? And currently, how is Delhi market doing for you? Because for spirits, Delhi has been challenging last two years. For you, how has Delhi market been?
Vivek Gupta
So it has been challenging for us as well. We are doing okay because — but we are very low in shares because it’s still a corporation market and there are a lot of ordering system issues there and all. We look, I’m like you, like anyone else, we are hopeful that the governments do what they are supposed to do. And so I won’t comment more than that.
You know, I had hope from previous government, I still have a hope from the government as well that they do something because the quality brands have to be available more consistently in the stores and I see a lot of potential in Delhi if the policy comes in. But I’m also you know pragmatic that it will not happen immediately.
Even in Andhra, if you see, it took six to nine months of policy to come in position. So I’m pretty sure, you know it will not be an immediate change that somebody sworn in and then next their policy will change. I really hope things get better.
Abneesh Roy
Sure. My second and last question is on the two brands you have put — photos you have put in the PPT, and lemon. You spoke also that in terms of that in the opening remarks. If you could tell us in terms of pricing and market opportunity, how big it is? And if you could talk about the margins here, I understand this is catering to a customer who is more new to the beer, more in terms of mild beer, et-cetera. But how big is the market and is this a premium product?
Vivek Gupta
Look, this is premium to Kingfisher. We have just launched this in only a couple of markets of Goa and Daman. It will get expanded to Mumbai because it needs some work on the beauties to produce the flavors. As you know that in India, there have been flavors, but not the legendary brand has never done flavors. And young consumers who are new recruiters in the category, they are looking for different flavors and varieties and do that.
So this is — think of this as an experiment as a pilot to start with, which has been well tested with the consumer and well done with our R&D, working with the global R&D to design it for a local a sense. We actually think doing it in the right manner on a very consumer-focused because there are some companies who launched many flavors, it became hate, but then they settled because there was that inventory was you know, getting dust in the shelves to do that.
So these are definitely — they definitely are at premium price, likely premium price, better margins, but they will also are designed for young consumers who are new recruiters coming in the on-trade wants to try different flavors of beer because the trend is towards cocktails and other things. So we will learn through it and then we will selectively expand them.
So these are two variants of Kingfisher, which we have launched and we are very excited because this just shows the opportunity that we are not going to be the old Kingfisher brand. We are listening to the consumers and we are making the interventions. And early response, I can tell you is fantastic. If you ever go to Dhaman or in Boa, you know there’s lot of demand for it.
Abneesh Roy
Understood, sir. Thanks. That’s all from my side.
Operator
Yeah. Thank you. Before we take the next question, we’d like to remind participants to ask a question. They may please press R&1 on their phone. We’ll take the next question from the line of Krishnan from Nirmal Bang Institutional Equities. Please go-ahead.
Krishnan Sambamoorthy
Thanks, Vivek and John. You indicated in the presentation that there’s been market-share gains for the quarter, both on an overall basis as well as in the premium segment. If you grow at 8% volumes for the quarter, what would — what do you reckon would have been the industry growth for the quarter?
Vivek Gupta
Sorry, your question is, what is the category growth?
Krishnan Sambamoorthy
So category volume growth for the Quarter. Yes.
Vivek Gupta
For the quarter, I think our volume growth is 8%, our estimate is category 7. So that’s why we have grown overall market-share. Based on whatever data we have, it is 7% for the quarter.
Krishnan Sambamoorthy
And yeah, can you also indicate the key states where you reckon you gained share significantly?
Vivek Gupta
Look, I tell you, I can tell you where we lost share and we can also tell you where we gained share. We lost — sorry. We lost shares in one second. We lost share in West Bengal, because if you see the beer has become very expensive in West Bengal after the duty increase. So we lost share in West Bengal because we took the pricing from — to pass-on the duties from 135 to 160 and there is an economy brand, our competitor capped at 140. So there was a loss of share to that brand.
So the West Bengal was one area where we lost share. We think we lost share in Rajasthan. Again, you know some of those concerns and we lost share in Tamil Nadu because Tamil Nadu still the go-to-market the way, way you know the needs to still do a better job of ordering and we have been raising this to the government that we believe there’s lot of stock of share in Tabil Nadu because coordination from and all there.
We have had couple of meetings with them, but that seems to be an issue as well. Karnataka, I’m not sure. I think we gained share despite — despite declining 5%, we gained share, which is an impact of category, which was already happening because of this whole of excise duties being increased and all. But everywhere else we gain share. We gain share in every other state, we gain share in Telangana, UP, Haryana, Maharashtra, you know, Assam, Runachal,, you name the state, we gained shares.
Krishnan Sambamoorthy
And would you be able to call-out how much was the contribution of Andhra in this 8% volume growth? Was that fairly substantial for the quarter?
Vivek Gupta
It is 1.5% to 1.6%. So without Andhra, we would have been 6.5% to 7 rounded of growth.
Krishnan Sambamoorthy
Okay. And couple of questions for disruptions. Any material disruption in the current quarter because of the Delhi State elections? And similarly, in the — what was the period where — where supply was halted Telagana.
Vivek Gupta
Look, this quarter honestly, the January has not been good because of two big disruptions. One is in Karnata. The Karnata category is down, 30% 35% because if you know because of the duty change, there was label approval for the beer and they were trying to manage old inventory, excise was managing. So for 15 20 days, it took — there was no stock in, you would have read also in the market, which only started-off. So there is an impact in Tarnata.
Now we are filling some pipeline, but there is an impact in Karnataka. Second thing is, of course, our operations were closed in Telagana for good 15 days so that is that something we are aware of this. Third, there were pricing changes and policy changes in some of the other states like Orissa. We got the price increase in, but there was — there was a period of change to do that. So there were disruptions in also where we got the pricings, but there is a disruption because of excise policy change as well.
So January had lot of disruptions, one led by — one driven by us and three driven by the big disruptions. We are off to a good start in February and we will try to do that, but let’s see how much this impacts the quarter. But from an overall year perspective and long-term perspective, I think we are in a good shape.
Krishnan Sambamoorthy
Okay. And any material impact of delay elections on wallets interstate.
Vivek Gupta
As I mentioned, the Delhi business is not too big. There’s a lot of opportunity there. So not any — not much impact. We are fine right now.
Krishnan Sambamoorthy
Great. Thanks a lot
Operator
Yes. Thank you. We’ll take our next question from the line of Ashutosh Jain from Barclays. Please go-ahead. Ashutosh Jain. Please go-ahead with your question., if your line is on-mute.
Ashutosh Jain
Hello, am I audible?
Operator
Yes, please go-ahead.
Ashutosh Jain
Thank you. I was looking at the Heineken Group recent print and happen to notice that in Brazil, digitization efforts of the RTM help it margins now very close to the group level. So could you just give more update on similar efforts in India and likelihood of similar impact on margins if it could have in this geography? Thank you.,
Vivek Gupta
Do you have any idea about what is doing? I have a followed up on this digitization piece, but more to take that?
Jorn Elimar Kersten
Yeah. Yeah, I can say. I think if you look at Brazil and it’s hard to compare to India looking at where they are in terms of, for instance digitization, but also in mix of their portfolio. So the Heineken brand, Brazil is actually the biggest market globally for the Heineken brand. So also in their mix development as well as other parts of go-to-market play a big role in the margin. So I think in terms of absolute margins, it’s hard to compare it. Obviously, overall digitization helps on two areas.
I think one is the productivity piece. And the other piece is to be better in terms of using data on where are the opportunities and what does the consumer want. And I think on both areas, there is definitely room for us to also develop. I think that also comes with really building the category. But to be very honest, we are taking steps and we’re developing and we’re working with apps for our — for our sales team that are locally developed to help them and to help win in all the stores.
But we’re also looking at basics of in-store visibility if you look at the number of, for instance, coolers that we deploy or that we plan to deploy in 2025. I think that’s short-term where for us is the biggest game. But of course, the benefit of being part of the system
Vivek Gupta
Is that we can learn and that we can look at the markets and see what works and then take those best practices and develop it for India specifically.
Operator
Thank you. Does that answer your question?
Ashutosh Jain
Yes. Thank you so much.
Operator
Thank you. Ladies and gentlemen, to ask a question, please press RN1 on your phone. We’ll take a question from the line of Ajay Thakur from Anand Rathi Securities. Please go-ahead.
Ajay Thakur
Thanks for taking my question. So wanted to understand a bit more on the consolidated EBIT margin impact from the price increase. While I understand you had mentioned about 100 basis-point kind of gross margin impact, but can we expect a similar or a higher kind of a number on the EBIT margin from the Telangana price increase?
Vivek Gupta
John, you want to take that?
Jorn Elimar Kersten
Yeah, yeah. Of course, we welcome the — the additional pricing. And like said, it’s great progress whilst we are not there where we want to be. And to be very honest, it’s also us gaining back some margin as we were selling at Los in Telangana. So, yes, of course, this will improve the top-line margins. But like we said, we’re also investing in growth.
So I don’t expect that to one-on-one translate into a margin extension. It’s very welcome to balance our business and to make after work and we invest behind the brands, behind the organization to continue to grow. So I would be very careful to translate that immediately into bottom-line margin expansion.
Ajay Thakur
Understand. And second question was more on the cost — the cost-saving initiatives that we have undertaken, while I understand that there has been already front-roading of the cost in terms of the exceptional items. I just wanted to understand, is it kind of totally been kind of covered with the exceptional item or we still have some more of it pending, which can come up in the next quarter?
And also in addition to that, is there any one-off also sitting in the other expenses during the quarter related to the — to the cost-saving measures that we have undertaken?
Vivek Gupta
Yeah. I think I can answer one first part and second, Jon, I’ll ask you to answer is there any other one-off items which were there in the P&L this month. I think productivity is going to be an ongoing thing at UBL because as we are going to invest and grow, we will keep looking at the opportunities to save. So — but what we wanted to do was we didn’t want to do multiple small initiatives throughout the time. So we actually did four or five programs at the same time.
And all of these programs were intent of upgrading the organization, finding the structural efficiencies, but also using digitization to get better on this. So this is why you have these exceptional cost in this quarter and you will be having the savings. We will absolutely have another productivity program for ’25. When will we do that, definitely not during the season because you want to focus on making sure you’re serving the consumers to — on Doing that. But somewhere in the second-half we will do that. And when we do that, we will let you know on that. But any other exceptional item,, you can talk about it in the current detail.
Jorn Elimar Kersten
Yeah, no, absolutely. I think not necessarily exceptional items, but conscious choices for the most part. So like we had mentioned to be ready for the summer season 2025, we did put additional money behind making sure that our breweries are ready. So in terms of maintenance cost on the quarter, we see a quite a peak other than another quarter. So to make sure that the are ready to fill the demand for the peak season.
And we still continue to see an increase in the organization cost because we started investing in the organization in, let’s say, Q2 — Q1, Q2 of this fiscal year. So we still see continued increase in those expenses if you compare it on Q3 from the previous year. And the last thing I would like to mention here as well is that, and as you all are aware, the outstanding receivables in Telangana, of course, have an impact on our financing costs and the cost of working capital, part of that also reflecting on the — on the Q3 P&L and impact on the margins there.
I think those are the three items that I wouldn’t necessarily consider them to be exceptional, but we do expect those items to normalize moving forward. So the underlying margin of the business is still very healthy.
Ajay Thakur
I understand. Thank you, sir.
Operator
Thank you. And we’ll take the last question from the line of Vishal from Yes Securities. Please go-ahead.
Vishal Punmiya
Yeah. Thank you very much. My first question is on. If you could share the improvement of over the previous quarter and what is the number currently?
Vivek Gupta
Yeah. No, I think it’s a great question. We actually added almost 10,000 busy coolers in this quarter. As I said, beer is sold when it is cold. And again, going back to our role as category maker, we actually are working on ensuring they are more schoolers in various parts of the places. We were able to place almost 1,000 plus coolers in Andhra Pradesh as the market opened up to really do that. So we had implemented more than 10,000 poolers.
Vishal Punmiya
Okay. And also if you could share the capex number for ’26 and ’27, including you have to.
Vivek Gupta
Look, it’s very difficult to share the capex number because you know, as we said, we are investing in the growth, we are looking at the opportunities. The numbers are very — you’re variable because some places we may go with a hybrid model, some places are investing in our beauty. So we have a total strategic plan, so I won’t be able to share number at this stage. And I would say that lot of it also depends on the policy regulation because one of the thing.
I’m really, really concerned about is the affordability of the beer because in the last few months, most of these states are taking duty increases, price increases for the consumer. And while we are putting a lot of effort to invest in the category growth, but this can be a real dampener because like Karnatka is a very good example. If the momentum would have continued, what it was there for five or six years, we would have actually gone and maybe built another beauty or expanded another beauty to meet the demand.
But unfortunately, I think some of our competitors are not seeing from that lens as a category maker. I think you know, they see it only growing shares and they get okay with you know, some of these changes. And I really hope that with a new platform of beer Association of India, we are actually trying to make sure that as large players, we actually advocate the right things. Even in Telangana, when we took the — you know, when we took that the right thing for the industry sustainability, you know, I’m told that there were many, many beer manufacturers who were trying to see if they can grow shares in this environment.
So I really think that one of the things is to really think beyond current pie and think about a much larger pie to actually see the category opportunity. And as more-and-more of those opportunities open up, I think our capex plan will change with that. So I would be very open with you. Look, so it is actually — you’ll be surprised that the capex plan as fluctuating as you know your travel expenses sometime because a policy change happen and you suddenly say, oh, really, do I need a beauty here if this is going to be the trend there.
So — so I don’t want to give a number, but I would say that it will be a very healthy number for UBL and there because we will still invest in expansion and driving the growth. We are still investing in our own to have better technology. You heard the UP investment, which is close to EUR82 billion investment and is significant investment as well.
Vishal Punmiya
Would it be fair to assume a two, 3 times capex versus the — versus what we have seen in the last two, three years? Or would it — would that band be right?
Vivek Gupta
Look, it would be very difficult to give a number because we are also looking at various models because in one of these states, we also — our CBU partner or a contact manufacturer is expanding their capacity and we are working through it. So it will be definitely higher than where it is today. I can definitely tell you, but I don’t want to give a number.
Vishal Punmiya
Understood. Got it. Thank you
Jorn Elimar Kersten
And if I can add something here, touching on a couple of items there. So if we look at the beer category growth, we think there’s three things that really drive category growth. It’s awareness, availability and affordability. And I think spoke to availability — to affordability. And if we look at awareness also that’s where the coolers play a big role. So in the store, the visibility of beers really helps with digital cooler. So we think that’s going to help for the category and for our brands as well.
On the availability, that obviously ties into the investments as well and that’s why we also look at it state-by-state, what is the availability, what’s the capacity and how can we tap into the capacity? Is it through a greenfield liking UP or is it through a partnership with existing capacity? Because still and I remain having this conversation with as well, overall, there is underutilization of capacity. So we need to make sure that we take the smart decisions here and not invest in greenfields where we don’t have to.
And on the UP specifically, I think if we look at UP, it’s the state with the biggest state revenue coming from the industry, but still versus other states, we see a lot of headroom in terms of consumption bear versus spirit. So that’s one of the reasons why we think UP is a very good potential for us to engage. And that’s where also that piece on availability plays a role with the new policy because doubling the store is massive change and we talk quite a bit about urbanization as one of the drivers for growth.
Yes, that is definitely true because availability in cities is often better. But the doubling of stores will also make sure that in non-urban areas, there is more availability of beer. And we do see across FMCG that actually rural demand is outpacing urban demand. So we think in that sense that UP has all the right levers turns to make sure that that’s where the growth is. So from an investment point-of-view, it shot up quite rapidly on our priority list in terms of where do we think a greenfield makes the most sense.
So we’re extremely confident that this is the right decision now to go with the greenfield. In another state, the decision might be a different one, but based on similar trade-offs.
Vishal Punmiya
Got it. Thank you.
Operator
Thank you. I now hand the conference over to Mr Vivek Gupta for closing comments. Over to you, sir.
Vivek Gupta
Thank you. No, first of all, thank you everyone for your questions and thank you for everyone for your confidence in this. I again want to repeat, I think as a team, we feel very confident that we are on the right track as a company. We also know that it will be a lot of hard work, a lot of uncertainty. But having said that, I think you know, we are investing in-building the category and investing in driving the growth and investing in winning in this market. We are continuously, you know, investing in the capabilities as well.
And one of the big capability is our corporate affairs through beer Association of India, but also our own effort to really, really talk about the affordability of the beer and accessibility of the beer. The one thing which is giving me sleepless night is the affordability of the beer, because if beer becomes extensive and it can lead to not only the long-term category erosion, but also it has other factors on sociability and health and other factors.
So that is one area where I think a broader industry and broader influencer group can really track and do that. But other than that, you know, we are very buoyant on the potential of India, but at the same time, there’s lot of hard work ahead.
Operator
Thank you, sir. On behalf of United Breweries, that concludes this conference. Thank you for joining us and you may now disconnect your lines