Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
United Breweries Ltd (NSE: UBL) Q4 2026 Earnings Call dated May. 06, 2026
Corporate Participants:
Jorn Kersten — Chief Financial Officer
Vivek Gupta — Chief Executive Officer
Analysts:
Abneesh Roy — Analyst
Harit Kapoor — Analyst
Latika Chopra — Analyst
Mehul Desai — Analyst
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day and welcome to United Rudies Limited Q4 and FY2026 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 this conference call, please signal an operator by pressing star then zero on your touchdown form. Please note that this conference is being recorded. I now hand the conference over to Mr. John Kurdstein. Thank you.
And over to you, sir.
Jorn Kersten — Chief Financial Officer
Thank you very much. Good afternoon, everyone. Thank you for joining us here on the quarterly results go for the Q4 of the full year 26. Vivek and I are happy to host you once again. We’ll take a bit more time this time around to spend some time with the introductory remarks because we think the situation in the market merits that. We give a bit more context on the results as well as the outlook. So please bear with us while we walk you through it. And let me start there with the category, because in the end, the category remains the most important anchor for how we look at the business as a whole.
And we’re very happy that in Q4 that we saw that category returning back to growth around 10%. And the majority of markets also contributed to growth, which is a big step up from the second half of 2025 and is also wide supported by multiple movements, including regulatory development, improved affordability on the ground, demand conditions. So overall, we’re happy that the structural drives of the category remain intact and that we see that the beer category in India is actually doing really well in the quarter now.
At the same time, also important to recognize that the market has become significantly more competitive, which means that winning in the environment has an impact on investments in high brands, commercial intensity. And as a result, while the category is growing, the cost of participation has gone up, which is also an important context for the performance in the quarter. And we’ll speak more about that when we talk about how intentional choices have impacted the quarterly delivery. Now, when we look at the quarter, very important to note that we very much believe that the fundamentals of the business remain really strong.
We delivered around 4% volume growth, and I’ll come back to that a little bit later, on balance between primary and secondary volume. So we see that underlying demand is strong, we see the premium continues to outperform in consistency with our strategy, and we also see that the gross margin is moving meaningfully. So in the end, we see that volume, price and mix, as well as our ability to Transform the margins is delivering is moving in the right direction on this volume growth versus the category growth.
It’s important context to make sure that everybody is aware that while Our volume has grown 4% our secondary volume, so our demand from the market has moved mostly in line with the category. There’s a slight pressure on market share but. But we’re also citing last year’s disparity between primary and secondary. So in the end that 4% is muted versus the actual movement that we see in the market. Now of course we see in the EBIT a decline materially in the quarter versus last year, largely impacted by deliberate choices that we have made.
One very clearly investing behind our brands and behind maintaining our leading position in the market. In this intensified environment, we expanded our investment behind the brands with 27% versus the previous year. Of course the quarter is ahead of the peak season. It’s an important quarter to invest in the brand strength and we see it also reflected in the brand power scores that we get back from the market. So we’re very happy and we continue to do this in line with our strategy to really grow our brands and invest behind both brands as well as in execution on the ground.
We’re also advancing in premiumization where our premium share is ahead of the overall. Our premium development is ahead of the overall development of the portfolio and we continue to invest in our network strategy. A large share of the growth in Q4 came from contract manufacturing which has an impact in the accounting. But we knew that, so that was anticipated, but has an impact on especially how revenue and margins are being reported. The last thing that I want to highlight here is that we also deliberately invested into bottling fusion, which also has to do with the environment.
More on a macroeconomic scale. We see that there’s pressure on supply, we see there’s tightness on supply for especially packaging material highly impacted by the energy rises driven by what’s happening in the Middle East. So we also deliberately made sure that our inventory and our use of bottles and packaging materials is at parcel to make sure that we first and foremost prioritize continuity of supply. I think, and that’s something that we also need to highlight that the Middle east situation is expected to have a meaningful impact.
So while we see some fairly minor impact in the quarter, especially driven by this MDI piece, we do see that for the outlook of the year there will be an impact for the market driven mostly by energy fuel cost impacting the packaging cost, packaging material cost. There’s currency movements of the INR performance currently will have an impact on cost as well as the aluminum price, which continues to be extremely high. And we don’t foresee that coming down anytime soon. So the impact that we see for the remainder of the year is predominantly cost led and not demand led.
So we still believe in the strong fundamentals of the category and demand will be there, but cost pressure will continue to be there in the second half of the year. So in the end, I think it’s very clear that we’re operating in a sort of two speed environment where one, we see strong category growth premiumization and we strongly believe that the opportunity will remain to be there and India is the growth engine for the global beer market. While we also see rising cost pressure both on the commercial investments as well as on the cost of production.
And that will remain to be there. And that’s also why we highlighted that in the press release that we did. Now, what we are doing and what are the clear choices that we’re making for what’s ahead of us is that first and foremost we will continue to serve the consumer. We will continue to also drive premiumization. We will invest behind the brands and behind the category and take a role as a category leader. We will also continue to optimize our network and capacity, including the contract brewers, because we believe that is what is needed in order to be there for the growth of the India beer market.
Of course we will tighten our pricing and revenue management in the current outlook. We are closely collaborating with the cross functional teams to make sure that we drive pricing and that we drive the right mix decisions to make sure that we are where the consumer wants us to be be also from pricing, but where we also try to mitigate as much as we can the cost pressure in an environment which everybody knows is heavily regulated. So there it requires additional efforts to make sure that we are able to translate some of that cost pressure into top line pricing.
Now of course, on the EBIT outlook there will be an impact. We are working hard to further work on productivity programs to make sure that we convert the healthy gross margin also into EBITD margin, that we make sure that we mitigate and anticipate the cost pressure which is ahead of us. And that’s not only true for the P and L, but as much for working capital and cash generation. I think we see in the shape of our P and L that we continue to grow also when we look at our investments. So we’re making headwinds on our investments in our greenfields as well as in investing in the stores with high expansion of a number of coolers, which of course also impacts our depreciation.
So throughout the shape of the P and L we can see that our belief in growth and in structural growth is well there and that UDL is positioned to grab the growth of the market at least proportionately. So I think the current performance in the quarter is mostly a result of deliberate investment choices impacted by the local environment as well as by the macroeconomic environment in which we operate. But we are confident that the category will remain resilient over time, that our strategy is still the right one, and that we’re taking the necessary actions to make sure that we’re set up for future growth as well as sustained delivery on our financials.
Now, before we head to the Q and A, I happily invite Vivek to give a bit more color on the introductory remarks.
Vivek Gupta — Chief Executive Officer
No Jon, thanks for this. I know I think all of you are joining the quarterly call, but I would say that this has been one of the quarters where we really had to step back and think about the structure financials in the category and what’s going to happen for the year and the year to come. And a lot of it was driven by Middle east war and the impact because as we mentioned that we are sitting on a 400 to 500 crore impact. You know, our profitability for last year and we had to make clear choices to do that.
But before that I would say a couple of things. First, great news that category is back on growth. I think in the last two calls we had conversation about what will happen to category when you see going back to growth. The good part is the categories come back to growth at 10% and it has not happened by chance. I think it is a function of I would say three things. Number one, the deliberate effort with Viewers association of India, you know where UBL is a key participant other than other players and UBL itself we have made with the regulator around the excise policies because if you actually see in the last nine out of ten policies which have been released there has not been any tax increase on beer and there has been a relative tax increase on spirits.
So the number one driver of category growth is that relative pricing of spirits and beer. You know the difference between that and. And we have seen that in almost 14 states 1, 4 which is almost 42% of our business, we have actually grown more than 30% in the quarter. 3, 0. Not mixing the words there. So I think the first important thing is the effort on the policy front is a big driver of the category growth And I’m not even talking about Karnataka and all which is not into implementation. The second big one which Yawn has taken, there are deliberate investments which UBL has done which are translating into category growth.
You know, there are states where the category is almost doubled. We have invested in capacities, we have invested in quality, we have invested in innovation, we have invested in our brands. Premiumization is a great example, you know, where again we are back on 16% and you saw that we are also investing in futures with the work we are doing with Maltech or Crown and others on the cans to really see that there is a future of beer in the category. So I think the investment, what we have made is leading to the category growth and third the high competitive intensity.
Because when not many players are investing to get the pie in India, consumers are hearing more about beer, they are seeing more investment. Retailers are seeing more investment. And we know that when category investment goes up it really helps the category growth. Our data suggest that some of our competitors have invested 3x4x more but we have not increased our investment to that level. But we continue to increase our brand power despite the investment which means we are at least investing in the right things.
We are not buying the volumes and deliberately not diluting the category. So the number one thing I want to bring to your attention, we are extremely delighted that structural intervention are leading to the category growth. And if the Karnaksa policy comes through or what we are seeing the momentum this quarter, I think the category growth trend will continue. The second important thing I want to bring, because some of you, I read statements after our results. I want to say that the work which UBL has done over the last couple of years, we don’t have a supply issue.
So I want to bring it to very clear we don’t have a supply issue. We have invested a lot in the last two years in building a supplier base on bottles. So we don’t have a supply issue. We also don’t have a supply issue on cans because we have the global network and we have identified these suppliers. We don’t have a supply issue. So none of our results are because of supply issues. And we don’t expect supply issues to happen. In fact it will be a competitive advantage for UBL because we have those supplies tied up or we have worked with our suppliers on a very strategic manner.
We have an inflation issue, we have a cost issue, not supply issue. So I want to just clarify that any of the demand or the category growth momentum continues for us. It will be, it will not Be because we could not get the supply. It would be maybe we chose not to supply because it is too it is prohibited for us to supply. But we don’t have a supply issue. The third thing I would say that because we are the only listed company, the other meaningful listed company had major issue in MP on the beer one I think my understanding is the impact on beer industry because of the war is disproportionate.
And this is a time where we had to make choices on how we want to run the business and where we want to run the business. So for me at this point of time the key focus is consumer. We need to make sure the supplies are available. The focus is to really have very tough conversation and transparent conversations with all our stakeholders, whether suppliers or regulators to make sure that we create the long term value for the category. And I’m very proud that UBL is leading that effort consistently.
You know, we are not watching from the behind, we are actually leading it because this is the time where the structural economics of category has to be. We are also working to make sure that we continuously invest in the brand. And we also very clear that we also are responsibly investing the money. There are states, I won’t name them where we have seen there’s lot of trade spend being done even where category has no money in that state. In a state like Telangana, we’ve seen some of our competitors actually throwing trade fence which doesn’t make sense.
It actually doesn’t encourage regulators to even think about the category long term sustainability. But we are very clear on those situations that we will follow the right path. So I do think that category growth is strong. We are in a position where our supply chain is strong. Our localization efforts are working of premiumization, our gross margins are up 330 basis point. We are making deliberate choices. You know some of the choices we made this quarter is to store more, use more new bottles versus old bottles so that we can replenish new bottles faster because old bottles we can use anytime in a brewery.
Some of the choices we made on making sure that we actually clear some of the inventories because our primary is 4% but our sell through is 8 to 9%. So I also saw some notes where they said there’s a big gap between 4 and 10. Actually there’s not a big gap between 4 and 10. Actually it’s 9.5 and 10 in our books. And this is one of the reasons we had more business from our partners because we also corrected some of the inventories in Anticipation so that we can actually have more fresh beer and do that.
Overall our cost program is kicking on very well. Our people cost is much below our growth rate now. So we have made changes in our structure. Our PUSA program is doing extremely well. Our brewery expansion is on track. We already got the land in UP that civil work has started. Our tail line in Telangana and in Maharashtra will be available before July. So we have one greenfield, two can lines, cooler investment capex is going on. The brand power scores are extremely high. So I think we are feeling very strong.
However, there are big headwinds in the category and we are not shying away from it. And we are structurally working to mitigate what we can. Can we mitigate all of it? We don’t know. It depends on how much the war impact lasts. As I look at today, some of the things like oil prices, Indian rupee, gas prices, I think they are all going northward so we really need to see through it. But we wanted to bring the reality. But our focus as company will remain to drive category growth to serve the consumer and keep unlocking the potential of beer which is there and it will not impact any of our capex plans.
With this I think I open up for any questions you have.
Questions and Answers:
Operator
Thank you very much. We’ll now begin with the question and answer session. Anyone wishes to ask a question may press star and one on the Touchstone telephone. If you wish to remove yourself from the question queue you must press 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles participants. You may press star and one to ask the question. The first question is from the line of Avnish Roy from Nuama Wealth Management.
Please go ahead.
Abneesh Roy
Yeah, thanks. Firstly on the cost impact you mentioned 400 to 500 crore cost impact next to three quarters. So I wanted to understand the assumption. I do understand glass uses a lot of fuel and fuel costs had gone up a lot. If I see today it’s down say 8% and last three, four days it is down 15%. For example, if this geopolitical issue gets resolved and the next one or two weeks crude cools down then does this still arise that 400, 500 crore cost impact happens? So what is the assumption here? And on the supply side you answered very clearly that you have taken care of.
Of course this time the El Nino is a very favorable climate for your kind of category. So are you factoring in all that? And both on aluminum cans and the glass bottles. If you can reconfirm given the very strong demand and now Karnataka policy also positive. Are you absolutely sure that supply side there is no risk inflation is there? So if you could answer both these. I think
Vivek Gupta
I’ll answer the second question and I’ll ask John to help in the first one more detail. I think we are very sure, we are very clear. You know, I think yes, there is a positive momentum. You talk about whether Karnataka policy can be there and all of this and we don’t know what will be the final blueprint of the Karnataka policy. Right. Because it is already taken couple of months for them to come back and modify. But I think from a pure scenario planning from what we need, we are fine. You know, we don’t have an issue.
And it is because over the last two years we have increased our supplier base and we have worked on this very diligently. So we are ready for the growth.
Jorn Kersten
Yeah. And on the cost impact I can highlight a little bit more on the assumptions and obviously I think like everyone, we would applaud if this issue will be solved within the next two weeks. Who knows. However, even if it does, our assumption is that the impact on cost and for cost to normalize will take much more and it will be here for the next couple of months if it ever comes down. So we do have assumptions around crude oil where we believe that it will not be below 100 USD or not far below 100 USD even if things normalize.
It’s largely depending on the impact of the gas import in India with the high exposure. And we know that some of the capex has been seriously impacted. So even if the conflict is resolved, it will not come back. We assume that the aluminum is north of $3,500. We also don’t expect that to come down very quickly. So I think as much as we hope and still have faith that the concept will resolve, the longer term impact will be there. We see of course on the demand side that I mentioned in the opening question on the opening remarks that most of the impact is cost led.
We think that Indian consumer and beer market will be resilient. Of course we’re also closely tracking what happens with local fuel pricing. So far no movement yet. But as soon as that happens and the consumer will see the pricing, we also have to take into account that there might be an impact on demand and the level of discretionary spend where we also see the notes that inflation, food inflation will go up to around 5%. Obviously we can expect that it may have an impact, but we also think that there’s Enough tailwinds on the category that we for now only foresee the cost pressure on the outlook.
Abneesh Roy
Sure. One follow up. Vivek, obviously you have worked in FMCG such a long time and all FMCG companies in this quarter call are seeing market share gains from local pairs. I think you also highlighted that because you have tied up on the sourcing side of packaging which I think for local players is very difficult. So are you already seeing that some of the local players or some of the maybe smaller players are already not able to meet up on the packaging side and that is leading to opportunity and market share gain for you say in April month?
Vivek Gupta
Actually no, I think, I don’t think that, you know, probably they understand or they have done all the bets yet because getting into the season the volume looks good, momentum looks good and for us when we give the plan, when we talk of 400 to 500, we need to look at the full year impact, the rest of the year impact on what’s going to happen based on seasonality, non seasonality and other things really come together. I also think that different players are seeing impact at different levels. I’ve definitely seen in some of our contact viewers that stock manufacturing their brands and say do you need more supplies because I can’t source the material.
So we are seeing that trend happening more and more but I would say that not in April, but I do expect in couple of months you will see that even more on that.
Abneesh Roy
Understood. My last question is on 2, 3 specific state Karnataka. When the initial policy came it seemed very positive for beer. When the final draft came, it seemed less positive but still positive. If you could tell us what is the current understanding. I do understand lower end of beer, there is better profitability. Now let us ignore the Iran crisis because that changes picture. But what is the current situation on the Karnataka and if you could tell us on Telangana? Yes, one, one last one. On Telangana there have been news reports of 12 to 15% hike.
Any update on that? Thank you.
Vivek Gupta
Yeah, I think first on Karnataka, I think first of all holistically the policy direction is very positive and I will put it into two parts. One is ease of doing business. I think ease of doing business. The government has already made significant progress. Like you know, the brewery can dispatch 24 hours, the licenses has increased labeling and all will be digital. I think very welcome move there which used to capture a lot of unnecessary time and energy there. I think the second one is on the policy itself.
Now of course the final fine print we have to see. But I think the direction of moving to taxation linked to ABV is very positive and I think it will lead to a significant growth in beer category and significant growth in consumption of beer if it comes to. So of course we have to wait for the final details but I would say wherever it nets up, it will be a net positive. Where it stands today on Telangana, I don’t think we have got any price increase or notification or anything like that. In fact we are in a significant conversation there because the government needs to understand that this is a unique situation and we are still as an association and as a company in talks with the government.
Abneesh Roy
Thanks a lot. That’s all from ic. Thank you.
Operator
Thank you. Participants, you may press star and one, you answer the question. Next question is from the line of Harith Kapoor from Investec India. Please go ahead.
Harit Kapoor
Yeah, good afternoon. So my first question was on the competitive intensity you alluded to. Just wanted to get your sense on apart from say you know, contract bottlers or very small players who have moved or have stopped doing their own branding for a bit. Some of the increased trade spends and those kind of activities that you were seeing, are they from the other significant players, are you seeing a reduction in that as well as we are moving forward like in April month, Have you seen that come down as well?
And you know what’s your kind of thought process on that? Do you see overall competitive intensity even with the other large two players kind of coming down because of what you’re facing? They are also facing.
Vivek Gupta
See look, I think our business is state by state. So making the overall picture is very difficult. I can split it into two parts. I think one is in the first quarter we saw the overall media spend on the surrogate brands on the category vendor 4X. Right. It was not us who increased the spend on Forex. So there are other significant players who are spending much more on media sponsorship and all. But we have also seen trade spend increasing in certain states significantly and we have seen in many places the trade spend is increasing even where there is an opportunity to buy short term volume.
So I would say that yes we are seeing an increase spend by the competition. We haven’t seen any reduction in that intensity yet. But we are also very clear that it is extremely important for us to stay competitive where we are. But it is also important for us to make sure we are structurally working on improving the health of the category. So I think it is intensity is high right now.
Harit Kapoor
Got it Vivek. The second bit was on the 400 to 500 crore number that you spoke Of I wanted to get your thought process on what in your mind could be the mitigating factor or the offset factors to this. Obviously there are a couple of big buckets. One is price increases in open market states. Hope hope of price increases in government control states. And then there is your own kind of bottom up that you can do in terms of cost. So you know how many of those things are already, you know have already been actioned where we are in that kind of journey and you know any thought on you know, how much can be mitigated?
Vivek Gupta
No, I think it’s a great question. I would say that you look I’m extremely proud of how the team has rallied and seen this crisis as an opportunity. I can safely say that at least half of this 400 to 500 we have firm plans to mitigate already. So whether it is our own productivity drive, whether it is selective pricing, whether it is reducing trade spend in the markets which doesn’t make sense for us or the category profitability is very low. So for example in one of the market we moved to zero trade spend.
I won’t name the market for competitive reasons but we moved to zero trade spend so that because we didn’t see that cross margin in the market to do that plus the work we are doing on consistent improvement on our own productivity and production excellence. I would say we already have firm plans of somewhere between 200 to 250 crores which is already done dusted into execution at all. We are also working on another similar ideas. But you know some of them really depends on whether we get pricing in Telangana or not.
Whether we get pricing in some of the other states or not. Because like Tamil Nadu and other states as well. And we also very aware that we don’t want to make beer unaffordable by doing all of this. Because we have been struggling to talk about affordability of the category and all some of it we will have to absorb at the shop. And we also don’t want to remove our capabilities in the short term. Sorry to
Operator
Interrupt. We are losing your audio slightly a bit.
Vivek Gupta
Sorry
Operator
Sir, can I disconnect and reconnect your line please? Participants please take connection while we rejoin the management call. Sam. It. Sa. Ladies and gentlemen, thank you for your patience. We have the line for the management reconnected so you may go ahead. Harith, if you can just assist where he’s from.
Vivek Gupta
Yeah, I think just just to summarize very quickly, I think on your question half of it is already we have firm plan on mitigation Other half we have ideas, but it will, it will take a lot of work. And also we also don’t want to make it completely unaffordable for consumers. Right. Because you cannot cover all the gap through this. So this is why we wanted to give very clear view of what’s happening and what are the potential effects.
Harit Kapoor
Great. Thank you for this. I’ll come back in a few moments. Thanks.
Operator
Thank you. Next question is from the line of Latika Chopra from JP Morgan. Please go ahead.
Latika Chopra
Yeah, hi. Thank you for the opportunity. You know, I just first wanted to check, you know, what was the volume in milling cases that you closed FY26 with and if you could also share with us a rough slate of how much of these volumes came from contract theories. I’m just trying to gauge how should one think about, you know, the overall impact on price mix, you know, as we, as we forecast the growth on revenue, growth forward. And how do you see this combination changing in FY27 given the supply addition plans you have put in place?
Vivek Gupta
Do you want to know what is the salience of our own breweries versus the contact breweries?
Latika Chopra
Yeah, just trying to gauge because, you know, this time if you look at, you know, the price mix trend declined 7%. That was quite steep during the quarter because of higher salience of contract periods. So just trying to see, you know, how are we shifting between goon and. I
Vivek Gupta
Think, I think I won’t give you the exact details right now and we can come back to you separately. Latika, I think I would say I won’t worry too much about the price mix of this quarter because I think we will have a healthy price mix. This quarter has a combination of couple of things, I think one, which is absolutely the sourcing mix because we took an inventory correction in our own breweries, which means that the primary is much lower than actually what we supply to the corporation markets or other distributors.
So that is why you see our earnings are lesser because the primary is lower and that increases the salience of the CBU’s and which is, I think, the deliberate correction we did to make sure we provide fresh beer. And we also ready ourselves because of the war scenario on the raw material and packaging materials and our contacts which were there. So I won’t read too much into the -7% as a structural thing.
Jorn Kersten
I
Vivek Gupta
Think going forward, our CBU Contribution is around 20 to 25%. It will vary depending on the month and the policy. And all we still have significant presence with our own breweries in the country. And which is only going to expand as well with up coming in next year and with the can lines coming up in by July. In two big markets where we like in Telangana we don’t have our own cans, you know, we bring it very small. But now we’ll have a big capacity or even in Maharashtra we are going to have more capacity which we bring to from some of the other markets.
So I would not worry on that part. But we’ll send back some of the details you’re asking.
Latika Chopra
Sure. Can I then ask you, you know, you close FY26 with a 3% volume growth. Of course the year was marked by, you know, various issues, you know, whether on weather or on regulations. But as you look towards FY27 and assuming a normal, you know, season and you clearly said supply is not an issue from a growth perspective, do you think this will be the year when we can probably aim for that mid to high single digit volume growth with probably a mid single digit kind of pricing on the underlying basis?
Is there some confidence on that?
Vivek Gupta
Absolutely. I think I will be very disappointed with the effort we’ve done which I talked in the beginning on structural levers to drive category growth, the investment we had made on getting cold beer, the networks, the premiumization, the brands and innovation. We think this should be a high single digit category growth year. Our own forecast is somewhere between 6 to 7% volume growth and it should translate to a double digit revenue growth. And we’re already seeing that momentum in the first quarter.
As I said, barring some of the structural thing which we did, 8 to 9% and volumes is up 4% and premium is up 16%.
Jorn Kersten
Yeah. And that just add that gives us confidence and of course we, like I said, we keep a close pulse on what’s happening on the demand. But we’re also confident because we’re cycling like you mentioned these two quarters from last year where demand was absolutely muted because of adverse weather and other elements playing their part. So knowing that will in itself create a tailwind for category and volume growth in the quarters to come post the peak season. We’re quite confident that we’re on the right trajectory for this one.
Yeah, I’ll
Vivek Gupta
Just add and I think while this will be the momentum and the growth, but I’m very clear I’m not going to hesitate to take tough calls where in the States the structural profitability is not there because of regulators. This is the time when the industry is in the crisis, costs are going down. We are not going to do charity here. So I Am also very clear that you know, if we have to take some tough calls, we will take the tough calls.
Operator
Thank you lady. I’ll request you to come back for a follow up question. I request all the participants, kindly limit yourself to one question per participant and rejoin the queue for a follow up. Next question is from the line of Mehul Desai from GM Financial Service. Please go ahead.
Mehul Desai
Yeah. Hi sir. Thanks for taking my question. I just wanted to understand basically the gross margin expansion that has happened given that you know, the realizations were also down and you had an infusion of new bottles also. So this gross margin expansion that has happened, I mean is it purely, you know, state mix or. I mean if you can explain what has led to this gross margin expansion and how should one look at that? I mean when you say this 400 to 500 crore of impact, how much of that impact will be seen in the gross margins?
Jorn Kersten
Yeah, that’s actually two questions. So first on the margin expansion that we see on Q4, I think there’s one element of source mix that also plays there with the accounting. I think we also are very happy that we see that the work that we are doing on premiumization that while we made some conscious choices on mbi we also see still improvement in the efficiency of our operations of our procurement that really helps support the sustained and long term growth of our growth margins including the capability and the hard work that we’ve been doing on pricing.
If we see that especially the width of the pricing that we’ve been able to get over the past 12 months and that we’re also anticipating as part of the mitigation for the time to come is a proof point that we’re really taking up the role as leading the category and taking up the conversations with the regulators that no category can survive without pricing. So all of that is resulting into a healthy margin expansion that we see and that we, that we are really going after to sustain it as part of a winning strategy for the outlook.
Like Vitek mentioned earlier, that cost pressure will have an impact on our materials either direct or indirect which will lead to an increased cost of production. So we do see that with the pricing that we’ve been able to capture and that will start hitting our P and L in April and onwards. We further identified in states like Telangana and others that are significant in volume, if we succeed in pricing it will have definitely an impact. Even if the in state profitability may still remain marginal given the size on the total margin development, it will have a big impact.
So in that Sense we closely monitor. Like Cizek mentioned we need to make the right choices first for the consumer to be able to supply second in some cases the hard choices if business turns out not to be feasible. Also to protect our long term margin. So while we first and foremost remain a growth company we of course take a look at the margin with the current outlook that we use we don’t see too big of a drop on margins especially taking into account the growth that we’ve seen so far. So we keep a close eye on it.
The bottom line impact in absolutes is currently our bigger concern.
Mehul Desai
That’s helpful. Thank you so much.
Operator
Thank you. Next question is from the line of Mr. Swaminathan from Avendra Spark. Please go ahead.
Harit Kapoor
Hello. Thanks for the opportunity. So one question is regarding the capex announcements in UP and the other two bottling projects. When are they expected to come online and what is the level of cost savings that we should expect from these capex coming on?
Vivek Gupta
Yeah, I think up as you said the civil work has started. We expect our beauty to start by the end of next year sometime before end of next year and I think the two can lines we expect to inaugurate before end of July this year. So depending on monsoons or some other factors which come in so the work is going on full scene. I think it is going to provide first growth opportunity and growth potential because Telangana for example because of the economics we have not been selling our cans so this will and I think we have almost less than 2% market share on a segment which is growing.
This will definitely step up because consumers are looking forward to our brands in the cans when we go to the market and so it will definitely have a competitive impact. We have also made capital capex investment on coolers. This year we are deploying further 16,000 coolers and we also seeing that that is also helping in consumption of the brands to really do that. So I think it will have an impact on growth but it will also have an impact on localization of some of the imports we do will become local and will of course in a competitive context some of it we will absolutely invest back because in some of the markets it will take some time also to build this back.
Harit Kapoor
Thank you. Just clarification to this is that so our 200 crores of savings that we’ve been talking about does not include any potential savings from the new CapEx?
Vivek Gupta
No, because it is fully on and of course we continuously work on how can we make the investments more efficient but that is nothing to do with this because that is absolutely. Operating expenses, extra pricing, efficiency in the trends, roi, people, productivity, all every single day.
Jorn Kersten
Yeah. And of course as part of that plan we’re taking a close look at our total investment plan and we do make some choices in smaller investments that we postpone in order to push back on the depreciation as well as prevent the cash going out. But not for these large growth oriented investments. We continue to go full throttle on these because we believe that that is what’s needed in order to lead the category growth.
Harit Kapoor
Thank you. All the best.
Operator
Thank you. A reminder to all the participants, email star and one who answer question. Next follow up question is from the line of Harid Kapoor from Investec India. Please go ahead.
Harit Kapoor
Yeah. Hi. Thanks for taking the follow up. So just one question on you know where you’ve ended the year in terms of premium mix in volume and value. If you could just give us that number. That’s it.
Vivek Gupta
So the last year the premium volume growth was 21% for UBL and we grew market share in premium with 21% volume growth. Our premium mix for in our portfolio is still less than 10%. So it’s you know it’s a 100 basis point improvement in our salience to really bring together. But the encouraging part is despite all the challenges in the category we ended up with a 21% growth. The most important thing is we were able to localize most of our premium portfolio. Harith. And that is also reflecting in our gross margins because there are eight locations where we are now locally producing which is translating into gross margins which I also mentioned in the last call that you will start seeing the impact.
Harit Kapoor
Got it, Got it. And this number that you mentioned is on the premium mix is just up 10% is, is volume.
Vivek Gupta
The volume is up 21%. Yeah. We are talking from a value point of view. You know, I don’t have the exact number because it varies by state on revenue.
Harit Kapoor
Perfect, Perfect. Thank you.
Operator
Thank you. Next follow up question is from the land of Mr. Swaminathan from Amanda Spark. Please go ahead.
Harit Kapoor
Thanks for the opportunity again. So I wanted to understand as to has the category seen any tailwinds from Maharashtra after the ILFL price increases there? And given that you have done a lot of initiatives in Maharashtra over the last 18 months, is there any tailwinds which is still left over in terms of benefit over the next 12 to 18 months?
Vivek Gupta
I think Maharashtra, the category is growing up upward or 20% and our business is going upward of 20% as well. I do think this will continue. I Think it’s a structural change which will continue to expand the category. And we know there’s a lot of investments are coming in Maharashtra both on innovation and the category. We also seeing economy segment in Maharashtra expanding. We saw that in Karnataka that when economy segment expands lot of consumers they switch their choices from low end spirits to beer.
And especially with this. So we see the trend going in Maharashtra. So I still think the opportunity in Maharashtra is huge. The way we are looking at Maharashtra is every district as a country now. So we have gone to the next level. So we see a lot of category growth opportunities within Maharashtra with the same policy regime in large number of districts versus if you take out Mumbai Thane and all. So I think Maharashtra will be a growth killer unless some dramatic shift happen in the policy over the next couple of years.
Harit Kapoor
Thank you.
Operator
Thank you. Next follow up question is from the line of Avnish Roy from Nuamal. Please go ahead.
Abneesh Roy
Thanks. Two quick questions. So Vivek, last two years you have done lot of new launches, innovations. So which ones are you most happy and where are their learning? So London, Pilsner and Heineken Silver etc and related question, which other markets you want to now locally manufacture Heineken Silver or any other part of the portfolio in the next two years? Any plans you can share?
Vivek Gupta
Yeah, no. I think the most excited we are is about Heineken Silver first. I think Heineken Silver is not only expanding the category but it is actually delighting the consumer. It is 100% malt beer to do that. We are seeing a significant growth. You know we had a bump up because Karnataka we were not able to produce locally but now that thing is over as well. We are actually able to produce. We are going to expand Heineken capacity in two more places in the next two years since you asked and maybe more up as I mentioned in a Greenfield brewery.
It will be world class beauty with Heineken facility and that will serve the north grade. We will also have a location in east where we are going. We already started working and hopefully by next year we will have the Heineken facility ready in east as well. We are also looking at global Heineken network to see from a sourcing point of view. But we are very very excited on Henneken potential. Our recent innovation on Kingfisher Smooth is off to a great start in Rajasthan. The repeat rates are fantastic.
It’s a great GR and we know in this category it takes time for trials to build in. But we are very excited about it. The work we have Done on our draft beers, you know is Ultra max now. And even in Ultra, the recent repackaging and relaunch of the brand is doing very well. So the big learning is that it takes time to build innovation. So we cannot measure innovation like in fmtd. Ok Just build the distribution. It will come because it takes time to create awareness, especially in a dark market. Second, we need to be on trend and ahead of trend versus me too innovation.
And third, we need to make sure that we actually have a supply chain who can deliver consistency because in beer giving consistent supplies on innovation, especially when you operate large scale breweries, you need lower moqs than all learning which is there.
Abneesh Roy
Thanks Vivek. One last question on your remark on craft beer. So you have also been launching and the larger players also my question was more on competition from some of the local craft beer like I don’t know if you have had a deep study of Dulali for example. Dulali what we heard from a lot of customers, very premium beer but the taste etc. Of the guava, mango, etc. Very differentiated and a lot of fan following. So do you have a product which can compete with these kind of products or it’s too niche and as of now too premium.
So doesn’t make sense.
Vivek Gupta
No, I think. I think Flavors is one of the platforms in the innovation. There are different platforms. You are talking about Flavors. We launched Kingfisher Flavors in Goa and in Daman and we had a very good learnings and response on products, stability, consumer preferences to do that. As I said, we have a huge pipeline of innovation. It is a combination of what we want to do and what we want to expand. As a management team we have decided to do fewer innovations and very focused and first win in few states and then expand it when we have the right insights learning to do that.
But we consistently work with the local players to understand the new trends and how we partner with them.
Operator
Thank you. Amnesia requested to come back for a follow up question.
Mehul Desai
Yeah, I’m done.
Operator
Thank you. Next question is from the line of Nathan from HDFC securities. Please go ahead.
Unidentified Participant
Hi, thanks a lot for taking my question. My first question pertains to this sort of dependency reducing in our own babies. So this is a one time sort of action in Q4. So going forward the supplies from owned breweries will be normalized. Is that correct assessment?
Vivek Gupta
Yes, yes. I think there will be an impact of, you know, our contract breweries because in some cases those states are growing faster where we have contract breweries, you know One good example is Jharthand where the category has almost doubled since September October because of the new policy of privatization of retail. And we don’t have a brewery. So there will be an impact of the mix where we don’t have the beauties but hopefully with some of the other changes which we expect in some of the other states where we own brewery that will balance out.
But if you keep those factors aside, there is no reason for us not to utilize our beauties fully.
Unidentified Participant
Thanks. Second question pertains to. I guess some of the disclosures have gone, have been reduced like your segment performance result and second like a regional growth trend. So I would be particularly keen to have a data on the regional trend which you have been highlighting for the past few quarters.
Vivek Gupta
Yeah, I think you know we were just, we thought there were many other questions in mind of people this time. We can always share the data later on. It was not intentional to remove it, it was just that we added few slides on, on the war impact and we said, you know, maybe let’s, let’s keep the macro picture and all but if you’re interested we can share that. But it’s a good feedback. So it was not a deliberate not to share. It was more to simplify the presentation, let’s call it that way.
Operator
Thank you ladies and gentlemen. We will take that as a last question. I’ll now hand the conference Gupta for closing comments.
Vivek Gupta
No. Thanks everyone for joining and your participation. I know, I think you know, it is, it is. Results are below expectation and we understand that. But I again as I said for us we are in this game for long run. We want to play the role of category maker. The category trend is positive, the effort is really paying off and we need to do more effort on the policy front. I think at the same time I think it is a difficult time for the category. However, I think we are very committed to the category growth.
We are very committed to brand building. We are very committed to run a very efficient organization and we are very committed to be very transparent with you so that you can even also understand what is coming. For the first time probably we are giving exact numbers in form of some guidance on the impact and that was also a deliberate call so that you understand the magnitude of the impact. Because sometimes in other FMCG companies, you know, who are not regulated on pricing, you know they can mitigate the impact for us.
There is always a lag between that. But having said that, as a UBS fully prepared for the growth challenge, we are going to be aggressive but choiceful. And we will continue to work on the structural improvement on our business. Thanks, everyone.
Operator
Thank you very much. On behalf of United Breweries Ltd. That concludes this conference. Thank you for joining us. And you may now disconnect your lines. Thank you.