Your house parties will pinch your pocket a bit more than last summer. Beer and chakhna (the Hindi word used to refer to snacks and finger foods consumed with alcohol) are set to get costlier as Russia’s invasion of Ukraine that started in February continues.

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Barley supply is down from Russia and Ukraine, the world’s second and fourth-largest producers. That has pushed up the cost of beer’s key ingredient.

Beer lovers may have to shell out 15-16 percent more for a drink as brewers want to offset rising costs.

Apart from some premium brands, Indian brewers do source barley locally, but prices here move in tandem with global prices due to supply disruptions.

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A report by financial services firm Equirus said that barley prices were up 45 percent during the year, while the price of glass, another raw material required for packaging the brew, was up by 18 percent. Barley and glass make up for most of the costs of producing beer.

The rise in prices could slow down beer volumes that Equirus had expected to pick up sharply from the fourth quarter of FY22 onwards.

Alcohol prices vary from state to state in India, depending on excise duty rates. Telangana and Haryana are the only ones that have allowed manufacturers to increase alcohol prices.

The maker of Budweiser and Hoegaarden beers, Anheuser-Busch InBev, has requested policymakers to let manufacturers hike prices as brewers do not see prices easing anytime soon. Meanwhile, the maker of Indian craft beer Bira 91 B9 Beverages plans to push premium bottles to protect margin.

Russia and Ukraine also account for 60 percent of sunflower oil production. As hopes for bumper sunflower oil supplies from the nations faded, the world lined up to procure more palm oil from the largest-exporter Indonesia, leading to the commodity’s price shooting up in local markets and the country placing a ban on exports to protect local buyers.

This ban will hurt India the most as it has been the largest importer of palm oil, the key cooking medium for most snacks consumed with alcohol. A Reuters report said that the ban had trapped at least 290,000 tonnes of the edible oil headed to India at ports and oil mills in Indonesia. Second-biggest exporter Malaysia is already struggling to meet higher demand levels and is asking for near-record prices for prompt shipments.

Shirish Pardeshi, an FMCG analyst at Centrum Broking, told CNBC-TV18 that all the snacking, chips makers, baking, and biscuit players, including Patanjali, will be impacted. Patanjali, which lists palmolein oil as an ingredient in many snacks, did not reply to CNBC-TV18 queries. Haldiram’s, the biggest namkeen brand in India, also did not respond to requests for comments.

Also Read: Alcohol consumption trends changing: Tequila, gin in vogue as rum and vodka take back seat

MTR Foods, which lists refined palmolien oil as an ingredient in some of their snacks, said the firm was keeping a close watch on the likely impact of the ban. “We have fast-tracked initiatives to find viable alternatives to palm oil in our products or source palm oil from certified vendors,” Ankur Bhaumik, COO, MTR Foods, told CNBC-TV18. “At the moment, we are not implementing any change as a direct result of it.”

Parle Products, which makes snack brands such as Chatkeens, FullToss and Parle’s wafers, said that the ban would not directly impact the company due to the exemption of crude palm oil and refined oil palm oil from the export ban.

But since then, Indonesia has banned exports of both versions of the oil, including refined, bleached, and deodorised (RBD) palm oil. "We do not expect the ban to continue beyond 8-10 days. Once the festival of Eid concludes and their domestic prices fall in line, we expect the ban to be lifted," Mayank Shah, senior category head at Parle Products, told CNBC-TV18.

First Published:Apr 26, 2022 4:32 PM IST