Trouble for beer industry over Aurangabad water shortage

Mumbai: Breweries in Aurangabad, touted the beer capital of India, face a potential shutdown because of insufficient water in their main source of supply.

add_main_imageBrands such as Kingfisher, Foster’s, Carlsberg and Heineken have their breweries at the Walunj industrial estate in Aurangabad. Breweries in the city produce about 180 million litres of beer a year, or about 70% of Maharashtra’s total brewing capacity, according to a state excise department official, who didn’t want to be named.

The problem now is that the only source of water for the city’s beer industry, Jayakwadi dam, is close to running dry because of the deficient monsoon rains this year. The dam currently holds only 2% of its total usable capacity, according to the Maharashtra state water resources department, and this water is the main source of supply for drinking, irrigation and industries in and around Aurangabad, the capital of the Marathwada region.NextMAds

Beer is mostly composed of water, and since none of the beer units in the area has its own water source, the industry will have no alternative if the authorities decide to shut water supply from the dam when it reaches the “dead storage” level—so the water is unaffected by silt.

“Various industry units located in and around Aurangabad currently consume around 55 million litres (mld) of water per day. Out of this, nearly 35 mld is used by breweries in Aurangabad, and due to very less storage left in the dam, we are currently receiving only 50 mld of water,” said an official in the Aurangabad region office of Maharashtra Industrial Development Corporation (MIDC), which is responsible for water supply to industrial parks. The official declined to be named.

“The current live (usable) storage in Jayakwadi dam can serve us only till November end,” said B.M. Sukare, chief engineer in the water resource department. “If we start drawing water from dead storage after that, the government will give priority to drinking water over industrial purposes.”

In a meeting last Tuesday, state chief minister Prithviraj Chavan authorized irrigation minister Sunil Tatkare to release water from the Nilvande dam, which is upstream to Jayakwadi dam, if the need arises, said another official in the irrigation department, who, too, did not want to be identified. But such release will be only for providing drinking water, he added.

Aurangabad, also a key tourist destination for heritage sites such as Ajanta, Ellora caves and Daulatabad Fort, emerged as a major industrial centre in the mid-nineties with many automobile and consumer durable manufacturers setting up factories in the city.

The other major industries that followed were distilleries and breweries. The city has at least half a dozen breweries and four distilleries. The major reason why the industry was attracted to Aurangabad was the silica-free water from Jayakwadi dam that gives beer a unique taste.sixthMAds

“Conditions in Marathwada region are really worrisome,” said Chavan on Tuesday, addressing Confederation of Indian Industry conference in Mumbai. “We are facing problems with drinking water supply to cities like Aurangabad, Jalna, etc., and the industry will have to take some hit.”

“When the season picks up from October onwards, we will certainly face problems in production due to very little water left in Jayakwadi dam,” said Rajkumar Lila, managing director of Lilasons Industries Ltd, the maker of the popular strong beer brand Khajuraho.

Queries emailed to United Breweries Ltd, the maker of India’s largest sold beer brands Kingfisher and Heineken, and Carlsberg India Pvt. Ltd, the maker of the Carlsberg and Tuborg brands, on how the companies are planning to cope up with situation if they stop getting water from Jayakwadi dam went unanswered.

Industry experts say the water shortage in Aurangabad will not affect the national market for many beer and alcohol firms.

The water shortage “might affect to some extent the brewery business in Maharashtra but there will be no all-India impact as such as beer are localized products. Breweries are set up to cater to the needs of one particular local market,” said Sushil Haksar, director general of the All India Association of Breweries, Distilleries and Vineyards.

But it will certainly affect some high-priced foreign brands such as Heineken, Budweiser, Carlsberg that entered India recently and don’t have breweries across the country, he said.

As the industry normally sets up breweries and distilleries in multiple states, considering the logistics and inter-state taxes and duties, a potential shutting of the breweries in Aurangabad will mainly affect the business in Maharashtra for many, corroborated a Mumbai-based beverage industry consultant, who spoke on condition of anonymity.

Maharashtra has the largest beer consuming cities in the country—Mumbai, Pune and Nashik and Nagpur—and a large chunk of stock for this market is supplied from Aurangabad.

“We haven’t received any intimation from MIDC so far. Water shortage in the region, as we learn from media reports, is a matter of serious concern and we look to discussions with the MIDC over it,” said Ajit Jha, director, corporate affairs and communication at SABMiller India, which produces popular beer brands including Haywards and Foster.

SAB Miller acquired Aurangabad brewery of Foster India in 2006 with rights to produce and distribute beer under Foster brand in India and the Aurangabad brewery’s current capacity is around 8.4 million cases per year. One case of beer contains 12 bottles.

“In the event of any unforeseen developments, our water treatment systems are designed to give treated water, which suits the quality of our product,” he said.