The West Asia conflict pushed up packaging costs for India’s alcobev industry by 13-14 per cent. Rajesh Khosla of AGI Greenpac said, "Geopolitical developments in West Asia disrupted gas supplies and shipping routes." Higher fuel, glass, and plastic prices now pressure margins, forcing companies to focus on better energy efficiency.
Packaging costs have climbed about 13-14 per cent over recent months, driven by gas disruptions, fuel-linked inputs, and higher crude and polymer prices
Rising packaging costs are adding to margin pressures for India's alcoholic beverages companies, with the West Asia conflict driving up prices of energy-intensive materials such as glass, while aluminium and plastic packaging are also becoming more expensive.
According to Rajesh Khosla, CEO of AGI Greenpac Limited, a packaging company, costs have risen about 13-14 per cent over the past few months, driven mainly by higher fuel costs, fuel-linked inputs, plastic packaging, and broader commodity prices.
The company serves around 70 per cent of the leading alcobev companies in India across beer and spirits segments. Its customer base has a mix of global multinational brands operating in India and large domestic players.
"Geopolitical developments in West Asia disrupted gas supplies and shipping routes. Container glass is an energy-intensive, round-the-clock process, so any change in fuel availability or price directly affects production cost. India's dependence on imported natural gas and soda ash, along with currency movement, has added further pressure," he noted.
Energy costs
Glass has seen notable increases because of its high dependence on energy and soda ash. Aluminium cans have also been affected by metal price movements and energy costs. Plastic packaging has come under pressure from higher crude oil prices, which raise the cost of polymer resins.
Khosla noted that in primary packaging, paper and plastic costs have risen, while in secondary packaging, aluminium prices have moved up in line with LME prices, alongside glass. Overall, materials with high energy intensity or import dependence have been the most affected.
"Costs could rise to about 20 per cent if these escalate further; if the situation eases, costs could moderate as well. Much will depend on gas prices, soda ash availability, and currency movements. We are focused on improving energy efficiency, increasing the use of recycled glass (cullet), and strengthening sourcing to reduce volatility for our customers," he added.
For instance, Dilip Banthiya, Executive Director and CFO, Radico Khaitan, said the West Asia war had affected packaging costs, particularly glass bottles, PET resin and laminates.
During the Q2FY27 earnings call, he said gross margin stood at 48 per cent, expanding 440 bps year-on-year but declining 109 bps sequentially. Product mix and premiumisation contributed 510 bps, while price increases added 85 bps. These gains were partly offset by packaging material costs, which had an impact of ₹27 crore in Q2, compared with ₹30 crore in Q1, equivalent to around 1.6 per cent of net sales.
"In Q2, we invested in working capital to support the strong growth in our premium portfolio, new launches, and secure key raw material and packaging material amid price volatility. This is a temporary build, and we expect it to normalise during the second half of this year," Banthiya said.
Meanwhile, Amit Dahanukar, Chief Strategy Officer, Tilaknagar Industries, noted during the Q2 earnings conference call that the ongoing geopolitical tensions have resulted in continued inflationary pressures across packaging inputs, particularly glass, resulting in an increase in packaging costs during the last two quarters.
"While exiting Q2 FY27, ENA prices have also started to show an inflationary trend with rising fuel and grain costs. Consequently, gross margins were under pressure. However, as committed in Q1, we have been working consistently on our cost optimization initiatives, which have shown positive results, helping us protect our margins," he said.
Similarly, Allied Blenders and Distillers Limited in October 2026 commenced commercial operations at its bottling facility in Uttar Pradesh, with an initial capacity of 6 million cases per annum. The facility was part of the assets acquired in January 2026 for around ₹70 crore and was subsequently upgraded with an investment of around ₹40 crore.
The facility strengthens ABD's in-house bottling capabilities in one of its key markets and is expected to improve service efficiency while delivering cost benefits through increased in-house bottling and savings on franchise fees. Amar Sinha, Managing Director, said during the earnings conference call, "We are undertaking some value engineering with our packaging material because, in difficult times, we need to reexamine where we can save money."