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Pernod Ricard has run into yet another problem in India
It is reported that the French company is facing “massive losses” because its brands have not been available for purchase in India’s capital, New Delhi, since before Christmas.
This is due to a delay in issuing the required licence by the local authority. Pernod Ricard says it applied for a renewed licence in August and paid the appropriate $276,000 fee.
India is one of the group’s key markets, which CEO Alexandre Ricard has declared a “must win” as part of his global strategy for Pernod Ricard. The company has been trading successfully in India for more than 20 years following its leading role in the takeover of the Seagram drinks empire, including its large interests in the country.
Pernod Ricard is the leading importer of premium spirits to India and has a 17% share of the spirits market there.
This dispute follows a lengthy wrangle with the Indian tax authorities which allege that Pernod Ricard has undervalued shipments by some $250m for excise duty purposes. It also faces separate charges of illegally funding retail outlets in the Delhi region in return for favourable listings of Pernod Ricard products.
The local authority has since reversed the legislation allowing independent retailers to sell alcohol and has reverted to a state monopoly for the retailing of drink.
The French group denies the allegations, but meanwhile senior employees of the Indian subsidiary remain under arrest awaiting trial on the second count.
The French group denies the allegations, but meanwhile senior employees of the Indian subsidiary remain under arrest awaiting trial on the second count.
Reuters says that Pernod Ricard has told a judge that it has suffered “massive losses” in India because its brands have not been available in the capital for six months. Delhi is a prime tourist destination and consequently accounts disproportionately for sales of premium brands in the country.
It told the court that it is “being severely impacted with loss of market share and revenues” and that it is being prevented from conducting its normal business in the region and consequently was suffering “massive losses”.
Last week a high court judge ordered the Delhi licensing authorities to give a reasoned decision within a fortnight on Pernod Ricard’s application renewal.