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Pernod Ricard’s India operations in more hot water

18 September 2023 By Ron Emler

India, which is Pernod Ricard’s second largest market after the US, is becoming increasingly troublesome for the French group.

The latest allegation is that India’s competition watchdog is investigating Pernod Ricard for allegedly colluding with retailers in the southern state of Telangana to effectively freeze out competitors.

Reuters claims to have seen documents showing that the Competition Commission of India (CCI) has been investigating the claims since early this year.

Reportedly they were made by Radico Khaitan, one of the major producers of Indian Made Foreign Liquor.

The Competition Commission does not discuss cases related to collusion, but Reuters suggests that it could summon Pernod Ricard or retailers, ask for documents or even conduct search and seizure operations to investigate the case.

Radico has alleged that Pernod Ricard broke India’s antitrust laws by entering into agreements with retailers in Telangana state to offer them “additional discounts and benefits” if they abstained from selling Radico’s 8PM whisky brand.

Pernod Ricard allegedly asked these retailers to guarantee a 70% share for its Royal Stag IMFL whisky brand in their shops, by entering into what Radico alleged was a “Royal Stag Agreement”.

Reuters further reports that Radico alleges that Pernod Ricard’s market share rose considerably after it entered into agreements with retailers in Telangana. In some shops it claims the French company’s share rose from 53% in January 2022 to 100% two months later.

Over the same period Radico claims that in some outlets the market share of its 8PM brand fell from 47% to 0%.

Pernod Ricard has not responded to a request from the drinks business for comment, but Reuters reports that the French company said it has “not been notified of the matter … by any competent authority”.

“Pernod Ricard India is committed to complying with the laws of the country and we instruct and educate our teams to do the same,” it added.

Its Indian arm is the leader in locally produced spirits with more than 40 per cent of the IMFL whisky market and about a third of the imported premium spirits.

Euromonitor says Radico’s market share is 6.6%.

Pernod Ricard’s headaches in India, a country which chief executive Alexandre Ricard says is a “must win” market, are mounting.

Its licence to sell in the Delhi region has not been renewed while the local authority awaits the outcome of a criminal case in which the French group is accused of illegally backing retailers in return for favouring its brands. Pernod Ricard denies the charge.

That case also centres on allegations of boosting market share illegally. The Indian federal agency says the French company offered corporate guarantees to some retailers in Delhi, and in return asked them to stock at least 35% of its brands, an allegation the company denies.

It is also challenging in the courts a demand for some US$250 million from the federal tax authorities for allegedly undervaluing some spirits imports.