Diageo drawn into Pernod’s Delhi saga

Within hours of Pernod Ricard’s application for its licence to trade in Delhi being refused, arch rival Diageo has been drawn into the saga.

According to the report, Hina Nagarajan, the chief executive of United Spirits, Diageo’s Indian subsidiary, has been summoned by New Delhi anti-corruption police, who are investigating billing and discount practices involving government agencies running liquor retail shops between 2017 and 2020.

She has been told to appear before police today and to provide several documents related to company sales, according to a Reuters report.

“You are hereby directed to appear in person or through a company representative … for joining (the) investigation,” said the notice served on her.

State governments such as Delhi depend heavily on tax revenue from alcohol. After a two year trial of allowing private retailing (which is at the nub of the strongly rejected allegations against Pernod Ricard) Delhi reverted to a state monopoly following which allegations of corruption have become widespread.

A spokesperson for Diageo India confirmed to Reuters that the company had received the Delhi police notice and said the company would fully cooperate and was “in the process of providing the information sought.

“We are in the process of sending in an authorised representative, as sought in the notice,” the spokesperson added, saying the company could not comment further as the investigation was ongoing.

The spokesperson also said the Reuters story was “misleading”, and stated: “We have received a notice that we believe may have been sent to other manufacturers as well. Such notices from regulatory authorities requesting information are usually addressed to the company head – this is a routine process.

“This notice requires information to be submitted by a representative for the company, pertaining to its operations between the period of 2017 and 2020, and not specifically from the Chief Executive Officer. We are cooperating with the authorities as we have always done.

“Diageo India has always maintained the highest standards of regulatory compliance and the headline & article suggesting any kind of culpability is irresponsible reportage.”

India is a critical market for all the international brand owners and demand there is predicted to eclipse even the United States over the next few years especially as wealth augments the already burgeoning middle class among its population of 1.4 billion.

Alcohol consumption per capita in the country has more than tripled in recent years with demand growth pronounced at the premium end of the market.