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Court ruling boosts Pernod Ricard’s fight to regain Delhi market
A recent ruling by an Indian appeals authority has directed the city of New Delhi to reconsider its rejection of a liquor licence for Pernod Ricard, overturning a key justification that the company had a “criminal background”.
The decision, reported by Reuters and based on a 29-page order from the Financial Commissioner, marks a potential breakthrough for the French drinks giant in a market that is both commercially vital and fraught with legal complexities.
Pernod Ricard, whose brands include Chivas Regal, has been unable to sell its products in the Indian capital since 2022, following repeated refusals by local authorities to grant a licence. These refusals were based on ongoing investigations into alleged violations of liquor regulations. However, the Financial Commissioner’s decision determined that the company could not be penalised before legal proceedings had reached their conclusion.
“A conviction beyond doubt”
The ruling, signed by Financial Commissioner Chetan B. Sanghi, explicitly stated: “There has to be a conviction beyond doubt by a court of law before any adverse opinion or action can be taken.” He further recommended that the Commissioner of Excise revisit the matter, effectively pressing the Delhi authorities to re-examine Pernod Ricard’s licence application.
In response, Pernod Ricard stated to Reuters, welcoming the decision and reiterating its commitment to working with authorities to “secure our licence and resume operations in Delhi at the earliest.” The company added, “We now look forward to a timely and favourable resolution.”
Persistent legal scrutiny
The backdrop to this regulatory battle is a broader financial crime investigation by India’s Enforcement Directorate. The agency alleges that Pernod Ricard India indirectly invested in city retailers in exchange for increasing its market share in 2021 — an accusation that the company firmly denies. The case remains ongoing.
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The company has consistently maintained that neither it nor its employees have breached Indian law. However, reports have surfaced —including a May 2023 draft prepared by Indian law firm Shardul Amarchand Mangaldas — suggesting that certain employees within the Indian subsidiary may have overstepped the Delhi Excise Policy (DEP). That document, which has not been legally confirmed, reportedly stated that three executives, including the then-chief operating officer Rajesh Mishra, had acted in violation of regulations prohibiting manufacturers from investing in retail.
Market significance
India is Pernod Ricard’s second-largest market globally, a position chairman and chief executive Alexandre Ricard has described as “must win.” Before the company’s licence was revoked, sales in the Delhi region accounted for approximately 5% of its Indian revenue. With retail sales in the capital suspended since 2022, the ongoing dispute has undoubtedly had financial ramifications.
Meanwhile, the company is also embroiled in a separate US$250 million federal tax dispute, stemming from allegations that it undervalued bulk imports. Taken together, these issues represent some of the most significant challenges Pernod Ricard has faced in one of its most important international markets.
Leaked report and industry impact
db has previously reported on a leaked internal investigation ordered by Paris, which suggested that senior executives in the Indian subsidiary may have colluded with retailers. The document indicated that corporate guarantees had been used as a means of securing retail market share. This is an early-stage assessment and does not reflect a final legal ruling.
Diageo-owned United Spirits, another major player in the Indian market, has also reportedly provided records of its activities to the authorities, further complicating the regulatory landscape for international drinks groups operating in the country.
With the Financial Commissioner’s ruling now in play, Pernod Ricard will be hoping for a resolution that allows it to resume business in one of India’s most lucrative urban markets. However, with multiple investigations still pending and individual cases unresolved, the full extent of the company’s legal challenges in India remains uncertain.
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