Pernod Ricard’s recent attempt to obtain a license to sell alcohol in New Delhi has been met with rejection. The New Delhi authorities cited ongoing investigations into suspected violations of the city’s liquor policy as the reason for the denial. This decision adds to Pernod’s existing challenges in India, where the company is currently embroiled in two antitrust cases and is also facing a significant tax demand of nearly $250 million, stemming from allegations of undervaluation of imports.
Pernod’s popular brands, including Chivas Regal and Absolut vodka, have been unavailable in the city since late 2022. This follows the rejection of a previous license application in April of last year. Despite these setbacks, Pernod insists on its innocence and asserts that it is eligible for a license. India holds significant importance for Pernod, representing a substantial 17% share of the company’s overall market. New Delhi, known as an urban tourist hub, serves as a vital showcase market for premium brands, making it a crucial location for any liquor company.
The rejection of Pernod’s appeal against the previous license denial was outlined in a 24-page order issued on Tuesday. While the document has not been made public, Reuters has obtained a copy. The order, issued by New Delhi Excise Commissioner Krishna Mohan Uppu, specifically cited the ongoing investigations against Pernod as the reason for the rejection.
Pernod, in its appeal, argued that it had met all necessary requirements for the city license and that city officials were prematurely interfering with ongoing criminal proceedings. However, the order referenced an investigation by India’s federal financial crime agency, which accuses Pernod of engaging in illegal activities. The agency claims that Pernod provided false information to Delhi officials in 2021, resulting in unlawful profits. Furthermore, they allege that Pernod violated rules by providing financial support to retailers in exchange for stocking more of its brands. Pernod has consistently denied any wrongdoing.
India accounts for a substantial 10% of Pernod’s group sales, highlighting the significance of the market. The Delhi business previously constituted 5% of Pernod’s Indian sales, as stated by CFO Helene de Tissot last year. The ongoing investigations and subsequent rejections of license applications pose a significant challenge to Pernod’s ambitions in India, a market that plays a vital role in the company’s global strategy.
