The wait for lovers of premium liquor like Chivas Regal and Absolut Vodka in Delhi has become longer. An Indian court on Friday rejected the petition of French liquor company Pernod Ricard, which had sought permission to sell liquor again in Delhi. After this decision, the company’s three-year drought in the country’s capital has deepened. This order of the court has come at a time when the company is facing legal investigation in matters related to Delhi’s old and now repealed liquor policy.
Why are these big brands missing from the capital Delhi market?
The Delhi market has been very important for Pernod Ricard. But for the last three years, people of Delhi have been yearning for its products. In the year 2023, Delhi authorities had refused to renew the company’s license. The main reason behind this was Delhi’s controversial liquor policy, which was later withdrawn by the government. The company had argued in the court that due to not getting the license, its entire business in Delhi has been badly affected and its brands are not available in the market. However, at present he has not been able to get any relief from the court.
What are the allegations against the liquor company?
Central investigation agency Enforcement Directorate (ED) alleges that when retail licenses were auctioned in Delhi in the year 2021, there was collusion between liquor manufacturers, shopkeepers and politicians. According to the investigating agency, under the rules, liquor manufacturing companies could not be directly or indirectly involved in retail sales. It is alleged that Pernod invested in retailers through bank guarantees, which was a direct violation of the rules. Apart from this, the company is also accused of earning illegal profit of 23 million dollars (about 23 million dollars) by telling wrong prices to the Delhi government. However, the liquor company has completely rejected all these allegations.
Why is Indian market important for Pernod Ricard?
This legal battle is a huge business blow for Pernod Ricard. India is the largest market in the world for this French company in terms of sales volume. Until the company was banned, about 5 percent of the total sales in India came from Delhi alone. The capital market is considered a big showcase for the company, where premium brands are in highest demand. The company is suffering huge financial losses due to stoppage of sales for three years.
Difficulties increased from tax dispute to antitrust investigation
This controversy is not alone in Delhi, Pernod Ricard is facing legal and regulatory challenges on many fronts in India. The company is also facing a case against the Customs Department of the Government of India for tax outstanding of more than 300 million dollars. Officials allege that the company hid information about the true age and composition of Scotch for more than a decade to reduce the tax on Scotch imports. Customs officials, in a filing dated 2022, had even repeatedly accused the company of suing the organization.
Along with this, Competition Commission of India (CCI) i.e. antitrust watchdog is also investigating the company. They are accused of making special agreements with retailers to harm their competitors in the market. Amidst all these controversies, the company says that these continuous legal battles are having a very bad impact on their investments and business in India.
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