New Delhi city refuses to renew Pernod’s liquor licence

New Delhi — India’s capital New Delhi has rejected Pernod Ricard’s application to renew its liquor sale licence, citing investigations into the company — the latest blow to the French spirits company in a critical growth market.

The April 13 order from city authorities said the decision was reached after reviewing Pernod’s licence application along with “considerable documents” received from investigating agencies in India. It cited many of the agencies’ allegations, including that Pernod illegally made profits by giving false price information and financially supported retailers in exchange for stocking more of its brands, violating rules.

The 12-page order also stated that “Pernod Ricard India Private Limited and its employees had active involvement in the said criminal conspiracy”. The maker of Chivas Regal and Absolut vodka, which has denied any wrongdoing, declined to comment on Tuesday.

Pernod told a Delhi court in March it has been “suffering massive losses” as its brands have not been available in the city for six months as its licence had been delayed. A judge had given the city two weeks to decide on the matter. Pernod has the right to lodge an appeal with senior Delhi government officials.

The company counts India as a key market where it has a 17% share and competes with Diageo. While the market share for New Delhi alone is not available, industry sources say that as an urban tourist hub, the city serves as a showcase market for premium brands, making it critical for any liquor company.

Among other regulatory challenges in India, Pernod is also fighting a near $250m tax demand for allegedly undervaluing imports. Pernod has operated for more than 20 years across India where licences to operate are granted by states or in this case, the national capital territory, individually and in most cases have to be renewed every year.

Reuters