Delhi refuses to renew Pernod Ricard’s alcohol licence

Pernod Ricard is facing further headaches in India, where the Delhi government has refused to renew its licence to sell alcohol.

The French group’s chairman and chief executive Alexandre Ricard has designated India as a “must win” market and was buoyant after Pernod Ricard’s sales there shot up by 17% in the six months leading up to Christmas.

Delhi accounts for about 5% of Pernod Ricard’s total sales in India.

Pernod Ricard had applied to renew its licence last summer and had appealed to a local court to require its reissue following stalling by the local authority. the drinks business can reveal that this has now been refused while investigations into Pernod Ricard continue.

Pernod Ricard announced immediately that it rejected all allegations made against the company and that it would ”challenge through due process the recent decision” by the excise authorities to deny its operating licence in Delhi.

It is alleged that when the local government gave up its local monopoly of alcohol sales three years ago, Pernod Ricard authorised HSBC bank to underwrite loans to selected retailers in return for generous stocking of its products to the disadvantage of potential competitors.

This, the Indian authorities allege, meant Pernod Ricard broke the rules which are there to prevent producers from owning or subsidising retailers.

Distribution has since reverted to being a state monopoly.

In an official statement Pernod Ricard said that its Indian subsidiary “has been pursuing its licence to operate in Delhi since the re-implementation of the former Excise Policy. It will continue to do so, and will challenge through due process the recent decision by the excise authorities to deny Pernod Ricard India this operating licence, as it is keen to re-start supplies as soon as possible.”

Pernod Ricard is also in dispute with the Indian government about how tax on some US$250 million worth of imported spirits is calculated.

The French group is charged with deliberately undervaluing products, an allegation it strongly rejects and which it is challenging in court.