Suppliers threaten to halt alcohol shipments as Telangana payment delays worsen
Major global drinks companies are demanding immediate settlement of long-overdue payments from Telangana’s state liquor monopoly. With peak season approaching, suppliers warn that continued delays could trigger shortages and disrupt business across one of India’s largest alcohol markets.
The difficulties in obtaining payment from the Telangana state liquor monopoly in India have resurfaced, forcing a group of large suppliers to threaten withholding stocks.
In a letter to the state authorities seen by Reuters, big international alcohol groups including Heineken, Diageo and Pernod Ricard have demanded the outstanding settlement of 29.85 billion rupees ($337 million) in overdue payments.
Further delay will risk supply shortages and threaten the continuity of business, it says.
Industry bodies unite in warning
Signed by the Brewers Association of India, the Confederation of Indian Alcoholic Beverage Companies and the International Spirits and Wines Association of India, the letter urged the state to release payment of the outstanding 29.85 billion rupees ($337 million) immediately.
The long-overdue payments relate to May of last year and the threat to withhold supplies comes as brewers and distillers enter the peak season for consumption, when demand can rise by up to 75% over the New Year season.
The letter suggests that this will put extra strain on the cash flows of some smaller unnamed suppliers unless payment is made soon.
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“Non-clearance of old payments and delay in current payments have created a situation which is not sustainable for the industry,” the letter said.
“Many companies will not be able to continue operations as they do not have the financial resources to do so,” it added.
A history of delayed payments
The monopoly in the southern state of Telangana, which is one of the largest alcohol markets in India, has a history of proving difficult over releasing payments.
In January, the country’s biggest brewer, Heineken-owned United Breweries, briefly halted supplies to the state in protest. That included Kingfisher, India’s top-selling beer brand.
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