Pernod Ricard, the French spirits giant, has been dealt another blow in a key growth market as New Delhi, India’s capital, has rejected its application to renew its liquor sale license. The decision was made due to ongoing investigations into the company, adding to Pernod Ricard’s challenges in the region.
According to an April 13 order from city officials, which was reviewed by Reuters and not previously disclosed, the decision to deny Pernod’s liquor sale license renewal was made after a review of the company’s application and “considerable documents” provided by Indian investigating agencies.
The decision to deny Pernod’s liquor sale license renewal was based on several allegations made by investigating agencies, including that the company provided false price information to generate illegal profits and supported retailers financially in exchange for promoting its brands, which goes against the rules. These allegations were cited in the order.
The 12-page order also stated, “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.
In March, Pernod Ricard informed a Delhi court that it had been incurring significant losses as its brands had been unavailable in the city for six months due to the delayed license renewal. The court had given the city a two-week deadline to reach a decision.
Pernod Ricard is entitled to file an appeal with senior officials of the Delhi government.
India is a crucial market for Pernod Ricard, where it competes with Diageo and holds a 17% share. Although the market share for New Delhi alone is unknown, industry insiders suggest that the city’s status as an urban tourist destination and a showcase market for premium brands makes it a crucial market for any liquor company.
In addition to other regulatory hurdles in India, Pernod Ricard is currently battling a tax demand of nearly $250 million over allegations of undervaluing imports.
For over two decades, Pernod Ricard has been present throughout India, where licenses to operate are granted on a state-by-state basis or, in this case, by the national capital territory. These licenses typically need to be renewed on a yearly basis.