Pernod says revenue in India hit as Delhi city delays license

Drinks giant Pernod Ricard (PERP.PA) is facing "massive losses" to business in India because its brands have not been available in the capital New Delhi for six months due to a license issue delay, according to documents and sources.

The issue is the latest business headache for the French spirits group in India, a key growth market.

Pernod has operated for more than 20 years in Delhi and across India where licenses to operate are granted by states individually, and in most cases have to be renewed every year.

In a court filing dated March 27, which is not public, Pernod told a judge that it applied for a new Delhi city regulatory license in August 2022 but the city government has still not issued a license, excluding the company from city bars and liquor shops.

Pernod said in the filing it is "being severely impacted with loss of market share and revenues" and unable to conduct its business in the city, adding that as a consequence it was "suffering massive losses."

Without quantifying the loss, Pernod said that it "has been suffering and continues to suffer significant business losses which are increasing with every passing day", adding consumers had been deprived of access to its brands.

Two sources familiar with Pernod's issues said its top brands Chivas Regal, Blenders Pride, 100 Pipers and Absolut vodka were not currently available in Delhi city.

The Delhi city government did not immediately respond to a request for comment, while Pernod declined to comment for this story.

Pernod has faced regulatory challenges in India for months. It is fighting a near $250 million tax demand for allegedly undervaluing imports and faces a federal investigation for alleged violations of Delhi city's liquor policy in 2021 that has led to the arrest of one executive. Pernod denies any wrongdoing.

Last week a Delhi High Court judge asked the local government to decide within two weeks whether to issue a license to Pernod.

The company counts India as a key market where it has a 17% share and competes with Diageo (DGE.L). 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.

In its court filing, Pernod says Delhi authorities in September approved the company's license application and the company deposited a fee of $276,000.

But the city license has not been issued yet, and the authorities have not given any reason for the delay, Pernod says.

Mayank Bhatt, CEO of Impresario Entertainment & Hospitality which runs popular restaurant-bar chains Social and Smoke House Deli, said the absence of Pernod brands in Delhi had left many customers disappointed and forced to settle for whatever other options are available.

"Absolut is an Absolut. To come and not get a brand you prefer takes away from the guest experience and hinders business," he said.

 

Reuters