NEWS
DIAGEO PAUSED SALES IN SOME INDIAN STATES TO FIGHT FOR PRICE HIKES
By Siulan Law Mathews DipWSET
29-8-2022
Source: Diageo India
Diageo’s India arm, United Spirits, has paused sales in a number of Indian states where liquor prices are still capped despite rising inflation.
The move to stop sales rather than seeing margins to erode has reportedly cost the company almost USD9million in sales and could complicate the firm’s pivot to premium products.
Diageo India’s CEO, Hina Nagarajan, said the company is lobbying for a mechanism to allow liquor retail price to rise with inflation, as well as to include liquor in the national unified goods and service tax (GST) scheme.
“In the short term there will be some impact on market share,” she said in an interview in the southern city of Bengaluru, adding that she hopes pricing issues will be resolved by the end of September.
“If we look at the longer term perspective, I think it is the right thing to do for the business and I think our investors and stakeholders recognise that.”
“Discussions are going well with up to five states. Others such as Haryana, Rajasthan, West Bengal and Uttar Pradesh, have already implemented hikes,” she added.
India is a very complicated market for alcoholic beverages, Mahatma Gandhi wanted to get rid of alcohol in the whole country, five states including Bihar and Gujarat are banning alcohol.
In states where alcohol is not banned, the state governments set their own alcohol prices and GST rates.
Liquor companies will also have to deal with the different liquor licensing laws across the 28 states and the 8 union territories in India.
Diageo India, which owns brands including Johnnie Walker and Smirnoff, has to get about 200,000 permits each year to navigate state rules that often change at short notice.
Analysts said Nagarajan’s bold move might have raised the trumpet call for overhauling India’s outdated and complicated liquor regulations, but the sales suspension is unlikely to last long given the competition in the Indian liquor market.
“United Spirits’ stand-off with the state authorities is likely to be short-lived, as a prolonged shortage of stocks of its popular brands can compel the retailers, food service operators, and consumers to switch to competitors, such as Pernod Ricard and Bacardi,” said business analysis company GlobalData.
(the writer can be contacted at: info@thewinechronicle.com)
ALL RIGHTS RESERVED
**IF YOU THINK THE WINE CHRONICLE IS WORTH SUPPORTING, PLEASE MAKE A DONATION TO HELP US IMPROVE AND CONTINUE OUR WORK**
TRENDING│ FOCUS│ MISSION│ ABOUT US│ CONTACT
| 