PERNOD INDIA ALLEGEDLY BOOSTED MARKET SHARE BY PROVIDING FINANCIAL BACKING TO RETAILERS
By Siulan Law Mathews DipWSET
Source: Pernod Ricard India
India's financial crimes agency alleged that Pernod Ricard India has violated the liquor policy of India's capital city by financially supporting retailers who in return helped the company boosted market share by 20 percent points, the Reuters news agency reported.
Quoting court documents, Reuters said Pernod India has provided corporate guarantees worth INR2 billion (USD25 million) in 2021 to its banker HSBC and then asked it to facilitate loans to retailers, who used the funds to bid for liquor store licences in New Delhi.
In exchange for financial backing by Pernod India, retailers who received the loans "had to ensure" that 35 percent of the stocks in their shops would be Pernod products, said the court documents.
As select retailers got loans with Pernod's support and stocked more of its products, the company’s market share rose from 15 percent to 35 percent, the documents said.
One document was reported to have said the arrangement "establishes a clear intention of Pernod Ricard to indulge in brand pushing to gain illegitimate market share."
In New Delhi, liquor manufacturers are prohibited from participating in retail sales directly or indirectly.
Pernod Ricard India said it strongly denies the allegations, adding that it "will continue to fully co-operate with the Indian authorities in this matter."
Pernod India’s head for international brands, Benoy Babu, was arrested last November in relations to this case.
He faces allegations of money laundering under Indian laws and violating Delhi's liquor policy rules, but he has denied wrongdoing and is seeking bail, a New Delhi court will hear bail application on 19 January.
The investigation adds to existing challenges faced by Pernod Ricard in India. The owner of Chivas Regal and Absolut vodka brands is contesting a USD250 million federal tax demand for allegedly undervaluing imports, saying it disagreed with the method used to calculate the tax due.
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