Three industry sources said global alcohol companies such as Diageo, Pernod Ricard and Carlsberg are demanding payment of an amount from the Indian state of Telangana, where Heineken suspended deliveries this week in an unprecedented move. ‘approximately 466 million dollars.
India is the world’s eighth-largest alcohol market by volume, with annual revenues estimated at $45 billion by Euromonitor last year. Its states individually regulate the pricing of alcoholic products, which constitute a significant part of their revenue.
Heineken subsidiary United Breweries said it would stop deliveries to south Telangana, India’s largest beer consumer, due to payment delays and lack of government approval for higher prices since the 2019/20 financial year, which has hurt its finances.
The unusual move by India’s largest beer company on Wednesday triggered a 7% fall in its shares, at a time when the industry faces nationwide scrutiny.
The antitrust authority is separately investigating accusations of collusion between Anheuser-Busch InBev and France’s Pernod to increase their market share, after raiding their offices in December. Both companies are cooperating with Indian authorities.
In many regions, such as Telangana, liquor companies are required to supply only state-run depots, which then sell to retailers, forcing the companies to rely on state governments for sales. pay.
Alcohol industry sources who spoke on condition of anonymity said Telangana owes a total of about 40 billion rupees ($466 million) to whiskey and beer companies.
Late on Wednesday, Telangana Minister Jupally Krishna Rao said United Breweries, which has a 70% market share in the state, had suspended deliveries as a “tactic” to pressure price increases, which tend to blunt consumer demand.
Mr. Rao said the state owed United Breweries 6.6 billion rupees ($77 million), but did not give the exact reasons for the delay.
It did not reveal the amounts owed to its peers, but sources said Carlsberg owed nearly 400 million rupees ($5 million) and the amounts owed to AB InBev totaled 1.5 billion rupees ($17 million).
Debts to whiskey and scotch manufacturers are much greater. Pernod Ricard is seeking 15 billion rupees ($175 million), while Diageo’s unpaid debts are estimated at 10 billion rupees ($116.40 million), according to two of the sources.
None of the companies responded to requests for comment Friday, nor did Telangana state officials.
In a letter to the Telangana government, the Brewers Association of India and the International Spirits and Wines Association of India said the lack of timely payments was “creating enormous difficulties for businesses”.
The areas most affected are operations and efforts to support and plan investments, the groups added in their October 3 letter, seen by Reuters, which estimates that the total outstanding payments then stood at 606 million dollars.
United Breweries, which is owned by Heineken, reported revenue of 183 billion rupees ($2.1 billion) for the 2023/24 financial year. Elara Capital estimates that Telangana accounts for around 15-20% of the company’s annual sales by volume.
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