Pernod Ricard faces competition probe in India for boosting Royal Stag’s market share
INDIA – Pernod Ricard India is on the receiving end following a probe by the Competition Commission of India (CCI) on the sale of its popular whiskey brand Royal Stag in Telangana, a state in southern India.
Pernod Ricard is a well-known brand in India. According to Euromonitor, the company accounts for about 19% of India’s spirit market share with an estimated value of US$31 billion.
The brand under investigation, Royal Stag, is Pernod Ricard’s best-selling brand by volume. It is a blend of grain spirits and imported Scotch malts and was launched in India in 1995.
According to reports filed at the CCI by its rival Radico Khaitan, alleges a collusion with southern retailers in a bid to decimate sales of Radico’s 8 PM whisky brand.
Radico insists that Pernod violated India’s antitrust laws by entering into agreements with the retailers in what they termed the “Royal Stag Agreement.”
This ensured that the retailers stocked up to 70% of its Royal Stag Whisky as revealed through CCI documents seen by Reuters.
Sources close to the Competition Commission of India (CCI), indicate that India’s watchdog has been following up with the case from the beginning of 2023 and found merit in Radico’s allegations that their rival offered them additional discounts in exchange for reduced sales of their brand.
Although the details related to the collusion are still confidential, the source indicates that CCI has a plan to summon Pernod or the retailers for a search and stoppage of these operations as highlighted in this case.
When reached out for a comment Pernod showed commitment to resolve this matter.
“Pernod Ricard India is committed to complying with the laws of the country and we instruct and educate our teams to do the same,” the company said.
Additionally, they highlighted they were yet to be notified by the relevant authority. Radico Khaitan and CCI on the other hand failed to respond to Reuters.
Pernod, the French drinks giant, is not new to these regulatory challenges in India. In 2022, India’s financial crime agency accused it of violating New Delhi’s liquor policy to boost its market share illegally without a license.
It is alleged that the French company asked the retailers to stock at least 35% of its brands in its shops, and in return offered them corporate guarantees, which the company vehemently denies.
Pernod has also faced a legal tussle of about US$250 million in federal tax demand as it previously undervalued its liquor imports.
As for the ongoing case, Pernod’s market share is alleged to have risen from 53 % to 100 % by March 2022 while sales of Radico’s 8PM brand reduced from 47 % to 0%.
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