- Alcohol industry faces tough times in Indian market
- Heineken halts supplies to Telangana due to outstanding payments
- State minister calls the move a 'tactic' to hike prices
- Telangana is India's biggest beer consumer
NEW DELHI, Jan 9 (Reuters) - Global alcohol companies such as Diageo, Pernod Ricard and Carlsberg are demanding unpaid dues of about $466 million from India's Telangana state, where Heineken suspended supplies this week in an unprecedented move, three industry sources said.
India is the world's eighth-biggest alcohol market by volume, with annual revenues that Euromonitor estimated last year at $45 billion. Its states individually regulate pricing of alcohol products, which are major contributors to their revenue.
Heineken's United Breweries has said it will halt supplies to southern Telangana, India's biggest beer consumer, because of delayed payments and lack of government approval for higher prices since fiscal 2019/20, which hurt its finances.
Wednesday's unusual move by India's biggest beer company sparked a fall of 7% in its shares at a time when the industry faces intense scrutiny nationwide.
The antitrust watchdog is separately investigating accusations of collusion by Anheuser-Busch InBev and France's Pernod to boost market share, having raided their offices in December. Both are cooperating with Indian authorities.
Many places like Telangana require liquor companies to supply only to state-run depots, which then sell to retailers, forcing the companies to rely on state governments for payment.
Alcohol industry sources who spoke on condition of anonymity said Telangana owed total unpaid dues of about 40 billion rupees ($466 million) to whisky and beer companies.
Late on Wednesday, Telangana minister Jupally Krishna Rao said United Breweries, which has 70% of the market in the state, had suspended supplies as a "tactic" to press for price increases, which tend to blunt consumer demand.
Rao said the state owed United Breweries 6.6 billion rupees ($77 million), but did not give exact reasons for the delay.
He did not reveal outstanding dues to its peers, but sources said Carlsberg is owed nearly 400 million rupees ($5 million) while outstandings for AB InBev amount to 1.5 billion ($17 million).
Dues owed to whisky and Scotch makers are much more. Pernod Ricard has been demanding 15 billion rupees ($175 million), while Diageo's unpaid dues are estimated at 10 billion rupees ($116.40 million), two of the sources said.
None of the companies responded to requests for comment on Friday, and neither did Telangana state officials.
Lack of timely payments was "creating tremendous difficulties for companies", the Brewers' Association of India and International Spirits and Wines Association of India told the Telangana government in a letter.
The areas worst hit were operations and efforts to sustain and plan investments, the groups added in their Oct. 3 letter, seen by Reuters, which estimated that total outstanding payments were $606 million by then.
Heineken-owned United Breweries reported sales of 183 billion rupees ($2.1 billion) in fiscal 2023/24. Elara Capital estimates that Telangana accounts for about 15% to 20% of the company's annual sales by volume.
Reporting by Aditya Kalra and Indranil Sarkar; Additional reporting by Rishika Sadam; Editing by Clarence Fernandez
Source: Reuters