CCI conducts surprise raids on liquor giants Pernod, AB InBev in Hyderabad

Liquor companies and retailers in Telangana have been accused of entering into cartel-like agreements to manipulate prices and market shares

The Competition Commission of India (CCI) conducted surprise raids on Wednesday at the offices of alcohol giants Pernod Ricard and Anheuser-Busch InBev (AB InBev) in Hyderabad, alongside several Telangana retailers. The raids form part of a probe into alleged price collusion with retailers in the southern state, according to a report by Reuters.

 

This is one of the largest antitrust investigations in the liquor industry since 2018, when Carlsberg, AB InBev, and United Breweries were raided over price-fixing allegations. In 2021, Heineken-owned United Breweries and Carlsberg were collectively fined over $100 million, although both denied wrongdoing.

 

Liquor firms entered into cartel-like agreements

The investigation centres on accusations that the liquor companies and retailers entered into cartel-like agreements to manipulate prices and market shares.

   

While AB InBev, maker of Budweiser beer, has confirmed its cooperation with the authorities, Pernod Ricard and the CCI have not yet commented on the matter. “We take antitrust compliance very seriously and are collaborating with the authorities,” AB InBev was quoted by Reuters.  Also confirming its cooperation with the investigation, in a statement to Business Standard, Pernod Ricard said, "As a responsible corporate citizen, we comply with Indian laws. We are cooperating with the competent authorities on the matter, and we rely on them to demonstrate our good faith and compliance."

 

Anonymous complaint triggers investigation

The investigation into AB InBev was triggered by an anonymous complaint in July 2022. Case papers also indicate claims of retailers in Telangana boycotting all beer brands except AB InBev’s, leading to a significant surge in its market share at the expense of competitors.

 

For Pernod Ricard, the raids stem from a 2022 complaint by rival Radico Khaitan. The complaint alleged that Pernod entered agreements with Telangana retailers to offer discounts in exchange for excluding Radico’s flagship 8PM whisky brand from their shelves.

 

This is one of the largest antitrust investigations in the liquor industry since 2018, when Carlsberg, AB InBev, and United Breweries were raided over price-fixing allegations. In 2021, Heineken-owned United Breweries and Carlsberg were collectively fined over $100 million, although both denied wrongdoing.

 

Troubles mount for Pernod Ricard brands

Pernod Ricard, which owns brands such as Absolut Vodka and Chivas, is already grappling with multiple legal and regulatory challenges in India, including a $250-million federal tax demand for alleged undervaluation of imports and two other antitrust cases. The company has also been banned from selling alcohol in New Delhi due to an ongoing investigation into liquor policy violations. 

The company has denied allegations in all these cases.

 

India’s liquor market is valued at $35 billion, with Pernod Ricard holding a 16 per cent market share in the spirits segment as of 2023, according to Euromonitor. In the beer market, AB InBev commands a 17 per cent share, second only to United Breweries, which dominates the 3-billion-litre-a-year sector.

 

Size of India’s liquor market

According to Statistica, India’s alcoholic beverage market in 023 was valued at $55 billion and is expected to rise at a compound annual growth rate (CAGR) of 7 per cent, reaching $73 billion by 2027. 

Pernod Ricard India has a significant market presence in India, owning brands such as Royal Stag, Seagram’s 100 Pipers, Blenders Pride, and Chivas Regal (Scotch). Pernod Ricard holds a 16 per cent share in the spirits segment as of 2023, according to Euromonitor. In September the French spirit maker said that India was its largest market by volume and second-largest by value, adding that premiumisation was part of its growth strategy in the country.