Global alcohol companies are demanding unpaid dues of about $446 million from India’s Telangana state, three industry sources said.
Companies such as Diageo, Pernod Ricard and Carlsberg are making the demand after Heineken suspended supplies to the region in an unprecedented move this week.
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 the pricing of alcohol products, which are major contributors to their revenue.
Heineken’s United Breweries has said it will halt supplies in 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.
The antitrust watchdog is separately investigating accusations of collusion by AB InBev and France’s Pernod to boost market share, having raided their offices in December.
Both are cooperating with industry authorities.
Government And Breweries
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 the condition of anonymity said Telangana owed total unpaid dues of about 400 million rupees ($5 million).
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 customer demand.
Rao said the state owed United Breweries 6.6 billion rupees ($77 million), but did not give exact reasons for the delay.
None of the companies responded to a request for comment on Friday, and neither did Telangana state officials.
Lack of timely payment 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 3 October 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.
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