Global alcohol firms demand $466 mln from Indian state in payments row, sources say

United Breweries

09/01/2025 08:43

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      Alcohol industry faces tough times in Indian market
    

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      Heineken halts supplies to Telangana due to outstanding
payments
    

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      State minister calls the move a 'tactic' to hike prices
    

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      Telangana is India's biggest beer consumer
    

  
    By Aditya Kalra and Indranil Sarkar
       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  UBBW.NS  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  ABI.BR  amount to 1.5 billion
($17 million).
    Dues owed to whisky and Scotch makers are much more. Pernod
Ricard  PERP.PA  has been demanding 15 billion rupees ($175
million), while Diageo's  DGE.L  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)
 ((Email: aditya.kalra@tr.com; X: @adityakalra;))