Delhi ban, possible ₹3,000 crore payout: Absolut Vodka maker Pernod Ricard hit by mounting legal troubles

Fans of Absolut Vodka in Delhi are unlikely to see the popular liquor brand return to store shelves anytime soon after the Delhi high court on Friday rejected a plea by French liquor giant Pernod Ricard seeking permission to resume sales in the national capital.

Pernod Ricard’s portfolio, which includes globally recognised brands such as Absolut Vodka and Chivas Regal, has remained unavailable in Delhi since 2023 as the company continues to face scrutiny in connection with the alleged irregularities linked to Delhi’s now-scrapped 2021 excise policy.

The dispute revolves around whether Pernod Ricard, which has been named as an accused in the liquor policy investigation, should be permitted to continue operations in the city while the probe remains ongoing.

Delhi authorities had earlier rejected the company’s liquor licence application, citing what they described as “serious” allegations raised by the Directorate of Enforcement (ED). Investigators have accused the company of colluding with retailers in an attempt to illegally expand its market share during the implementation of the 2021 excise policy.

The setback comes amid a separate and intensifying legal battle between Pernod Ricard and Indian authorities over allegations of tax evasion tied to its Scotch whisky imports.

According to a Reuters report published earlier this week, Indian investigators concluded that Pernod Ricard concealed the age and composition of imported Scotch whisky concentrates in order to understate their value and pay lower import duties.

The report said the company was subsequently asked to pay $314 million — roughly ₹3,000 crore at current exchange rates — in back taxes.

India is Pernod Ricard’s largest market globally by sales volume, and before its suspension from Delhi’s liquor market, the capital reportedly accounted for nearly five per cent of the company’s nationwide sales.

Pernod Ricard did not immediately comment on the Delhi high court verdict.

Reuters, citing court filings and internal investigation documents, reported that Indian investigators concluded in September that Pernod had “intentionally complicated” disclosures by introducing new internal codenames for malt imports, allegedly making it more difficult for customs officials to compare the imports with those of rival companies.

An investigators’ report submitted in a government filing dated January 24 alleged that Pernod failed to disclose “the true description of their imported malts (i.e. its exact composition and age) with the intention to hide the actual value of the imported goods and to avoid comparison.”

The company has denied all allegations.

In an earlier statement, Pernod India said it “rejects any suggestion of wrongdoing,” maintaining that it has complied with all applicable regulations and is “addressing this matter through the appropriate legal channels and remains confident in its position.”

Authorities allege that Pernod undervalued its imported bulk Scotch concentrates by nearly 67.5%, thereby sharply reducing the effective burden of India’s steep 150% import tariff on alcoholic beverages.

These imported concentrates are later blended with water, caramel and other ingredients to manufacture whisky brands such as Royal Stag.

According to court records cited by Reuters, Pernod’s current tax liability stands at nearly ₹3,000 crore. However, if penalties are imposed under applicable laws and the company ultimately loses the case, the total financial exposure could exceed $600 million — around ₹5,725 crore.

That amount would represent nearly one-fifth of Pernod Ricard’s India revenue of $2.9 billion last year and roughly three times its profit from the Indian market, highlighting the enormous financial stakes involved in the dispute.

The latest court setback in Delhi adds further pressure on the French liquor major as it attempts to navigate mounting regulatory and legal challenges in one of its most important global markets.