'Hold the beers': No Budweiser, Hoegaarden for three years in Delhi

'Hold the beers': No Budweiser, Hoegaarden for three years in Delhi
Portfolio beer brands of Budweiser Brewing Company APAC Ltd | Photo: Reuters

India's capital city has banned the world's largest brewer, Anheuser-Busch InBev, from selling its products in the key New Delhi market for 3 years for allegedly evading local taxes.

The city government orders from earlier this month followed a 3-year investigation which found that beer maker SABMiller - acquired by AB InBev in 2016 for around $100 billion - used duplicate barcodes on its beer bottles supplied to city retailers that year, allowing it to pay lower levies.

AB InBev said in a statement it denied the Delhi government's allegations and would appeal against the order.

"The barcodes were being duplicated by... SABMiller and supplied to the retail outlets to evade payment of excise duty," said a 19-page order, dated July 16, which detailed the findings.

In a second order last week, the Delhi city authority said that AB InBev should be put on a "blacklist" for three years. It also called for the sealing of two of AB InBev's warehouses in the capital city, an action that a senior Delhi government official told Reuters on Tuesday had already been completed.

"This means the company is debarred from Delhi market for all purposes, unless they appeal against this," said the official, adding that no fresh stock of AB InBev beer brands can be sold at liquor shops or restaurants.

Neither of the orders had been previously reported.

AB InBev, which counts popular beer brands such as Budweiser, Hoegaarden and Stella Artois in its portfolio, said the Delhi government's allegations related to operations of SABMiller prior to its takeover, and it looked forward to receiving a fair hearing on the matter.

"Integrity and ethics are part of our core values ... (We) look forward to presenting our views in full cooperation with the excise appellate process," a company spokesman said.

AB InBev is the second biggest player in India's $7 billion beer market, accounting for a 17.5 percent market share, according to research firm IWSR Drinks Market Analysis.

Though separate local market share figures were not available, industry executives said the Delhi ban would be a major setback for AB InBev, which is also battling a separate Indian antitrust probe concerning alleged beer price fixing by SABMiller and other companies.

"New Delhi remains an extremely critical market for any beer company... this is the country's social capital, apart from Mumbai. It's a showcase market for the premium beer portfolio," said a former senior AB InBev executive, who declined to be identified.

This month, AB InBev cancelled the planned listing in Hong Kong of its Asia Pacific unit, citing "several factors, including the prevailing market conditions".

Pub culture

A young and affluent population and a growing pub culture, especially in the big cities, have spurred beer consumption in India. That is despite the fact that the industry is tightly regulated, with most states individually regulating pricing and imposing taxes, which form a vital source of their revenues.