Global Liquor Giants Demand $337 Million Payment From Telangana Government Amid Supply Concerns

Telangana stands as one of India's largest alcohol-consuming regions in the nation.

New Delhi:

Major alcohol industry associations representing Heineken, Diageo, and Pernod Ricard have formally requested the southern Indian state of Telangana to resolve $337 million in outstanding payments. In their communication, they warned that continued delays risk causing supply shortages and severely impacting business operations, according to a letter obtained by Reuters.

As a significant alcohol market in India, Telangana has experienced strained relations with beer and liquor manufacturers over payments for products delivered to government-controlled depots. Earlier this year in January, Heineken's United Breweries, producer of the renowned Kingfisher beer, temporarily suspended supplies to the state in protest.

The outstanding dues, which have accumulated since May 2024, are creating financial pressure on the industry as it approaches the festive season, when consumer demand typically surges by approximately 75%, as noted in the letter sent to Telangana's government on November 12.

The joint letter, endorsed by the Brewers Association of India, Confederation of Indian Alcoholic Beverage Companies, and International Spirits and Wines Association of India, urged authorities to release the 29.85 billion rupees ($337 million) in delayed payments.

"Non-clearance of old payments and delay in current payments have created a situation which is not sustainable for the industry," stated the confidential letter.

"Many companies will not be able to continue operations as they do not have the financial resources to do so," the industry bodies further warned, without identifying specific companies.

Reuters received no response from the Telangana government despite multiple requests for comment.

Heineken, Diageo, and Pernod Ricard also did not respond to inquiries.

Many Indian states, including Telangana, mandate that liquor companies distribute exclusively through government-operated depots, which subsequently sell to retailers. This system forces manufacturers to depend on state governments for payment.

India's alcohol sector, a crucial growth market for global beer and spirits producers, already faces mounting regulatory challenges, including planned stricter advertising limitations and ongoing antitrust investigations.