Indian military stores orders for Pernod, Diageo dry up - sources

By Aditya Kalra
NEW DELHI (Reuters) - Pernod Ricard and Diageo, two of the world's largest spirits manufacturers, have no longer received orders for their imported brands from India's defense canteen stores, where they were sold at preferential prices, industry experts told Reuters.
The move is seen as part of Prime Minister Narendra Modi's "Vocal for Local" campaign, which called for domestic products to be promoted to help India during the coronavirus pandemic, a government measure criticized as protectionist and against foreign companies close .
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India's defense canteens provide soldiers, former soldiers and their families with access to local and imported products such as alcohol and electronics at prices below the market price.
But Pernod Ricard India, whose brands include Chivas and Glenlivet Scotch Whiskey, received no orders for imported spirits in May, compared to average monthly defense order orders of 4,500 to 5,000 boxes, a source said. A case usually contains six, nine or 12 bottles of brandy.
Diageo India has also not received orders for its imported brands such as the popular Johnnie Walker Black Label Whiskey and Talisker Single Malt since May, a second source said.
Pernod Ricard declined to comment and Diageo did not answer questions. The Ministry of Defense didn't answer.
Although no written order was issued, a senior government official said a formal decision on the matter was imminent.
"We want to promote local products ... with the Prime Minister's campaign, it will become a priority," said the official.
A bottle of Johnnie Walker Black Label costs 3,600 rupees ($ 47) in Maharashtra state canteens, a third less than retail customers paying rupees 5,500 ($ 72).
"Drinking Scotch has become a habit, this step will hurt our pockets," said a retired Indian Army official who said he buys five bottles of Scotch each month for himself and his family.
While imported defense liquor sales only generate approximately $ 17 million in annual sales, the channel generates regular demand for top foreign brands. The canteens sell approximately $ 450 million in alcohol a year, mostly Indian beer, whiskey, rum, and other spirits.
A formal order to restrict the purchase of imported alcohol through defense deals will signal an unfriendly business environment and "be protectionism when there is nothing to protect," said a senior executive who works for a foreign liquor company in India.
"You can't make scotch in India," said the executive.
In May and June, the Department of Defense asked the liquor companies to provide information about their brands, the country in which they are made, and the imported ingredients used.
The ministry had received similar responses from other non-liquor companies, the sources said, but it was not immediately clear what other orders had been stopped.
(Reporting by Aditya Kalra; additional reporting by Sanjeev Miglani and Aftab Ahmed; editing by Raju Gopalakrishnan)

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