India is a worry for Carlsberg

India | Carlsberg’s CEO Cees ‘t Hart called India’s market environment “highly uncertain” and “volatile” after posting a 30 percent volume decline in the country, which it blamed on the market struggling socially and economically.

“In India, the infections are very high. 95 percent of the off-trade outlets are open but the numbers of customers remain subdued, as they fear contracting the virus as crowds are gathering,” Mr ‘t Hart told investors in a post earnings call on 29 October 2020.

As if this was not enough, the auditor of its Indian affiliate, Carlsberg India, resigned on 7 November 2020. According to Reuters, for the second time in a row, the auditor, PwC, could not offer an opinion on Carlsberg India’s annual results, citing disagreement among board members and compliance concerns, including a review of complaints around the promotion of beer in prohibited areas.

Carlsberg has been locked in a commercial dispute with its joint venture partner, the family-owned Khetan Group. The latest results, like the previous year’s, have not been approved by the board’s three Khetan representatives, but have been signed off by the seven members nominated by Carlsberg, Reuters said.  

Moreover, a final ruling is still pending on allegations of beer price fixing. India’s Competition Commission concluded in 2019 that AB-InBev, Carlsberg and Heineken’s local units had all colluded to fix beer prices. The watchdog launched the investigation after AB-InBev reported to the authority that it had detected an industry cartel.

The three brewers account for about 85 percent of domestic beer consumption and could be fined a total of USD 280 million, if found guilty, Reuters said. AB-InBev could escape its share of the fines as it first reported the issue.

The alcohol industry in India is highly regulated and each state has different laws governing the sector.