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Wednesday, December 11, 2019

Explained: Why Delhi has banned the company that makes Budweiser, Hoegaarden beer

The allegation against AB InBev - the parent company that owns Budweiser and Hoegaarden - pertains to evasion of excise duty.

Written by Sourav Roy Barman , Edited by Explained Desk | New Delhi | Updated: August 1, 2019 5:43:32 pm
The action has been taken by the Delhi government’s excise department.

Popular beer brands Budweiser and Hoegaarden are unlikely to be available in Delhi’s liquor outlets for the next three years, with the government imposing a ban on them.

The action has been taken by the Delhi government’s excise department. The state government collects excise duty on alcohol, which is a lucrative source of revenue. The allegation against AB InBev – the parent company that owns these beer brands – pertains to evasion of excise duty. READ MORE EXPLAINED NEWS

Evasion of excise duty led to ban

An excise department probe found that barcodes on a set of beer bottles of the brand were found to be “duplicated”. The presence of identical bar codes on different bottles essentially means that the company paid excise duty once for the sale of multiple bottles.

For example, if the same bar code is printed on five different bottles, the company will pay excise duty for one instead of five. The investigation dates back to 2016 and the discrepancies were found during a raid on a popular pub.

Beer company to appeal against ban

According to Reuters, the company has denied the allegations and has decided to appeal against the government decision. The company has reportedly claimed that the allegations pertain to the period when the brand SABMiller was not yet acquired by it.

It has also suggested that the bar code discrepancies might have been technical errors. However, the department issued an order last week, initiating immediate action against the violations. For now, the company’s warehouses have been sealed in the national capital – where the demand for beer eclipses hard liquor during the summer months.

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

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, Reuters reported.

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