Last November, the Illinois-headquartered spirits giant launched an investigation into whether its Indian business had done business according to company policy and applicable law, including the US Foreign Corrupt Practices Act (FCPA).
Paying the 100 Pipers?
A Times of India article claimed on Monday that, as a result of suspending certain business activities in India as it launched the probe, Beam’s Indian flagship brand Teacher’s had lost market share (40% to 30%) with the whiskey supplanted by Pernod Ricard’s 100 Pipers.
But responding to this claim, Beam Inc. VP of communications and PR, Paula Erickson, told BeverageDaily.com the company had “rapidly addressed activity that concerned us [in India] which had the effect of reducing commercial activity”.
“We have implemented corrective actions and new procedures, and we are now making progress ramping up our repositioning program to restore our place in the marketplace,” she said.
The most recent Nielsen data showed that Teacher’s remained the No.1 Scotch in India, Erickson added. Other Beam brands sold in India include Jim Beam, Maker’s Mark and Sauza.
Erickson refused to discuss specifics in regard to operations suspended in India, but said that Beam remained committed to India and was confident regarding the market’s long-term prospects.
Beam Inc.’s Indian business accounts for around 2% of consolidated net sales for the 12 months ending December 31 2012, and a smaller percentage of operating income.
Whispers of management change
The Times of India also quotes temporary Beam Inc. India boss Arthur Aroney as saying that the company was pursuing “corrective actions, new protocols and new management” in India, but Erickson refused to comment on the scope of the review since it was still ongoing.
Thus she also declined to respond when asked if Beam was looking for a new CEO for its Indian business – after the Times article stated that previous MD Harish Moolchandani was suspended last October – insisting that Beam company policy ruled out discussion of specific personnel matters.
Beam Inc. said in its annual report filed with the US Securities & Exchange Commission (SEC) in late February that the investigation had cost $4m in Selling, General & Administrative Expenses (SG&A) charges to date
“The ongoing conduct of the investigation and our implementation of remedial measures have had, and will likely continue to have, over the near term, a disruptive effect on our Indian business,” Beam added.