British drinks giant Diageo is challenging a prohibition order issued by India's Food Safety and Standards Authority (FSSAI) against one of its top-selling rum products. The company's Indian unit, United Spirits, has filed a legal petition in the Mumbai High Court, arguing that the ban on "McDowell's No. 1 Celebration Matured XXX Rum" was both premature and commercially prejudicial.
FSSAI's Ban and Diageo's Challenge
The FSSAI, India's primary food safety regulator, had banned several whisky and rum brands from Diageo and India's Inbrew, citing mislabeling and improper use of artificial flavors. For McDowell's rum, the regulator objected to the listing of "artificial flavour (rum)" as an ingredient, contending that rum's flavor should derive naturally from its production process.
Diageo, through United Spirits, asserts that the prohibition order was issued by an officer not legally empowered to do so and bypassed established adjudicatory processes. A key point of contention is the timing: the FSSAI initiated industry consultations on flavor labeling rules after the prohibition order was already in effect. Diageo argues that continuing the ban while these rules were still under active consideration by the FSSAI itself rendered the order disproportionate.
Government's Stance and Court Proceedings
A government source, however, reportedly stated that the FSSAI's consultation process was initiated at the request of alcohol companies and did not indicate any ambiguity in the existing regulatory position. The FSSAI maintains that its order was justified based on current standards.
The Mumbai High Court heard the challenge briefly but declined to grant immediate relief to Diageo. The court has requested a response from the federal government by August 19. This legal battle unfolds amidst a broader regulatory crackdown on India's $40 billion liquor industry, which has also seen Indian inspectors seize approximately 18,000 boxes of Diageo liquor bottles for allegedly lacking markings confirming the use of safe recycled plastic. Diageo, which views India as a critical growth market, insists it adheres to all legal requirements.