Whisky market in India
For months, the Scotch whisky industry has campaigned to cut 150% of the federal tariff on imported Scotch whisky in India. The UK government has prioritized this goal in its upcoming trade talks with Indian authorities. The importance of the Indian whisky market to the global whisky category cannot be underestimated. This is where the most whisky is consumed - almost half of the whisky worldwide is purchased in this country, and seven of the world's ten largest whisky brands are Indian products.
The demand for whisky in India is driven by a growing group of young, increasingly affluent consumers. India is a priority market for the Scotch whisky industry, according to the Scotch Whisky Association, lowering the import duty could increase global Scotch whisky export value by more than £ 1.2 billion in the next 5 years.
Whisky market in India
According to the Statista platform, Indians drink 2.6 liters of whisky per capita annually, and you have to remember that this is a country with 1.3 billion people. However, what falls under the "whisky" category in India may be a long way from the restrictive Scottish whisky laws. The vast majority of Indian whisky is distilled from molasses and matures for about a year. The sweet molasses-based distillate suits the tastes of the Indian people, and also pairs well with the smoothie drinks that Indians love.
Benefits of tariff reduction for the industry
However, the Indian whisky market is not limited to native products, and Scotch whisky, mainly blended, is also enjoying growing popularity there. A 150% cut in the Scotch whisky tariff could triple the share of Scotch in the retail market, thanks to the increased accessibility of this category to consumers. However, the importance of the Indian market for the Scotch whisky industry is not only the retail market - more than 80% of all Scotch whisky exports to India are supplied by wholesale supplies. Scotch whisky is blended with native distillates to improve taste and quality.
Scotch whisky industry representatives are counting on the positive effect of the ongoing negotiations and the reduction of the customs tariff from 150% to 30% by 2025. If this happens, not only the retail sales of Scotch whisky bottles may increase, but also the wholesale sales of whisky to this country - more attractive prices can encourage many Indian whisky producers to increase the proportion of Scotch whisky in their products.
Potential for premiumization of the market
Wealthy new Indian consumers prefer premium products and the value of the Indian whisky market has increased by 17% last year. This is a long-term trend - in the last decade, the average price of whisky sold has increased by almost 100% and is currently over $ 7 per liter. All price ranges are thriving in the Indian whisky market, but it is still a budget whisky driven market. The market is at a very early stage of the premium cycle, which offers many opportunities for the development of premium segments.
Certainly, an extremely important aspect in the success of the development of premium Scotch whisky in India will be legal regulations - local authorities are against alcohol and often try to win voters with an anti-alcohol approach. However, if the Indian authorities do not introduce new tax and intervention regulations, and the negotiations of the free trade agreement with the United Kingdom turn out to be successful, premiumization in this market will continue, and the export of Scotch whisky to India will increase significantly in the coming years.