Latest news with #DiageoPlc
Mint
23-05-2025
- Business
- Mint
Diageo India expects price drop for some spirits after free trade pact with UK
New Delhi: Diageo India, a subsidiary of British liquor giant Diageo Plc, anticipates that the recently-announced India-UK free trade agreement (FTA) will help lower prices for imported spirits, with some categories seeing a high single-digit reduction, potentially lifting demand for its alcoholic beverages. "The India-UK free trade agreement, which has halved the duty on scotch from 150% to 75%, is landmark. It shall enhance accessibility of scotch in the world's largest whiskey market. As a category captain, for USL, it presents a valuable opportunity to drive deeper penetration and introduce new premium offerings that cater to India's evolving repertoire of consumers," Praveen Someshwar, chief executive officer and managing director, said during the company's earnings call on Friday. USL, or United Spirits Ltd, is an Indian beverages company and a subsidiary of Diageo. Earlier this month, India and the UK finalized the FTA, agreeing to reduce the 150% import duty on scotch whisky and gin to 75% initially, with a further decrease to 40% over the subsequent decade. Diageo India manufactures, sells, and distributes brands such as Johnnie Walker, Ketel One, Tanqueray, Captain Morgan and McDowell's No1, with a portion of its portfolio made locally and another part imported. The company's chief financial officer, Pradeep Jain, said that the duty reduction from 150% to 75% may result in approximately a high-single digit decrease in consumer prices. This will also help lift volumes for the company, he added. "Not just we, my sense is that the government will also insist that we pass on the pricing benefit to the consumer. We are absolutely of the same view that we would want to pass on this benefit completely to the consumer. And therefore, keeping the consumer spend constant, it is reasonable to assume that in this part of the portfolio, a high single digit additional volume growth should occur—that's on the bottled in origin (BIO) portfolio," he said. For spirits bottled in India, or BII, the price reduction could be in the range of 4-5%. To be sure, BII refers to spirits that are shipped to India in bulk and bottled within the country, including both international brands and locally blended spirits. These products dominate the ₹ 1,000–2,000 price segment. This includes brands such as 100 Pipers and Teacher's scotch. BIO refers to spirits that are entirely produced and bottled outside of India before being imported for sale—for instance products made and packaged in the UK like scotch whisky. 'There will be a benefit that accrues into the raw material prices also, but again, we will take a call on that as and when that happens. There is still some amount of work to happen before this actually becomes legislation. So, probably the benefit will start coming only in the financial year 2026-2027,' Jain said. Commenting on potential increase in competition due to duty reduction, Someshwar said, "Any play by a competitor will expand the pie—to me, that is an exciting space to be in." Diageo is a large player in the Indian liquor market, competing with companies like Pernod Ricard and Allied Blenders and Distillers Ltd. For the full year ended March 2025, the company reported gross revenues of ₹ 26,780 crore, a 5.4% year-on-year increase. In the March quarter, the company saw a 10.5% rise in reported net sales to ₹ 2,946 crore, attributed to portfolio resilience and the resumption of business in Andhra Pradesh. Profit after tax for the quarter was ₹ 451 crore, up 17.4%, and gross profit increased by 13.4%, leading to a gross margin of 44.5%.
&w=3840&q=100)
Business Standard
21-05-2025
- Business
- Business Standard
Diageo to cut Scotch prices in India as UK FTA halves import duties
Global spirits major Diageo Plc is set to reduce the prices of its Scotch whisky brands in India following the recently signed India–UK Free Trade Agreement (FTA), which slashes import duties on UK-made spirits, The Economic Times reported. Under the FTA, customs duties on whisky and gin made in the UK will fall from 150% to 75% initially, and gradually drop to 40% over a 10-year period. For Diageo, which follows a July–June financial year, the price cut will likely begin with high single-digit percentage reductions, with the company confirming that it will fully pass on the duty benefits to consumers. Prices may drop to ₹3,500 per bottle India is Diageo's largest market by volume and second-largest by value. Currently, Scotch whisky accounts for just 4 per cent of total whisky consumption in India due to its high price point. With the duty cut, Diageo expects greater access and demand. A bottle that currently retails for ₹5,000 could fall to ₹3,500–₹4,000, depending on state taxes and distributor margins. The company owns global brands including Johnnie Walker, Tanqueray, and Smirnoff. Boutique brands may benefit, but state taxes still a barrier The lower duties may also pave the way for smaller, boutique Scotch labels to enter the Indian market—previously priced out by high import duties. However, state taxes, registration costs, and licensing requirements could slow the price cuts from reaching end consumers. Liquor companies in India face: Separate label registrations in each state Annual licence fees Distributor margin variations Resistance from states concerned about tax revenue loss Some companies are already invoicing products at less-than-optimal margins, and there are concerns about minimum import pricing and predatory pricing from new entrants. India imported 192 million bottles of Scotch in 2024 Despite regulatory hurdles, the India–UK FTA is being seen as a breakthrough for global spirits makers. India became the top global market for Scotch whisky by volume in 2024, importing 192 million bottles, up from 167 million in 2023 — surpassing France. While the market for imported single malts has seen a slight dip — partly due to growing consumer interest in Indian malts — the long-term outlook remains robust, especially for mid-tier imported labels that could benefit from the new pricing environment.
Time of India
21-05-2025
- Business
- Time of India
United Spirits Q4 Results: Profit rises 17% on Andhra boost, premium growth
United Spirits Ltd , the country's largest listed liquor company, reported a 17.4% increase in net profit at Rs451 crore, for the quarter ending March. Net sales value grew 8.9% at Rs 3,031 crore for the quarter, on a year-on-year basis. The profit growth was attributed to commencement of operations in Andhra Pradesh after five years, and the premium category which grew at 13.2% on a quarterly basis. Profit rose to Rs 1,558 crore in FY25, from Rs 1,312 crore a year earlier, USL, controlled by Diageo Plc, said in a statement on Tuesday. Revenue from operations for the year increased to Rs 26,780 crore while volume of cases sold grew by 4%. The company that sells brands including Johnnie Walker and McDowell's, said premium volumes grew 9% during the last quarter of FY25, and accounted for 81% to its overall volume sales, while sales of popular or mass-priced products declined by 2% during the same period. 'The challenging demand environment notwithstanding, we have delivered 13.2% NSV (net sales value) growth for P&A (prestige and above) in Q4FY25 and 9.9% P&A growth for FY25, and a leveraged EBITDA growth that takes us to our medium-term guidance," said Praveen Someshwar, chief executive officer at USL. "Looking ahead, we remain focused on delivering sustained growth while creating long-term value for all our stakeholders." Gross profit for the company grew by 13.4% and gross margin was at 44.5%, which had an expansion of 115bps on a year-on-year basis.
Time of India
21-05-2025
- Business
- Time of India
Diageo to cut liquor prices in India as UK trade deal slashes Scotch duties
Mumbai: Diageo Plc will cut liquor prices in the high single-digit percentage range in India to fully pass on the benefits of lower Customs duties following the recent India-UK free trade agreement . The world's biggest liquor company expects the FTA to be fully implemented only from fiscal 2027, benefiting drinkers in the world's biggest whiskey consuming market. "This (FTA) will take some time to embed into legislation. I think the belief right now is it will come in fiscal year 2027, but we will keep watching that, so that will start flowing through," Nik Jhangiani, chief financial officer at Diageo told analysts on Tuesday. "We intend to pass that through to consumer pricing fully. That is the whole idea of being able to really drive more growth in what is (already) an exciting category." Diageo follows the July-June financial year. For the UK-based firm, India is its largest market by volume and second by value. As per the FTA, tariffs on UK-made whisky and gin will be halved to 75% initially, eventually dropping to 40% over a 10-year period. Scotch whisky, the biggest global spirits segment by volume, has a 4% share of India's total whiskey market as high taxes make them pricier. In 2024, sales of scotch single malts slowed as Indian consumers gradually shifted to local malts. The maker of Johnnie Walker, Tanqueray and Smirnoff said benefits from the FTA will translate into lower prices, depending on categories within scotch in terms of bottle and origin (BIO) versus bottled in India (BII). "If you look at that reduction of about 150% down to the 75% initially, that will enable probably a high single-digit decrease in consumer price, and we believe that should drive a similar high single-digit percentage increase in volumes. Clearly, the intent is to pass through fully," he said. Customs duties make up about 20% of the shelf price for scotch, with state taxes, production, and marketing costs contributing the rest. "The FTA will lead to better pricing on bulk whisky for India, opening up the market for new UK whisky brands and exposing Indian consumers to relatively smaller scotch whisky brands and casks. We believe the consumer price of scotch could come down by at least 20-22% but that will largely depend on local taxes and how companies work backwards on their calculations," said an industry expert. According to industry body IWSR, some industry commentators are suggesting an up to 30% drop in on-shelf prices though the realistic saving is likely to be around 10% for BIO scotch. Also, the savings will not be apparent across states, and may not be passed on to the consumer, at least not in the short-term, it said. Several liquor companies are already invoicing at lower-than-ideal prices to compensate for the high duties, and paradoxically, states will be resistant to any price reductions due to revenue losses. "FTA, as far as is presently known, does not remove any of the extensive red tape that characterises doing business in the Indian alcohol market. For instance, brands and labels will still need to register annually state by state, with licence fees paid. There are opportunities, but they will not necessarily be easier to access," said Jason Holway, senior research consultant at IWSR. IWSR said it is unknown, as yet, whether two of the Indian industry's concerns have been addressed: minimum import pricing per case to prevent dumping and 'predatory pricing' and the removal of non-tariff barriers to help boost Indian export opportunities. "Initial analysis suggests an outbreak of predatory pricing or dumping, which would demand a response from the Indian Customs authorities, is unlikely, particularly when most players, domestic and imported alike, are premiumising portfolios so as to maximise margins. That said, a price war can't be ruled out just yet," it said.
Time of India
20-05-2025
- Business
- Time of India
Diageo to cut liquor prices in India as UK trade deal slashes Scotch duties
Mumbai: Diageo Plc will cut liquor prices in the high single-digit percentage range in India to fully pass on the benefits of lower Customs duties following the recent India-UK free trade agreement . The world's biggest liquor company expects the FTA to be fully implemented only from fiscal 2027, benefiting drinkers in the world's biggest whiskey consuming market. "This (FTA) will take some time to embed into legislation. I think the belief right now is it will come in fiscal year 2027, but we will keep watching that, so that will start flowing through," Nik Jhangiani, chief financial officer at Diageo told analysts on Tuesday. "We intend to pass that through to consumer pricing fully. That is the whole idea of being able to really drive more growth in what is (already) an exciting category." Diageo follows the July-June financial year. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Kulkas yang belum Terjual dengan Harga Termurah (Lihat harga) Cari Sekarang Undo For the UK-based firm, India is its largest market by volume and second by value. As per the FTA, tariffs on UK-made whisky and gin will be halved to 75% initially, eventually dropping to 40% over a 10-year period. Scotch whisky, the biggest global spirits segment by volume, has a 4% share of India's total whiskey market as high taxes make them pricier. Live Events In 2024, sales of scotch single malts slowed as Indian consumers gradually shifted to local malts. The maker of Johnnie Walker, Tanqueray and Smirnoff said benefits from the FTA will translate into lower prices, depending on categories within scotch in terms of bottle and origin (BIO) versus bottled in India (BII). "If you look at that reduction of about 150% down to the 75% initially, that will enable probably a high single-digit decrease in consumer price, and we believe that should drive a similar high single-digit percentage increase in volumes. Clearly, the intent is to pass through fully," he said. Customs duties make up about 20% of the shelf price for scotch, with state taxes, production, and marketing costs contributing the rest. "The FTA will lead to better pricing on bulk whisky for India, opening up the market for new UK whisky brands and exposing Indian consumers to relatively smaller scotch whisky brands and casks. We believe the consumer price of scotch could come down by at least 20-22% but that will largely depend on local taxes and how companies work backwards on their calculations," said an industry expert. According to industry body IWSR, some industry commentators are suggesting an up to 30% drop in on-shelf prices though the realistic saving is likely to be around 10% for BIO scotch. Also, the savings will not be apparent across states, and may not be passed on to the consumer, at least not in the short-term, it said. Several liquor companies are already invoicing at lower-than-ideal prices to compensate for the high duties, and paradoxically, states will be resistant to any price reductions due to revenue losses. "FTA, as far as is presently known, does not remove any of the extensive red tape that characterises doing business in the Indian alcohol market. For instance, brands and labels will still need to register annually state by state, with licence fees paid. There are opportunities, but they will not necessarily be easier to access," said Jason Holway, senior research consultant at IWSR. IWSR said it is unknown, as yet, whether two of the Indian industry's concerns have been addressed: minimum import pricing per case to prevent dumping and 'predatory pricing' and the removal of non-tariff barriers to help boost Indian export opportunities. "Initial analysis suggests an outbreak of predatory pricing or dumping, which would demand a response from the Indian Customs authorities, is unlikely, particularly when most players, domestic and imported alike, are premiumising portfolios so as to maximise margins. That said, a price war can't be ruled out just yet," it said.
