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Business Standard
28-05-2025
- Business
- Business Standard
Pernod Ricard to cut Scotch prices in India after UK trade deal
The Indian arm of French liquor giant Pernod Ricard said on Wednesday that the India-UK free trade agreement (FTA) will enable it to reduce prices of imported liquor for Indian consumers. 'The FTA is expected to improve access to premium Scotch whiskies by making them more competitively priced, as reductions in import duties on 'Bottled in Origin' products will translate into lower retail prices across most states,' said a Pernod Ricard India spokesperson, reported news agency PTI. Bottled in Origin (BIO) refers to premium spirits bottled in their country of origin before being imported to India, commanding some of the highest price points in the market. Duties to be slashed under new trade deal Under the FTA, the current 150 per cent import duty on Scotch whisky will be cut to 75 per cent initially and then gradually reduced to 40 per cent over the next 10 years. However, the spokesperson also noted that while the price reductions will benefit Indian consumers, they will have minimal impact on Indian Made Foreign Liquor (IMFL), which already sells at much lower price points. Pernod Ricard's global portfolio includes brands like 100 Pipers, Chivas Regal, The Glenlivet, and Absolut. In the IMFL category, it sells products such as Blenders Pride, Imperial Blue, and Royal Stag, making it the market leader in India by sales. India's growing Scotch whisky appetite India has already overtaken France in Scotch whisky imports by volume, bringing in 192 million bottles in 2024, up from 167 million in 2023. The trade agreement is expected to further boost these numbers. Mark Kent, chief executive of the Scotch Whisky Association, said that the duty cuts 'will be transformational for the industry and has the potential to increase Scotch whisky exports to India by £1 billion over the next five years, creating 1,200 jobs across the UK.' Last week, Diageo Plc also said it would reduce prices of its Scotch whisky brands in India following the implementation of the FTA.
Yahoo
21-05-2025
- Business
- Yahoo
As Scotch whisky industry cheers UK-India FTA, questions remain
You can hardly blame the Scotch whisky industry for all the kerfuffle surrounding the announcement of the India-UK free trade agreement (FTA), and specifically the halving of import tariffs from 150% to 75%, with a further cut to 40% within the next decade. One article talked of the FTA idea having been floated around 'since the premiership of Boris Johnson'. Well, it's true that there was some excited (but premature) chatter of a deal at the time – largely, I'd argue, to distract attention from the shambles of Brexit – but I reckon I first wrote about the prospects of tariff cuts for Scotch in India at least 20 years ago. So it's taken a while. Scotch Whisky Association (SWA) chief executive Mark Kent labelled the deal 'transformational', repeating the organisation's projections that it has the potential to increase Scotch whisky exports to India by £1bn ($1.34bn) over the next five years, creating 1,200 jobs in the UK. Kent also suggested the move would give 'discerning consumers in a highly educated whisky market far greater choice from SME Scotch whisky producers, who will now have the opportunity to enter the market'. I haven't seen the SWA's workings and I've no reason to doubt the good faith of those figures but meeting that value forecast entails increasing shipments fivefold versus the total of just under £250m recorded in 2024 (HMRC data). For a trade organisation often characterised as conservative and cautious, that's pretty bullish. As for SME Scotch whisky producers, I'm sure that many of them will want to enter India and I'm equally sure that they're under no illusion about the challenges they face. India is a huge and incredibly complex market in which to operate – and that doesn't change just because the tariffs have been halved. Even Indian brand owners complain about tax levels and the 'bureaucratic hurdles' that they say sometimes make it easier for an international brand to establish itself than one made in a neighbouring state. Many have tried – and failed – to push up retail sales prices to counteract rising costs. India can be chaotic. Just look at Delhi: in November 2021, the city privatised its previously state-owned liquor retail network, aiming to eliminate corruption and open up investment in the ramshackle network of stores in the city. Within months, the shiny new system was in pieces, corruption had if anything worsened and a race to the bottom on pricing was driving stores out of business. The tariff cut is also good news for Indian companies By July 2022, the city had reverted to the old model but the reverberations continue: Pernod Ricard is still locked out of the market, refused a licence because of allegations that it broke the rules governing relationships with retailers during the brief privatisation experiment (allegations which the company strongly denies). Whatever the rights and wrongs of that case, it illustrates the complications of operating in a drinks market that is highly regulated and heavily politicised. Outside GST (Goods & Service Tax), alcohol is the biggest revenue provider to the state. Each individual state has its own political agenda and its own regulations, meaning companies will have to register their products in each one. If the US is said to be 50 markets, rather than one, India is 28. Then there is the competitive landscape. The tariff cut is also good news for Indian companies, which import vast amounts of bulk Scotch for their huge IMFL brands. The largest such importer, Radico Khaitan, reckons it will ship in Rs2.5bn (US$29m) of Scotch in the 2025-26 fiscal year alone. India's distillers will reap the tariff dividend, too and their increasingly high-quality premium-and-above brands – the likes of Rampur, Royal Ranthambore and Paul John – are capturing the attention of a local clientele only too happy to take pride in drinking their own whiskies (something encouraged by Prime Minister Narendra Modi's 'made in India' mantra). We also shouldn't expect this FTA to be the last that India ratifies in the near future. Deals with the US and the EU are expected, raising the prospect of tariff reductions for American and Irish whiskey. Sazerac's relationship with John Distilleries (the US company acquired a stake in the business in 2017) is not just about finding export markets for Paul John single malt. In other words, the situation – while still highly positive for Scotch – is more complicated than it might first appear. And that's before we get to the acid test: what will be the concrete effect on pricing for Scotch in India and how will that impact sales? It was intriguing to hear Diageo CFO Nik Jhangiani's take on this during the company's Q3 analyst call this week, when he said: 'If you look at that reduction for 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.' Great but hardly 'transformational' and there's a bit of devilry lurking in the detail, too. All single malts must be bottled in Scotland but some of Diageo's blends are BII (bottled in India) and others BIO (bottled in origin). The latter will reap the full benefits of the tariff reduction, whereas the former will get this only on the liquid itself, with bottling and packaging costs unaffected. Most interestingly, Jhangiani said that 'we do intend to pass that through to consumer pricing fully'. Given that companies commonly invest a bit of margin to keep prices down in a high-potential market like India, the clear temptation (especially at times like these) would be to use the tariff benefit to cut prices but also to beef up the bottom line at the same time. Will others follow Diageo's lead? Given challenging trends in other markets, might some be tempted to slash prices to chase volume, triggering a price war? That would be hugely counter-productive to Scotch's long-term efforts to build its aspirational image among the world's most whisky-crazy population but we can't rule it out – particularly as, according to local reports, the deal does not include any MIP (minimum import price) arrangements that would prevent this. There's no doubt the UK-India FTA is a landmark deal that could and should give a much-needed boost to Scotch whisky exports both in the short and long term. But questions remain, especially with regard to non-tariff barriers on both sides of the equation. Is there the political will for India to ease some of the state-level and regulatory barriers not just for Scotch but for other imported (and domestic) spirits? For Indian whisky, will key export destinations countenance relaxing some of their own rules, particularly around minimum maturation periods? There's an argument to say that a whisky aged for two years in the heat of India can appear more 'mature' than one that has spent three years in a chilly warehouse in Scotland. There's much to celebrate in this FTA but I suspect that we are only at the beginning of a much longer and more involved conversation about India and whisky that will be played out in the years ahead. And those SWA projections of an extra £1bn? They still look pretty ambitious to me – but the truth is that, at this stage, nobody really knows the size of the prize for Scotch in India. "As Scotch whisky industry cheers UK-India FTA, questions remain" was originally created and published by Just Drinks, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. 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Agriland
13-05-2025
- Business
- Agriland
Scotch whisky sector welcomes ‘transformational' UK-India trade deal
The Scotch Whisky Association has welcomed what it regards as the 'transformational' trade deal confirmed between the UK and India. Mark Kent, chief executive of the association said that the free trade agreement is a once-in-a-generation deal and a landmark moment for Scotch whisky's access to the world's largest whisky market. Kent said: 'The reduction of the current 150% tariff on Scotch whisky will be transformational for the industry. 'The deal has the potential to increase Scotch whisky exports to India by £1bn over the next five years and create 1,200 jobs across the UK.' Meanwhile, the Agricultural and Horticultural Development Board (AHDB) is pointing out that, for some time, the narrative around UK malting barley demand has been somewhat lacklustre. The trend of fewer younger people drinking has capped growth in usage by the brewing, malting, and distilling (BMD) sector. Demand for barley Human and industrial (H&I) usage (mainly made up of BMD demand) of barley in 2024/25 is expected to fall for the second consecutive year, according to the most recent UK cereal supply and demand estimates. At 1.782Mt, barley H&I usage this season is 7% down year-on-year and 4% on the previous five-year average. AHDB analysts also point out that while it is likely that US President Donald Trump's tariffs may impact UK whisky trade, the new deal with India has the potential to outweigh any possible drop in demand from the US. The UK-India trade deal also has the potential to bolster UK malting demand at a time when trends are pointing to a reduced domestic demand. Figures produced by AHDB indicate a total UK barley availability figure of 8.484Mt in 2024/25. This is up 50Kt year-on-year. The estimate of full season barley imports remains at 175Kt, down 26Kt year-on-year but well above the five-year average. From July 2024 to January 2025, the UK imported 124Kt of barley, with the pace expected to slow throughout the remainder of the season. H&I barley usage is estimated at 1.782 Mt, down 56Kt from January's estimate and 128kt lower on the year. The decline year-on year and from January is driven by sluggish BMD demand, which can be partly attributed to the increase in the cost of living. At 4.374Mt, usage of barley in animal feed is relatively unchanged from the previous estimate, but 189Kt higher than in 2023/24. Due to its relative availability and competitive price to wheat this season, barley is featuring in compound feed rations at a higher rate in 2024/25. However, the increase is largely due to a rise in fed-on-farm usage, again, due to its price relative to wheat and pressure on malting barley premiums.
The Herald Scotland
08-05-2025
- Business
- The Herald Scotland
Scotch whisky breakthrough in India during a troubled era
The UK-India free trade agreement announced on Tuesday may not ultimately add much to this country's overall gross domestic product, and it will certainly do little to offset the loss of frictionless trade with the European Union since Brexit. But it does promise significantly freer access for Scotch to a hugely lucrative market. India is one of the world's largest consumers of spirits. But until now exports of Scotch to the rapidly growing economy have largely been impeded by hefty import tariffs. Under the new free trade deal between the UK and India, tariffs on imports of whisky and gin will be halved from 150% to 75%, before being reduced to 40% by the 10th year of the agreement. The Scotch whisky industry, which exported £218 million of whisky to India last year, responded to the news with unbridled joy. There was certainly no holding back from the Scotch Whisky Association, the reaction of which left the observer with the clear sense that the industry is within touching distance of a commercial holy grail. Read more: Mark Kent, chief executive of the SWA, hailed the agreement as a 'once in a generation deal and a landmark moment for Scotch whisky to the world's largest whisky market'. He said the reduction of the current 150% tariff on Scotch imports to India has the potential to increase exports to the country by £1 billion over the next five years, and help the industry create a further 1,200 jobs across the UK. 'The deal is good for India too, boosting federal and state revenue by over £3bn annually, and giving discerning consumers in a highly educated whisky market far greater choice from SME (small and medium-sized enterprise) Scotch whisky producers who will now have the opportunity to enter the market,' Mr Kent added. 'This agreement shows that the UK Government is making significant progress towards achieving its growth mission, and the negotiating teams on both sides deserve huge credit for their dedication. The Scotch whisky industry looks forward to working with the UK and Indian governments in the months ahead to implement the deal which would be a big boost to two major global economies during turbulent times.' Mr Kent was not alone in responding effusively. William Wemyss, managing director of Wemyss Family Spirits, owner of Kingsbarns Distillery in Fife, said the deal with India would finally give it access to a market that was previously beyond its reach. He declared that the new agreement 'changes everything'. Mr Wemyss, whose family also owns the Darnley's Gin and Wemyss Malts brands, said: 'It finally gives us a fairer footing to compete in a market that has been out of reach for too long. 'This deal could open the door to sustained investment, new partnerships, and long-term growth not just for our own business but for distilleries across Scotland. It's a positive and pragmatic step in the right direction, and one that we hope will be implemented swiftly and effectively. 'We welcome the agreement and remain committed to bringing our whisky to new audiences around the world, sharing a product that's proudly Scottish but globally loved.' There is certainly no doubt the deal has come at a crucial time for the Scotch whisky industry. Over the last couple of years, distillers have seen sales come under pressure in key markets such as the US and China as a range of geopolitical and macroeconomic challenges have undermined demand. Figures published in February found the value of exports fell by 3.7% to £5.4bn in 2024, with the SWA citing difficulties presented in the domestic market by high excise duty and input costs. It also highlighted 'shifting' patterns in world trade that mean exports to traditionally strong markets such as the EU and US 'have become much more challenging'. And this was before President Trump announced a barrage of tariffs on so-called 'Liberation Day' last month, which mean exports of Scotch whisky to the US – the industry's biggest market by value and worth £971m in 2024 – are now subject to an import tax of 10%. You do not need to go too far to see the impact such geopolitical and macroeconomic events are having on the Scotch whisky industry. Last week, Isle of Harris Distillery, a shining light of the new wave of distilleries which have opened in Scotland over the last decade or so, announced 'deeply regrettable' plans for redundancies 'in a move to safeguard the future' of the business. It is not yet clear how many of the 45 jobs at the distillery will be affected, but it is undoubtedly a major blow for a venture that had made the provision of local employment on the island a key objective since it came into being. It was also unsurprising to read managing director Simon Erlanger and executive chairman Ron MacEachran highlight the challenges facing the wider Scotch whisky sector at present as they announced the decision. 'Much like our colleagues in the wider spirits industry, we are facing challenging headwinds which have led to some incredibly difficult decisions,' Mr Erlanger told The Herald. 'Following a number of cost-cutting measures, voluntary redundancy is being offered to staff in the first instance, with compulsory to follow thereafter if we do not fulfil our cost reduction target. It is deeply regrettable we find ourselves in this situation and would like to take the opportunity to thank our entire team, particularly those affected by the changes, for their dedication and contribution to the business.' Mr MacEachran said: 'What we have seen across the industry in recent months are significant reductions in A and P (advertising and promotion) expenditure, headcount reductions, some of them very significant, slowing down or mothballing of distilleries.' It is to be hoped that the redundancies announced by Isle of Harris are not followed by yet more cuts at other distilleries as the industry continues to encounter difficult conditions. The breakthrough in India will certainly help the sector in the long run, but it would perhaps be naïve to think that every Scotch whisky distiller will benefit, with the bigger players tending to find it easier to succeed in exports market than their smaller counterparts. Moreover, even by year 10 of the new free trade deal, Scotch whisky exporters will still face tariffs of 40% in India. However, the new accord with India is certainly a step in the right direction in a highly uncertain world.
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Business Standard
07-05-2025
- Business
- Business Standard
Scotch whiskey to get cheaper in India as import duty slashed under UK FTA
Scotch whisky fans in India may soon find their favourite drinks becoming cheaper. Under a new India–UK Free Trade Agreement (FTA), the current 150 per cent import duty on Scotch whisky will be cut to 75 per cent initially and then gradually reduced to 40 per cent over the next 10 years. The tariff cut is expected to benefit both consumers and the Scotch industry. A bottle of Scotch whisky that currently retails for around ₹5,000 may soon cost between ₹3,500 and ₹4,000 after the initial reduction, depending on state taxes and distributor margins. As the tariff continues to fall, prices are expected to dip further. 'Transformational' for UK exports Mark Kent, chief executive of the Scotch Whisky Association, described the agreement as a 'once in a generation deal'. 'The reduction of the current 150 per cent tariff on Scotch whisky will be transformational for the industry and has the potential to increase Scotch whisky exports to India by £1 billion over the next five years, creating 1,200 jobs across the UK,' he said in a statement. 'The reduction of the current 150% tariff on Scotch Whisky will be transformational for the industry. The deal has the potential to increase Scotch Whisky exports to India by £1bn over the next 5 years and create 1200 jobs across the UK," Kent added. India has already overtaken France to become the largest market for Scotch whisky exports by volume, with 192 million bottles exported in 2024, up from 167 million in 2023. The agreement also promises to open the Indian market to a broader range of Scotch brands, including boutique distilleries previously unable to compete due to high tariffs. This could bring more variety and competitive pricing to the premium segment of the market. Domestic market shielded by gradual rollout Despite the tariff cuts, Indian officials maintain that the domestic alcoholic beverage market — dominated by country-made liquor (88 per cent) and India-made foreign liquor (9.5 per cent) — will not face significant disruption. Scotch currently accounts for just 2.5 per cent of India's whisky market. 'The incremental increase in imports of Scotch whisky, therefore, would not significantly affect the domestic market. The tariff reduction on imports is over a longer period of time (10 years) and even after that it will attract significant customs duty (40 per cent),' news agency PTI quoted a government official as saying. Boost to FDI and local industry The official also noted that easing import duties could help attract foreign direct investment (FDI) into the Indian liquor industry. 'Liberalisation of duties would invite UK's expertise in terms of spirit/wine making, quality control, marketing and consumer awareness,' the official said. Moreover, improved FDI prospects and access to advanced technologies could benefit Indian producers of foreign liquor, while potentially increasing government revenue, curbing counterfeits, and enhancing export quality. Industry voices concern over future FTAs Anant S Iyer, Director General of the Confederation of Indian Alcoholic Beverage Companies (CIABC), expressed concern that similar concessions in future FTAs with the EU, US, or Australia could harm the Indian alcobev and wine sectors. 'We fear that if the same template of duty reduction is followed for the trade deals with the EU, the US and other nations which produce spirits and wines, then the Indian Alcobev industry, including the wine sector, could get adversely impacted,' he said, reported PTI. Iyer also urged the government to review state-level excise concessions on imported liquor and stressed the need for better market access to boost India's alcoholic beverage exports to $1 billion by 2030.
