Scotch prices in India have fallen by 10-15 percent for the first time since the implementation of the India-UK Free Trade Agreement and companies like Diageo and Pernod Ricard benefiting from lower import costs to consumers in key states. Maharashtra, Rajasthan, Goa and Uttar Pradesh are already seeing price cuts for brands like Johnnie Walker Black Label and J&B, and other states are expected to follow suit. Industry officials said Pernod Ricard has petitioned the government to reduce prices for brands such as Chivas, Ballantine and The Glenlivet. This is the first major price cut for consumers by the two largest scotch producers since the trade agreement came into effect on July 15. This will show how whiskey drinkers in India will benefit from tariff savings.
Competition will increase for Indian single malts
Sandeep Arora, founder of ‘Spiritual Luxury Living’, said in an ET report that the UK FTA will affect the current prices of ‘bottled-in-origin’ brands. This could change the competitive landscape for other whiskies, including Indian single malts. He said price differentials, introduction of new whiskeys and availability will be important factors for the Indian market. Before the revised prices were approved, companies had to submit price reduction proposals and proof to state excise officials that the whiskey was made in the UK. Some states have approved the proposals, people with knowledge of the matter said. Industry sources said Diageo’s 750 ml Johnnie Walker Black Label is now selling for around Rs 3,800, compared to Rs 4,250 earlier. At the same time, J&B is now priced around Rs 1,700, from Rs 2,300 earlier.
How is the price of imported Scotch determined?
Under the India-UK agreement, the tariff on British whiskey was reduced from 150 percent to 75 percent, effectively halving the tariff rate. Also, it will be reduced to 40 percent in the next 10 years. This does not mean that the retail prices will also come down by the same amount, as the import duty is only a part of the final price. Apart from this, state excise duties, taxes, distribution costs and margins are also involved in determining the price. Diageo previously estimated that prices for its ‘bottled-in-origin’ Scotch portfolio could fall by an average of 7-9 per cent nationally. Large reductions in some states are due to state-specific pricing structures and business decisions rather than direct tariff reductions. These changes could intensify competition in India’s premium whiskey market, which also includes Indian single malts such as Amrit, Paul John and Rampur.
Will Indian Single Malt Currency Prices Change?
Rakshit Jagdale, head of Amrut Distilleries, said in an ET report that though we have considered changing prices to compete with these brands, we will have to wait until the festive season to get a clear picture of the market. The initial cuts are being implemented in some of India’s largest whiskey markets. Maharashtra and Uttar Pradesh are among the highest whiskey consuming states, while Maharashtra and Haryana are the major Scotch markets. Pernod Ricard CEO Alexandre Ricard said in August that his company would use the deal to make its brands “more relevant and affordable for consumers”, as well as introducing new Scotch products from the UK and accelerating innovation.
