The Free Trade Agreement (FTA) between the UK and India could not only double scotch whisky sales in India but also give Indian whisky a boost in the global market, says Jean–Etienne Gourgues, Chairman & CEO of Chivas Brothers.

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In a conversation with CNBC-TV18, he said that there is no level playing field today between India & the UK when it comes to tariffs. Currently, the import of scotch whisky attracts a 150 percent duty, while Indian whiskies imported to the UK attract no tariff.

"It will be fair to have the same condition on two sides," Gourgues added.

India and the UK have been engaged in talks for a free trade agreement with negotiations being launched in January 2021 and the eleventh round of talks being concluded most recently. Tariffs on the import of scotch whisky have been among the main points of contention in the negotiations. While the UK wants import duty to be lowered from 150 percent to 75 and eventually to 30 percent over three years, Indian manufacturers are concerned it may hurt their business.

Gourgues argues that the FTA going through will not only benefit Indian consumers by giving them more choice of premium whiskies but also benefit Indian Made Foreign Liquor (IMFL) brands by reducing import costs for them. A large proportion of whisky makers in India also import scotch to India to manufacture bottled-in-India scotch and premium Indian whisky brands.

“Today, scotch whisky is 3 percent of all whisky sales in India. We've done some modelling with the Scotch Whisky Association, and we think that if the FTA was fully implemented and executed, today, scotch whisky share will double to 5-6 percent. But while it will double a majority, that’s 94 percent, will still be Indian whisky,” Gourgues added.

Ranjeet Oak, Chief Commercial Officer (COO) of the Indian arm of Chivas’ parent Pernod Ricard also added that the FTA will give Indian whiskies new markets globally.

Chivas Brothers, the scotch whisky arm of French alco-bev major Pernod Ricard, makes brands such as Royal Salute, Glenlivet, Chivas Regal, Ballantines, 100 Pipers, while Pernod Ricard makes several popular whisky, gin and vodka brands including Absolut, Beefeater, Jamesons, Aberlour, Malfy, Monkey 47, among others.

India is currently the largest market in the world for Scotch Whisky by volume and is Pernod Ricard’s top third market by top-line. Like other alcoholic beverage makers, the company has seen significant growth in the premium segment of alcohol in the Indian market.

Gourges says India’s large population, the benefit of 20-25 million new consumers entering the legal drinking age every year and a move towards premiumisation are current tailwinds for the company, which is not only looking at bringing more of its global brands for India but also craft new brands and brand extensions specifically for the Indian market, that could then be sold in other markets as well.

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First Published:Jul 25, 2023 10:19 PM IST