Scotch Whisky Prices Set to Drop in India as UK-India Trade Deal Takes Effect
Diageo, the global leader in spirits, has announced plans to reduce prices for its Scotch whisky in India, with the potential for a single-digit percentage decrease. This decision is directly linked to the recently signed India-UK Free Trade Agreement, which is expected to be fully implemented by fiscal year 2027. The agreement is anticipated to benefit Indian consumers, who are among the largest whisky drinkers in the world.
India currently accounts for the largest volume of whisky consumption, and is Diageo’s primary market in the region. The company’s chief financial officer, Nik Jhangiani, stated that the FTA will take time to be embedded into legislation, but the benefits are expected to reach consumers by 2027.
Under the terms of the FTA, tariffs on UK-made whisky and gin will be reduced from around 150% to 75% initially, with further reductions expected over the next decade. This could lead to a potential price drop of 20-22% on some products, though the actual impact will depend on factors such as local state taxes and pricing strategies.
Currently, Scotch whisky holds only 4% of India’s total whisky market, due to high import duties that have kept it expensive. Sales of Scotch single malts in India have slowed in 2024 as consumers have shifted to Indian-made alternatives. However, Diageo hopes the FTA will help revive demand for its products.
Diageo, which produces brands such as Johnnie Walker, Tanqueray, and Smirnoff, anticipates a high single-digit drop in consumer prices, which could lead to an increase in sales volumes. Currently, customs duties account for about 20% of the final retail price of Scotch in India, with the remaining portion coming from production costs, marketing, and state taxes.
Industry experts have warned that while the FTA opens the door to new UK whisky brands and offers greater variety to consumers, it may not result in uniform price reductions across Indian states. An industry expert noted that the consumer price of Scotch could drop by at least 20-22%, but this will depend on local taxes and how companies adjust their pricing strategies.
According to IWSR, on-shelf prices could decrease by 30%, although realistically, only 10% could be saved on BIO Scotch. Some liquor companies are already selling at lower-than-ideal prices to offset high taxes. However, states may oppose price cuts as it would mean losing revenue.
Jason Holway, a senior research consultant at IWSR, stated that the FTA does not eliminate the extensive red tape that characterizes doing business in the Indian alcohol market. Brands and labels will still need to register annually with state authorities and pay license fees. While opportunities exist, they may not necessarily be easier to access.
The IWSR also highlighted concerns regarding minimum import pricing and non-tariff barriers. While the risk of predatory pricing or dumping appears low, it warned that a price war cannot be ruled out, especially as most players focus on premiumization to boost margins.
The industry body noted that it is still unclear whether two key concerns of the Indian industry have been addressed: setting a minimum import price per case to prevent dumping and predatory pricing, and removing non-tariff barriers to support Indian exports.
“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 added.