India’s Whiskey Brands Report Good Times Ahead for Industry

August 13, 2014 Posted by India Briefing Reading Time: 3 minutes

DELHI – India’s thirst for whiskey continues to grow as its local firms charted some of the largest growths worldwide in 2013, according to a recent report.

Seven out of 10 of the fastest growing whisky brands in the world are Indian, Drinks International found in its annual Millionaire’s Club report, which looks at companies with at least one million in 9-liter case sales.

At the top, Radico Khaitan’s Crown whisky recorded a 75 percent growth in the last year, the highest in the world. It’s followed by Pernod Ricard’s Imperial Blue (40 percent), Allied Blenders & Distillers’ Officer’s Choice (31 percent) and United Spirits Ltd’s Haywards Fine (30 percent).

Worldwide, spirits demand has also been climbing, growing 11 percent in the five years from 2008 to 2013, according to Euromonitor International. In the next five years till 2018, another 13 percent jump is expected, with whiskey possibly overtaking vodka sales for the first time in decades.

Officer’s Choice overtook McDowell’s No. 1 and long-standing leader Johnnie Walker to become the largest selling whisky brand in the world, selling some 23.8 million cases last year. The brand is now the largest exported spirit brand out of India and is sold in 21 countries globally, with key markets in the Middle East and Africa.

Brand loyalty, however, remains questionable among Indian consumers, as United Spirits, which is now owned by Diageo, saw several of its other Whiskey brands decline in sales, despite the double digit growth of its McDowell’s brand.

Till today, India continues to levy a hefty 150 percent tax on imported scotch malt, a crucial ingredient for most Indian whiskies. Industry experts believe the levee will have to be dropped one day, though concerns abound about the competition from foreign whiskies that may threaten the home grown brands when that happens.

Change is brewing within the industry, as local whiskeys undergo “premiumisation” and shift their focus to delivering novel experiences for consumers, trends driven by the rising affluence in India and the expansion of the middle class, according to the report. Brands like Officer’s Choice and McDowell’s are gaining popularity among the new consumer demographic – young, urbanites who cannot yet afford a premium Johnnie Walker.

As Indian whiskey drinkers in Tier-I cities become more sophisticated, companies are looking to upgrade the packaging and marketing of their products to meet the changing demands. Meanwhile, Tier-II cities are where the growth opportunities lie, as whiskey drinking becomes more popular and socially acceptable.

With the domestic market taking off, Indian brands are also expanding their offshore operations. Last year, Officer’s Choice exported 1.8 million cases to the Middle East, in particular UAE and Oman. Sub-Saharan Africa, the likes of Nigeria, Ghana and Angola, as well as Haiti and Malaysia are also seeing strong growth.

A spokesperson of Diageo and United Spirits told Drinks International, “India will continue to be the key market for its whiskies, but the long term will see promising contributions from emerging markets such as Africa, Vietnam and Myanmar.”

Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email india@dezshira.com or visit www.dezshira.com.

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