India-US trade deal: Even if the duty on whiskey and wine is reduced, Indian companies will remain dominant. Understand how.

News Topical, Digital Desk : A potential reduction in import duty on American whiskey and wine is unlikely to have a significant impact on Indian liquor companies. Industry experts say import volumes are small and the exemption will come with conditions such as a minimum import price.

Why won't it have a big impact ?

According to the report, the duty exemption on American whiskey will be accompanied by a minimum import price, as previously provided in trade agreements with Australia, Europe, and the UK. Furthermore, American whiskey sales in India are very low, with a total of 229,000 cases sold, representing less than 0.1% of the market.

India's whiskey market is primarily dominated by domestic companies, with Scotch whiskey accounting for over 3% and Irish whiskey accounting for less than 0.2%.

Why won't bourbon be a big challenger ?

According to Vinod Giri, director general of the Brewers Association of India, most bourbon and Tennessee whiskeys are darker in color and have a stronger flavor. He said these whiskeys, like single malts, appeal to consumers with a distinctive taste, not the typical premium whiskey consumer.

He says price isn't a major obstacle. An example is Jim Beam bottled in India, which hasn't performed well despite being affordable. Therefore, the duty reduction on bourbon won't have a significant impact on the premium whiskey market.

Government's stance

The liquor industry is awaiting the details of the trade agreement. The government has assured that the interests of domestic companies will not be harmed. Ananth S. Iyer, director general of the Confederation of Indian Alcoholic Beverage Companies ( CIABC) , said the organization is not opposed to reducing import duties, but the process should be done in a phased manner.

Wine accounts for less than 0.5% of the Indian wine market. Of this, Australian wines have the largest share. The success of imported wines in India depends not only on their country of origin or brand, but also on a strong distribution system. Therefore, even a potential duty reduction on wine is unlikely to significantly change the market.

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