By Prasun Sonwalkar, IANS
London : The high demand for Scotch whisky among India’s burgeoning middle classes and the government’s withdrawal of additional customs duty on imported wines and spirits this July have led to a 45 percent spurt in the export of Scotch whisky to India in 2007.
Latest Scotch industry figures provided exclusively to IANS show that during the first nine months of 2007 (January to September), as many as 1.54 million cases of Scotch whisky were exported to India. Each case has nine litres of whisky.
The equivalent figure for the period for 2006 was 1.06 million cases. The main reason for the 45 percent growth in export is India withdrawing the additional customs duty in July, conceding a long-standing demand of the Scotch industry.
The exports to India include products of the spirits major Whyte & Mackay, which was bought by Indian entrepreneur Vijay Mallya for 595 million pounds ($1.2 billion) in May. Latest figures show that Whyte & Mackay has a turnover of 160 million pounds with profits forecast to double to 50 million pounds.
David Williamson of the Scotch Whisky Association (SWA) told IANS: “Since the Government of India’s decision in July to remove the discriminatory additional customs duty, the association has welcomed tax-reform moves by a series of Indian states to ensure a more level playing field for imported spirits.
“As a result, Indian consumers are benefiting from the opportunity to enjoy premium imported spirits at a more reasonable price and the grey market is being increasingly undermined.”
He said the Maharashtra government had recently moved to amend the tax structure for imported spirits, replacing a straight 200 percent tax on all imported bottled spirits with a banded tax system, with different rates levied according to product value, or at a rate of Rs.300 per bulk litre, whichever is higher.
Williamson said: “We are encouraged that the state authorities have been engaging with the trade on the issue and this move is a step in the right direction.
“However, local consumers in Maharashtra will still not have the same choice of international brands as consumers elsewhere in India and we are concerned at the apparent continued tax discrimination faced by a range of imported products”.
The Scotch industry sees India and China as major markets for growth. The demand for imported spirits in India has zoomed as its burgeoning economy increases the size of its middle class exponentially every year.
China is a massive emerging market with an expanding middle class of over 200 million that is now developing a taste for Scotch. In the past ten years sales have risen from 700,000 to 5.7 million litres, as China has steadily reduced import tax from 65 to 10 percent.
But the Indian market is considered more lucrative and may well be the largest market for spirits in the world. India reportedly consumes over 120 million cases of spirits each year, the vast majority of which are locally produced.
According to SWA figures, overall sales reached record levels in 2006 when exports rose by four percent to 2.5 billion pounds, which overtook the previous high of 2.4 billion pounds in 1997. The volume of shipments also rose by six percent on the previous year to more than one billion bottles. The strong performance is expected to be maintained throughout 2007.
Richard Burrows, SWA chairman, said: “Building on a record year in 2006, the prospects for Scotch whisky are brighter than they have been for many years. I’m greatly encouraged that distillers, large and small, are investing in facilities in Scotland and taking advantage of opportunities worldwide, with markets in Asia, North and South America offering strong potential for growth.”
Meanwhile, Mallya has appointed Ashwin Malik as the chief executive of Whyte & Mackay. Based in Glasgow, Malik takes over from Bob Brannan and Vivian Imerman, who have taken an advisory role with the company.
Mallya has announced plans to invest around 10 million pounds to lift the capacity of the Invergordon plant in Scotland from 40 million to 80 million litres of alcohol a year. Also on the cards is driving capacity in Whyte & Mackay’s malt distilleries, which include Isle of Jura and Dalmore in Easter Ross.