Despite potential duty concessions, the impact of US whiskey and wine imports on India’s spirits market is unlikely to be significant.
A recent report by the Times of India has highlighted that American spirits imported into India are a tiny fraction of the overall market. According to industry experts and market data, several factors contribute to this assessment.
Small Current Import Volumes
The volume of American spirits imported into India is extremely small. The total sales of about 2,29,000 nine-litre cases of American whiskey accounts for less than 0.1% of India’s overall whiskey market. By comparison, domestic producers dominate the market.
Consumer Taste Preferences
Industry representatives argue that consumer taste profiles, rather than pricing alone, limit the appeal of American whiskey. ‘Most Bourbons and Tennessee whiskies have distinct darkish colour and stronger flavours, which like single malt whiskies, appeal to a more discerning palette,’ said Vinod Giri, director general of the Brewers Association of India.
Pricing is Not the Main Barrier
While pricing may not be the main barrier to consumer adoption, some imported labels do perform well in the market. For example, bottled-in-India Jim Beam retails at an affordable price below locally bottled Scotch whiskey. However, this success is limited to a niche segment of premium whiskey consumers.
Policy Safeguards and Distribution
Government officials have indicated that domestic interests will be protected under the bilateral trade pact. Industry representatives also emphasize the importance of effective distribution channels, which are crucial for success in the Indian market. ‘Success in the Indian wine market, especially imported wines, is driven not just by provenance, but by ability to distribute effectively,’ Giri added.
Limited Impact of Tariff Relief
The limited scale of imports, evolving consumer preferences, and likely policy safeguards suggest that tariff relief for US spirits may do little to alter the balance of India’s vast and domestically led alcohol market. Industry experts believe that duty reduction on Bourbon will not make a significant impact on the premium whiskey market.
Phase-Delivered Tariff Relief
The Confederation of Indian Alcoholic Beverages Companies (CIABC) is open to reducing import duties in a phased manner, but this approach requires finer details from the government.
What This Means for Consumers
For consumers, the impact of US whiskey and wine imports on India’s spirits market may be limited. While some premium whiskey brands may perform well, it is unlikely that they will significantly alter the market landscape.
Pros and Cons
The pros of tariff relief for US spirits include increased availability and choice for consumers. However, the cons include potential disruption to the domestic industry and the impact on local producers.
In Conclusion
While US whiskey and wine imports may increase with potential duty concessions, their impact on India’s dominant spirits market is unlikely to be significant. The factors contributing to this assessment include small current import volumes, evolving consumer preferences, and policy safeguards that protect domestic interests.
