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Indian distillers hunting higher margins through newly favoured malts

By Raynah Coutinho , 25-Jul-2013

With its Indian chapter launching as recently as April this year, the Scotch Malt Whisky Society (SMWS) is a case in point of how the country’s taste for the drink has been moving quickly in a premium direction.

The eagerness we’ve seen from members clearly points to an emerging trend by consumers who are curious to find out more about premium whiskies,” says Ashwin Deo, managing director of Trinity Vintners and spearhead of SMWS’s indian presence.

He explains that this “trial mode” among India’s new generation of connoisseurs is a sign that the whisky market is starting to mature. “We source casks from nearly 130 distilleries across Scotland and from other parts of the world. Indians are starting to become keen on trying out new stuff and learn more about tastes and aromas.”

Once a masses-driven, blend market, India is rapidly ripening with opportunity for manufacturers of premium whisky. 

The end of volume chasers

Indeed, according to United Spirits’ managing director, Ashok Capoor, when he took the reins of Vijay Mallya’s liquor division: “Being a volume chaser is a thing of the past.” His words cut a clear picture of what the company’s new focus will be - with the big players, who until recently concentrated their efforts on selling millions of litres of mass-market brands like Director’s Special and Bagpiper, now looking at domestic and international malt sales as key to growing their margins.

The top-end of the market is booming. Sumedh Singh Mandla, formerly at the helm of Asti Spirits in Mumbai, says: “India has traditionally been a domestic whisky-drinking country, with local brands clocking sales of over a million cases annually

Now, however, there is a growing interest in Scotch. The single malt segment is growing and Indians are becoming more experimental.” 

Like Mandla, Thrivikram Nikam of the Bangalore Malt Club is convinced this move towards experimentation is pivotal in India’s move towards premium whisky. “With clubs like ours, our members meet to discuss whiskies, taste them and become more aware of the products available, and this is encouraging.” 

Nikam is also executive director of Bangalore-based Amrut, an Indian distiller that is unusual because it markets its premium malts almost exclusively to international markets - only recently has it begun to sell in India, though in small quantities of around 1,000 cases each year.

Over the last decade, Amrut’s Fusion malt whisky has twice been named the world’s third best by celebrated connoisseur Jim Murray - something that has shocked distillers around the world. In 2011, it became the first Indian malt to be stocked by Harrod’s department store in London.

We started selling our whisky abroad in 2004, but India didn’t seem ready [for malts]. We responded to queries in the market in 2009 and later brought in our first two brands in limited numbers,” says Nikam, adding that recently, customers from Mumbai, Kolkata and Hyderabad have been making a pilgrimage to Bangalore to take home some of its much in demand malts.

Increasing status

Naturally, given India’s emerging place in the global economy, much of its consumers’ new-found preference for malt results from their ability to pay premium prices. “A lot of demand is status driven; Indians are travelling a lot now and therefore are increasingly exposed to Scotches and single malts from around the world” explains Nikam. 

So we first identify the demographic of our potential customers and then invite them to tastings to build their awareness and help them differentiate products - these are qualities that are still lacking in the market.”

Stemming from the recent internationalisation of Indian ABC1s, there is now an increasing thirst to sample new types of whisky hitherto unavailable in the country. One such initiative is organised by SMWS, which offer tastings of single cask whiskies, which even in Scotland are seen as a curiosity.

While malt demand is on a definite upswing through an increasingly discerning market, whisky is at the same time facing stiff competition from the wine market, which is growing at a much quicker pace from a market share of next to nothing just a decade ago.

It is also hindered by high taxes creating a significant barrier to entry. “If import duties and local taxation become more rational, there will be even sharper growth in this segment,” says Mandla.

But with India’s contribution to global liquor imports estimated at just 10%, according to a Daedal assessment of the Indian spirits business, there is tremendous scope for single malt and Scotch manufacturers to grow this share, largely as a result of demand at home.

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