Chivas Brothers, a leading Scottish whisky manufacturer, anticipates that the proposed UK-India Free Trade Agreement (FTA) will establish fair customs duties for spirits companies. Currently, Scotch whisky imported from the UK to India faces a steep tariff of around 150%, while Indian whisky brands can enter the UK market duty-free.

Jean-Etienne Gourgues, Chairman and CEO of Chivas Brothers, highlighted the potential benefits of the FTA, stating that it could stimulate investment in India and strengthen the production of premium spirits in the country.

Negotiations for the FTA began in January 2021, and the two countries have recently completed the 11th round of talks. At present, both bottled and bulk Scotch whisky face taxes of up to 150% in India. However, if a bilateral agreement is approved, it promises tariff liberalisation that would provide mutual benefits for both India and the UK.

Gourgues stressed the importance of fairness, stating:
“Our expectation is to achieve a level playing field between India and the UK. When we export Scotch whisky to India, we pay extremely high taxes of over 150%. But when Indian whisky brands are sold in the UK, they face zero tariffs.”

Chivas Brothers, a subsidiary of French spirits giant Pernod Ricard, is known for its diverse portfolio of single malt and blended Scotch whisky brands, including Chivas Regal, Ballantine’s, Royal Salute, and The Glenlivet.

Currently, India is one of Chivas Brothers’ top five key markets, following the US, France, China, and global travel retail (duty-free). Gourgues foresees that with the support of the FTA, the brand’s 30-year presence in India will grow to become one of its top three markets.

According to Gourgues, India is seen as a “strategic priority” market for Chivas Brothers. He stated:
“There is already a strong commercial and consumer foundation. At the same time, we see many opportunities and growth potential in the Indian market, so for us, it is definitely a very strategic market.”

In addition to offering branded Scotch whisky, Chivas Brothers also supplies large quantities of bulk Scotch whisky for the production of Indian whiskies, including well-known brands such as Royal Stag and Imperial Blue, which are among the world’s top-selling whisky brands.

Gourgues assured that a reduction in taxes under the FTA would not negatively affect the domestic spirits industry, as Scotch whisky only accounts for 3.1% of total sales in India. He predicted:
“The Scotch whisky market, at the end of the FTA, would make up at most 5% to 6%. So even if it doubles, 94% of the market would still be Indian whisky.”

Highlighting that most Scotch whisky shipped to India is in bulk, he emphasised:
“Scotch whisky accounts for only a very small portion of sales in India – just 2% of the total market.”

Gourgues anticipates that lowering tariffs on bulk Scotch whisky under the FTA will accelerate the growth of India’s Indian-made foreign liquor (IMFL) industry. He explained:
“We expect tariff liberalisation on two components – imported bottled Scotch whisky, which will offer more premium choices to Indian consumers, and bulk Scotch whisky, which will incentivise production of Indian brands and IMFLs, maintaining high quality at more affordable prices.”

When asked about potential increases in investment in India following FTA implementation, Gourgues responded:
“Very likely, we hope to invest more. We will enhance our support for Indian consumers.”
He emphasised that India is an “important” and “rapidly developing” market for Chivas Brothers, where clear trends in premium consumption indicate growing demand for high-end products.

Gourgues added:
“This is an exciting opportunity for us, driven by a significantly enhanced shopping experience.”

Although Chivas Brothers is developing new brands and expanding existing product lines to capitalise on this growth, no specific details were disclosed.

Regarding growth prospects in the Indian market, Gourgues stated that performance has been strong in recent years, achieving double-digit growth that has surpassed pre-COVID sales levels.
He expressed optimism:
“There’s no doubt – we expect to continue double-digit growth for our brands in India in the coming years.”