The success of Indian whiskey


In recent years, changing consumer preferences and an increase in living standards have given rise to a growing demand for premium single malt whiskey, particularly among the younger generation. The global single malt whiskey market is projected to grow at a compound annual growth rate (CAGR) of 7.94% from 2021 to 2028, ultimately reaching a market size of US$4.8 billion by 2028.

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The Indian single malt whiskey industry, while still in its infancy, is making significant strides. With only 8-9 distilleries currently producing single malt whiskey in India, it lags behind Scotland, which boasts over 140 malt distilleries. Nevertheless, Indian single malt whiskey is gaining popularity and recognition, establishing its own unique niche in the global market.

## **Whisky value chain**

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Scotch single malt whisky is the most famous kind because Scotch whisky, in general, is quite popular. But in recent years, more countries have started making good single malt whiskies too. These countries include Ireland, Japan, the United States, and Canada. And as the market keeps growing, we're seeing even more places like Australia, France, Germany, India, and Taiwan making quality single malts. So, there's a wider variety of single malt whiskies from different parts of the world to try now.

## **The Indian single malt industry**

India stands as the third-largest whisky market in the world, boasting a market size of US$18.38 billion in 2023. Notably, it is anticipated to maintain a steady growth rate with a compound annual growth rate (CAGR) of 5.34% expected during the period from 2023 to 2027.

A remarkable development is that India has also secured its position as the largest market for Scotch whisky, surpassing France in 2022. This shift is highlighted by the fact that India imported a staggering 219 million 70cl bottles of Scotch in that year, marking a remarkable market growth of 200% over the past decade. This data comes from the Scotch Whisky Association, underlining India's growing appetite for Scotch whisky.

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Recent trends highlight the promising potential of the single malt whisky segment within the Indian domestic market. UK-based Whyte & Mackay entered the Indian market in 2018 and has experienced an impressive 35% annual sales growth over the past three years. The company recognizes India's appeal as a young market with a relatively low average drinking age, making it a prime opportunity.

In recognition of this potential, Whyte & Mackay has strategically positioned India as one of its most significant markets, following only the United States and China. Notably, whisky accounts for a substantial two-thirds of all spirit sales in India. Furthermore, 85% of the market is dominated by 10 domestic brands that operate within the lower price range, as reported by the International Wine & Spirit Research (IWSR). These findings underscore the evolving landscape and opportunities in the Indian whisky market.

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Indian single malt whisky production commenced in 1982 with Amrut Distilleries, marking the industry's humble beginnings. Even today, the industry remains relatively young, with only 8-9 distilleries dedicated to crafting Single Malt Whisky in India. In stark contrast, Scotland boasts over 140 malt distilleries. However, despite its nascent stage, Indian Single Malt is steadily gaining recognition, competing with global brands, and establishing a unique identity in the market.

This rising prominence is further validated by Jim Murray, a renowned whisky critic, who has praised the exceptional quality of India's top brands like Gianchand Single Malt, produced by DeVANS Modern Breweries. Notably, Murray has consistently ranked Indian single malts highly, such as Mithuna (2021) and Amrut Fusion (2010), in his Whisky Bible. Adding to the accolades, Indian Single Malt Indri, from Piccadilly, secured a Double Gold at the Whiskies of the World Awards. In 2023, Indri's Diwali Collector Edition also earned the prestigious Best in Show Double Gold title.

Within the domestic market, whisky holds a dominant position, accounting for two-thirds of all spirits sales in India. Notably, 85% of this market is controlled by 10 domestic brands that offer products in the lower price range, according to the International Wine & Spirit Research (IWSR). Encouragingly, home-grown single malts have witnessed substantial growth, accounting for 33% of the Indian market in 2022, a significant increase from 15% in 2017.

Even global industry leaders have taken notice of the growing potential within India's home-grown single malt market. For example, Diageo launched an India-made single malt whisky under the brand "Godawan" last year, emphasizing the growing significance and appeal of Indian single malt to global giants.

## **What makes Indian whisky stand out?**

When it comes to assessing a good quality whisky, it's not just about awards or meeting sales targets; flavor is what truly matters to buyers. In India, where whisky producers contend with a unique climate characterized by high humidity and virtually nonexistent winters, this distinctive environment plays a vital role in crafting whisky like no other place in the world.

## **India overtakes France largest Scotch whisky market in the world**

India has now become the UK's top market for Scotch whisky, surpassing France in terms of volume. The Scotch Whisky Association (SWA) reported a substantial 60% increase in Scotch whisky imports to India in 2022 compared to the previous year. Specifically, India imported a whopping 219 million 70cl bottles of Scotch, outpacing France's 205 million. This signifies remarkable growth in the Indian Scotch market, exceeding 200% over the past decade.

The rise in Scotch whisky volume has made it a pivotal sector in the UK's free trade agreement (FTA) negotiations with India, currently in their seventh round of discussions. Despite the impressive double-digit growth, it's crucial to note that Scotch whisky still constitutes only a small fraction, a mere 2%, of the overall Indian whisky market due to high tariffs.

This shift in market dynamics underscores the growing appreciation for Scotch whisky in India, even though there is ample room for further expansion if trade barriers are lowered.

## **Whisky market in India**

India ranks as the world's third-largest whiskey market, with a market size of US$18.38 billion in 2023. It is expected to maintain a CAGR of 5.34% from 2023 to 2027. Notably, India overtook France as the largest market for Scotch whiskey in 2022, importing 219 million 70cl bottles of Scotch during the year, reflecting a remarkable 200% growth over the past decade, according to the Scotch Whisky Association.

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As per Statista platform, Indians consume approximately 2.6 liters of whisky per person every year. This is quite significant, especially when you consider that India has a population of 1.3 billion people. However, it's important to note that what qualifies as "whisky" in India is quite different from the strict regulations that govern Scottish whisky. In India, the majority of whisky is made from molasses and only matures for about a year. This unique whisky has a sweet taste that appeals to Indian palates and pairs well with the popular smoothie drinks enjoyed in the country.

## **India's booming alcohol market: McDowell's, Royal stag, Imperial blue, and more**

India's love for whisky has led to strong sales for some well-known brands. According to the 2023 study by Drinks International's The Millionaires' Club, McDowell's Whisky, an Indian brand, is the most popular whisky and the third best-selling alcoholic beverage overall. The most popular alcoholic drink overall is Jinro soju, which sold 100.9 million cases in 2022, a 6.8% increase from the previous year. Ginebra San Miguel gin ranked second with 37.9 million cases in 2022.

In the same survey, Indian whisky brands continued to shine. McDowell's Whisky secured the third spot with 30.8 million cases sold in 2022, a 2.3% increase. Royal Stag and Imperial Blue, both Indian whiskies, occupied the sixth and seventh positions with 27.1 million and 24 million cases sold, respectively. Blenders Pride, another Indian whisky, ranked 17th with 9.5 million cases sold. Royal Challenge experienced a substantial 53.2% growth and sold 7.2 million cases, while 8PM sold 9.1 million cases of Indian whisky.

India stands out in the list of countries in terms of alcohol sales. This is not surprising, considering that India is the most populous country globally, and it's one of the fastest-growing markets for alcohol sales.

India also took the lead over France to become the largest market for Scotch whisky in the current year. Research showed that businesses like Mansion House by Tilaknagar Industries and Royal Challenge by Diageo/United Spirits witnessed more than a 50% increase in sales volumes.

Indian whiskies dominate the list, with McDowell's, Royal Stag, and Imperial Blue ranking as the top three contenders. American whisky Jack Daniel's and Scotch whisky Johnnie Walker take the fourth and fifth spots with 22.7 million and 14.6 million cases sold, respectively. The top 10 whisky brands in 2022 also include Irish whisky Jameson, Blenders Pride, Scotch whisky Ballentine's, 8PM, and Canadian whisky Royal Crown. Five out of the top ten whiskies are from India.

Only four Indian whiskies, including McDowell's (2.3%), Imperial Blue (-0.4%), 8PM (-5.2%), and Director's Special (3.4%), did not experience double-digit growth in 2022, according to the research.

India boasts a vast domestic whisky market, estimated at 1.5 billion liters, as reported by Bank of America Merrill Lynch. It's worth noting that this incredible volume is even more surprising when considering that a 2022 YouGov survey of urban Indians of legal drinking age found that more than half had never even tried whisky. Additionally, popular vodka brands in India include Smirnoff, Absolut, Magic Moments, and Grey Goose, with sales figures of 13 million cases, 4.8 million cases, and 28.1 million cases in 2022, respectively.

## **Benefits of tariff reduction for the industry**

Efforts are underway to reduce the 150% federal tariff on imported Scotch whiskey in India, which is a key focus in trade negotiations between the UK and India. This reduction could have a significant impact, potentially tripling the share of Scotch whiskey in the retail market, making it more accessible to Indian consumers. Additionally, more than 80% of Scotch whiskey exports to India are supplied through wholesale channels, where Scotch is blended with native distillates to enhance taste and quality. Thus, a tariff reduction could boost both retail and wholesale sales of Scotch whiskey.

## **Premiumization of the market**

Alcoholic beverages are often the life of any event, making gatherings more enjoyable. These days, there's a growing trend towards including premium drinks, which bring an air of luxury to the occasion. This shift has propelled the global market for alcoholic drinks to a whopping $1 trillion. Over the past year and a half, there has been a surge in the sales of luxury and premium alcohol categories, contributing to this industry growth.

A report from Statista predicts a substantial annual growth rate of 12.41 percent between 2021 and 2025. The way millennials consume alcohol has also changed, with 54 percent of them now preferring premium drinks, in contrast to only 35 percent of those aged 55 and above. This shift towards premium alcohol consumption aligns with a broader trend of adopting a healthier lifestyle. Moreover, this premium trend is more pronounced in urban areas where people have a penchant for super-premium quality spirits.

The COVID-19 pandemic and lockdowns had a significant impact on the alcohol industry. It led to a transformation in drinking habits, with people shifting from pubs and restaurants to enjoying their drinks at home. This change in consumer behavior has created a shift towards premiumization, where consumers are willing to pay more for high-quality alcoholic beverages. This is an encouraging sign for manufacturers as they adapt to the evolving preferences of consumers.

As a result of the lockdowns, consumers are no longer seeking basic drinks but are looking for more unique and high-quality options. They are experimenting with craft spirits like whisky, rum, and gin, which they might not have explored before. The closure of bars and restaurants has increased at-home consumption, and many Indian consumers are exploring both high-quality imported and home-grown brands. People are now seeking products, services, and experiences that add meaning and value to their daily lives.

To enter this evolving market successfully, it's crucial to understand the primary consumer segment, which primarily consists of millennials. They drive the trend of premiumization in alcohol and have a keen awareness of quality and health aspects. Leveraging social media and digital tools can help reach this audience, and creative advertising campaigns can catch their attention. In summary, while some growth can be attributed to "revenge shopping," the overall expansion in the luxury and super-premium alcohol sector stems from changing consumer perceptions and drinking habits. The younger generation values the quality, flavor, history, and sustainability of their beverages, leading to a shift in alcohol preferences and a bright future for premium spirits.

India's growing affluent consumer base is showing a preference for premium products. The value of the Indian whiskey market increased by 17% in the past year, driven by this trend. Although the market is currently dominated by budget whiskeys, it is in the early stages of the premiumization cycle, offering numerous opportunities for the development of premium segments.

To sustain this growth, it will be crucial to navigate legal regulations in India, where authorities often adopt anti-alcohol policies to gain voter support. However, if these regulatory challenges are overcome, along with successful trade negotiations with the UK, the premiumization trend is expected to continue, leading to a significant increase in Scotch whiskey exports to India in the coming years.\
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Amid the global trend of premiumization in the alcohol industry, Indri Diwali Collector's Edition 2023, a Made in India whisky, achieved a remarkable feat by being named the world's best whisky brand by Whiskies of the World. This accolade, a 'Double Gold Best In Show' award, was bestowed upon the peated Indian single malt in a fiercely competitive global whisky-tasting competition featuring over 100 whisky varieties from across the globe. Notably, this Indian whisky outshone renowned international brands, including American single malts, Scotch whiskies, Bourbons, Canadian whiskies, Australian single malts, and British single malts.

## **Conclusion**

The Indian single malt whiskey industry is on a remarkable trajectory, with both domestic and international markets recognizing its potential. With changing consumer preferences, rising demand for premium products, and ongoing efforts to reduce tariffs, the future looks promising for Indian single malt whiskey. As this young industry continues to mature, it is poised to establish itself as a global contender in the world of whiskey.


The Indian single malt whiskey industry is thriving with global recognition, driven by changing consumer preferences and rising living standards. India, the third-largest whiskey market, surpassed France as the largest Scotch whiskey market in 2022, importing 219 million bottles. Despite a young industry with 8-9 distilleries, Indian single malt whiskey captures 33% of the domestic market. Premiumization is a key trend, and efforts to reduce tariffs on imported Scotch whiskey are underway. Regulatory challenges exist, but the industry's growth is evident, with a notable Indian single malt winning the world's best whisky award. The future looks promising as the industry matures and establishes itself as a global contender.


The success of Indian whiskey

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