Managing director of Elite Wine & Whisky, Nick Green oversees purchases, operations and heads up the company’s global strategies.
In February, figures released by the Scotch Whisky Association (SWA) showed a record-breaking year for the industry in 2022, with whisky exports breaking the £6 billion barrier for the first time.
The SWA also revealed that India had surpassed France to become the top importer of Scotch whisky by volume. While still only accounting for just 2% of the India whisky market, this milestone achievement has put the spotlight on India with demand fuelled by the country’s growing middle class, which has contributed to its status as one of the most lucrative whisky markets.
Although the growth in the whisky market is not just limited to India, and is a reflection of a broader trend in the global market, it has excited those working in the Scotch whisky industry around what 2023, and beyond, could hold.
What is the U.K.-India free trade deal?
Part of this excitement is due to a widely anticipated U.K.-India free trade deal—something that was expected to have been agreed upon last year and is now seen as a priority by many for the current U.K. government to get over the line this year.
The rise of India as a major market for Scotch whisky has been a game changer for the industry. However, the imposition of high import tariffs, currently capped at 150%, has been a hindrance to what has the potential to be significant growth of the market. The last time tariffs were reduced was in 2007, which sparked a surge in exports—a sign of what could be expected to come.
According to a recent article in The Spirits Business, the value of Scotch shipments to India has risen from £40.6 million in 2010 to a peak of £166.2 million in 2019. Last year, its value was recorded at £146.1 million, putting the country eighth in the drink’s export charts by value.
The anticipated reduction of tariffs could increase demand for Scotch whisky in India by making it more affordable for consumers, and it could be a boon for collectors, creating a larger customer base and increasing the value of rare and vintage bottles. As more people in India become interested in Scotch whisky, the demand for higher-end bottles is likely to increase, driving up prices.
Mark Kent, chief executive of the Scotch Whisky Association summarizes that “by reducing tariffs through the U.K.-India free trade agreement, continuing the duty freeze in the March budget, and ensuring the industry’s continued ability to advertise our world-class product in our home market, the Scottish and U.K. governments can count on the Scotch Whisky industry to reinvest its success across the U.K.” In short, continued success for our industry could create a ripple effect across the U.K.
There are myriad benefits to this potential agreement for British business as a whole with the Confederation of British Industry (CBI) predicting that it could boost trade with India by £28 billion a year by 2035. Amid all the positives that a free trade agreement could bring, we do have to consider the potential challenges. Namely, ensuring that while operations are scaled up to meet demand, the industry is able to recruit and retain the talent needed.
How can industry leaders prepare?
With negotiations still ongoing, and both nations wanting to ensure they stand firm to get the best possible deal, there are no certainties on what an agreement will eventually look like. However, India’s rise as the top importer of Scotch whisky presents a significant opportunity for Scotch whisky brands, smaller producers and cask collectors, which could improve should a reduction in tariffs be secured.
In my opinion, the jury is still out on the overall impact this will have on the Scotch whisky industry. New developments, like the U.K. chancellor’s announcement as part of the government’s 2023 budget that duty on whisky will increase by 10.1% could still impact the outcome. This comes at a time when the industry, like many up and down the country, is facing increased challenges driven by rising inflation, increased costs and a banking crisis.
As business leaders in the industry, it’s important we remain agile and forward-thinking. We’ve had to jump a number of hurdles in recent years, and this has been an important lesson in preparing for every eventuality—while still maintaining a positive outlook around the potential that our industry has when given the opportunity to flourish.
My key advice is to have open, honest and transparent communication—with stakeholders, clients and employees. We may not always have the answer to the challenges and uncertainty we face, but it’s vital to support others within the industry.
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