Indian whiskey brands can rise the challenges the recent FTA poses with the UK, says Paul John | Today news

While India Inc. largely named the India-UK Free Trade Agreement (FTA) as a landmark treaty that strengthened the economic ties between the two countries, the Indian alcoholic beverage industry expressed concern for fear that the import duty on foreign beverages could harm domestic producers. According to the agreement, rates on the British whiskey and gin can initially be reduced from 150% to 75%, and eventually dropped to 40% over a ten -year period. This phase reduction is expected to benefit UK brands significantly. The government also did not include the MIP (minimum import price) in the agreement that would have prevented possible dumping (the practice of selling goods in a foreign market at a lower price than the price cited in the exporter’s home market) and also the removal of non-tariff barriers to ensure a better international market access for Indian alcoholic beverages. In this interview, Paul P John, chairman and managing director of John Distilleries PVT Ltd and the man behind Paul John Single Malt Whiskey, talks about the impact the FTA can have on the Indian alcohol industry. The India-UK Free Trade Agreement raised a few concerns in the Indian alcohol industry, especially among the single malt manufacturers. The agreement will undoubtedly help the UK’s whiskey and other alcohol exporters. The European Union also insists on reduced rates on key exports such as whiskey, wine and cars as part of its continued negotiations for a free trade agreement (FTA) with India. What kind of impact will it have on Indian beverage manufacturers? Due to the FTA, there may be some pressure on Indian alcohol companies. However, India is now building a tradition of producing high quality spirits, and the growing global interest in Indian single malt is proof of the increasing recognition of the category. Indeed, a reduction in Indian beverages in Europe can help to compete Indian brands on a more level playing field. However, although rates can reduce, there are still several non-tariff barriers in Europe, such as strict maturity aging and regulations, which can limit the accessibility of Indian brands in these markets. The phenomenon of tropical aging is gaining ground and we have a lot of educational work in this regard, hence a collective effort of the more sincere players is needed. For Indian brands to compete effectively, there is a need for a level playing field where local laws, such as the GI label for Indian single malt, will help the credibility of our products to increase the credibility of our products. The EU should be encouraged to standardize such measures on local and imported products to create fair competition. In addition, our industry will benefit from further policy reforms that can facilitate market access and promote a broader recognition of Indian spirits in the global market. However, there are concerns about dumping. Worldwide, the status of Indian whiskeys has risen significantly over the past decade. What do you think contributed to that? The increase in the global status of Indian whiskeys can be attributed to various factors. In the first place, the quality of the Indian single malt -whiskey has improved significantly over the years. As a category, Indian single malt has benefited from tropical ripening, accelerating aging, leading to a rich, complex taste profile that echoes well in consumers worldwide. Brands such as Paul John gained international recognition and won several awards at prestigious global competitions, which contributed to building credibility and confidence in the quality of Indian whiskeys. In addition, the increasing demand for unique and crafts has enabled Indian brands to stand out. As global consumers become more adventurous in their whiskey choices, Indian whiskeys, with their rich heritage and clear features, caught their attention. This is why we are not openly concerned about the FTA with the UK. We can set up the challenge. According to the Ministry of Trade, India imported $ 354 million, while exporting only $ 157 million worth of whiskeys in FY24. What is the status for FY25? Although the import export gap is a concern, there is a growing demand for Indian whiskeys in the most important international markets, and this gap has been gradually narrowed. The important progress by brands such as Paul John in international competitions and our growing presence in global markets reflects the increasing attraction of Indian whiskey abroad. In FY25, we know that our export has continued to grow as we strengthen and invest in market education, and ensure that Indian whiskey has a stronger presence worldwide. How was your relationship with Sazerac, the US firm, which had a significant interest in the business? How did the partnership help you? Our relationship with Sazerac was extremely positive and strategic. They brought a wealth of experience and expertise to the table, especially in global distribution and brand building. Their experience in the International Spirits Market has enabled us to expand our presence in important world markets such as the US, the United Kingdom and Australia with direct distribution, enabling us to reach a wider audience and improve the visibility of the brand. Their deep understanding of global whiskey dynamics contributed to refining our strategies, and we have benefited from their insights into product development and marketing. Sazerac’s partnership has provided us with invaluable value to set up production, reach new markets and maintain the quality that Paul John Indian Single Malts defines throughout. Together, we are focused on the growth of the Indian whiskey category, which further increases our position in the Premium Spirits segment worldwide. In India, we are building the US whiskey category that currently has few players. Sazerac also plans to launch and develop the Bourbon category -whisky of Buffalo Trace Distillery, in the top Indian Metros. Do you think there is a sufficient market for Bourbon in India? The rise of premium spirits in India, especially in urban markets, opened Newpopt opportunities for categories such as Bourbon & Rye. While Scotch Whiskey was traditionally dominant in the Indian market, the growing curiosity and the developing preferences of the Indian consumer offer an opening for Bourbon. With its distinctive flavor profile and the increasing number of young, wealthy consumers looking for new experiences, Bourbon can make up a niche in India. However, it will take time for bourbon to get the same recognition as Scotch, especially with the fortress that Scotch has established. What are the challenges facing Indian whiskeys in the domestic market? How can they be overcome? The primary challenge in the domestic market is the uneven playing field created by differential taxes and the excise rights of the state. Most countries in India do not consider ‘in India’ products as luxury items, leading to higher taxes for Indian brands compared to imported whiskeys. In addition, there are bureaucratic barriers that make it difficult for Indian brands to establish themselves in the same way that international brands have done. To overcome these challenges, there must be a joint effort by the government to standardize the excise policy, reduce access barriers to household products and ensure that Indian whiskeys are recognized as premium products. Advocacy of bodies in the industry, such as the one we have created, are crucial to influencing policy changes that will promote a more competitive environment for Indian spirits. John Distilleries Limited (JDL) is considering a new 30-acre plant in Karnataka with an investment of around £ 600, after expanding its Goa facility. You have announced a capacity expansion at your GOA facility earlier. The company has invested around £ 500 crore to finance the expansion that will triple the capacity to almost 3 million liters annually. Is that investment on track? We look at an investment of Rs.500 crore in Karnataka, which covers the production of IMFL, malt production and barrel storage. Yes, the Goa investment is on track. Do you see a further increase in the question of whiskeys in India? Absolutely. India’s whiskey market is experiencing an increase in demand, especially in the premium and luxury segments. As more consumer whiskeys examine high quality whiskeys, the Indian single malt carves a unique space in the market. The rise of wealthy consumers, the increasing focus on quality and experiences, and the growing middle class are raising this question.