The Next Big Market For Whiskey Is India, Not China
By Richard Thomas
As China’s economy took off during the 1990s, the meme of China as “the next big thing” gathered a momentum that, if anything, outpaced the country’s stratospheric growth. The idea that China was the place to do business, whatever the business actually was, penetrated literally everything. Nevermind that China was protectionist and the land of flagrant knock-offs and intellectual property abuse. It was the place to be, the market to get into. Virtually everyone agreed, including in the world whiskey industry.
Or so it was until last year, when the Chinese tightened up on luxury imports, a single move that prompted the biggest slump in Scotch whisky exports in 15 years. Suddenly betting the farm on China didn’t seem so bright, and more attention in the industry shifted to where it should have been focused all along: India.
The World’s Biggest Whiskey Market
Despite its rising incomes, China remains (very) small fry when it comes to whiskey consumption, drinking 0.02 liter per capita, whereas India consumes 1.24 liters per capita. Those are two countries with comparable populations, and it’s figures like that multiplied out by over one billion that make India by far and away the world’s largest whiskey market.
The world’s largest for sure, but not exactly it’s most lucrative. Indian median incomes are only a tenth of China’s, and the country has substantial trade barriers for whiskey producers to contend with. While India may be the biggest market, the United States stands as the most valuable.
Consequently, most of India’s enormous whiskey consumption has remained focused on cheap, domestic brands. Those brands are often based on de facto rum and vodka with a little imported malt stirred in, and wouldn’t qualify as any kind of whiskey were they exported to the West. Yet as incomes rise and the middle class expands, India’s potential to become both the biggest and the most lucrative whiskey market in the world inches closer to fruition.
From Ersatz Whiskey To The Real Thing
Although interest in the whiskey industry in India often lagged behind that in China, the Subcontinent was never entirely neglected. Pernod Ricard has had Blender’s Pride, Imperial Blue and Royal Stag competing with Indian companies such as United Spirits (McDowell’s, Bagpiper) and Allied Blenders (Officer’s Choice) in the ersatz Indian whisky category for at least a couple of decades.
Going local hasn’t always been easy or successful for foreign liquor companies, however. When Beam Global (now Beam Suntory) bought the Spanish whisky distillery DYC, their intent was to sell a cheap, hot weather-friendly whisky to the Indian market, made in part at a distillery with plenty of excess capacity. The brand was a typical Indian whisky, created using imported DYC malt and locally made grain spirits, but it never took off and was scrapped in 2011.
Besides, as lucrative as going local might be right now, that isn’t really what a company like Pernod Ricard wants. Instead, the name of the game is to get global brands like Jameson and Chivas Regal into India in a big way, a sensible, long-term ambition.
In the past that hasn’t been easy. In order to make Jim Beam Bourbon more price-competitive, Beam Suntory finally had to resort to tankering the whiskey to India and bottling it locally. That done, Jim Beam is now getting a major push in India.
Measures like that are necessary to get around steep Indian tariffs. Import taxes on liquor are hardly peculiar to India, but in that country they can sometimes reach a staggering 525%. A bottle of Glenfiddich 12 Year Old that costs $28 in the U.S. goes for approximately 3,000RS ($48) in India, due in large part to the import duties. Local proper whiskies, such as Amrut and Black Dog, are often several hundred rupees less, and most of the ersatz Indian whiskies go for only a few hundred rupees ($4-6).
Despite these problems, the idea of India as the next big thing in whiskey is catching on, an idea baited with those seductive words “world’s largest whiskey market.” Inevitably India’s deep thirst for whiskey, one of the cultural inheritances of The Raj, will turn more and more to imports and making the real thing as incomes rise and tariffs fall. The original whiskey shortage scare was about the Chinese drinking up all the world’s aged whiskey, but if such a thing were ever to happen, my money would be on India as the one that drains the cask dry.