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Scotch prices drop, Indian whiskey facing heat
Delhi Bureau
Date of posting: 02-11-07
      Scotch whisky makers Diageo and Groupe Pernod Ricard have dropped prices of their key brands such as Johnnie Walker and Chivas Regal respectively by 10-30% ahead of the Diwali festival week making them about 30%-50% above the price of the costliest Indian whiskey.

      “Demand for Scotch is very strong after the price drop. Consequently, consumers are preferring mid-level Scotch brands over premier Indian brands such as Royal Challenge and Antiquity despite the latter being cheaper by nearly half”, said the manager of liquor store in Delhi’s Connaught Place.

      High duties combined with a weak Indian rupee had made scotch exorbitantly expensive in India. However a lowering of import tariffs combined with a weakening dollar is helping bring Scotch prices to within reach of Indian consumers.

      “Last Diwali, an entry level Scotch such as Johnnie Walker Red Label was selling for Rs.2000. Now it is Rs. 950”. Said the liquor store manager. “On the other hand, the prices of premium Indian whiskey brands such as Royal Challenge or Antiquity have registered a marginal rise over last year owing to rising input costs”, he added.

      While demand for Indian whiskey is still very high with consumers stocking up ahead of the Diwali festival, its actual sales may be lower than during the last Diwali season. "Where consumers bought five Indian whiskey bottles last year, they are now buying two of Scotch and three of Indian whiskey”, said the manager. In many parts of India, alcohol is not allowed to be sold on festival days to discourage people from drinking. However, most tipplers stock up in advance which actually leads to increased consumption on those days.

       The recent Scotch price reduction is likely to help Johnnie Walker, Chivas Regal and other Scotch brands post 30-35% volume jump in the next three years, and push their import business more into the mainstream retail.

      Already, increased international travel and privatization of duty free shops has led to huge growth in Scotch sales by arriving passengers.

      Industry analysts believe India’s fully duty paid retail Scotch whisky sales will 10 million cases this eyar. Perhaps reading the trend, United Spirits, India’s leading Whiskey manufacturer has acquired Whyte & Mackay and plans to roll out its brands in India. While Diageo has kicked off a price reduction on its Johnnie Walker Black and Red Labels, Pernod Ricard is following suit with an almost similar pricing strategy on Chivas Regal and Ballantine’s Scotch whiskies. Pernod Ricard is seen effecting a price reduction of up to 30% even as Diageo has gone in for a drop as high as 38% in a few markets.

      “We expect a significant momentum from the price reduction, especially with the festival and marriage season kicking in. We are offering incentives on bulk purchases and also providing Johnnie Walker bar tenders as an integrated service for marriage parties,” Asif Adil, MD of Diageo India, was quoted in an Indian business newspaper. Diageo is also effecting a price drop on its other reserve brands in India like Ciroc Vodka, Baileys Liqueur and Johnnie Walker Gold and Blue Labels.

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