The Hindu Business Line : Small distillers plot a Scotch coup

A FEW South-based distillers, mostly mid-sized independent players, are planning to board the Scotch whisky bandwagon in a move that could give the Scotland's pedigree industry more consumer exposure in one among the top five whisky consuming markets in the world.

Among the early movers is Apollo Alcobev, an associate of the Chennai-based Empee Distilleries Ltd. It plans to purchase floating labels in Scotland and locally bottle the imported Scotch, which could then be priced competitively with premium Indian whiskies.

Mr Sat Pal Chaudhry, Chief Operating Officer (COO) of Apollo Alcobev, said, the company would target a price band of Rs 400 to Rs 600. "We plan to acquire registered labels in Scotland and then import the Scotch concentrate for local bottling," he said. "There are many who are eyeing the same, but we plan to move faster," Mr Chaudhry added. Informed industry sources said the Tamil Nadu-based MGM Group, which took over Sical's distillery sometime ago, was also making moves to dabble in locally bottled Scotch whiskies.

Interestingly, the UB Spirits Division had launched a locally bottled Scotch brand, Scottish Crown, in the value segment during 2002. The trade reports suggest that the brand, which was launched in Mumbai, has not really set the segment on fire. The mid-sized distillers are now attempting to beat down the price further and position Scotch against top-end Indian whiskies. They expect that the aspirational value attached to Scotch among Indian tipplers' could be translated into sustainable volume through competitive pricing.

The whisky flavour accounts for over 60 per cent of the Indian hard spirits market pegged at around 90 million cases annually. In fact, the buoyant domestic whisky sales have been primarily responsible for the growth in whisky flavour internationally. In context, the attempt by the smaller distillers to take Scotch whiskies to a bigger consumer mass is bound to generate some interest in a market, mostly dominated by domestic whiskies made from molasses. "We feel it can be priced against Indian whiskies," Mr Chaudhry said. As bulk imports attract no additional duties, it is estimated that a litre of Scotch concentrate could land at Rs 400 per litre and diluted before bottling it locally.

Mr Amar Sinha, CEO of BDA Ltd, which manages the third largest Indian whisky brand, Officers' Choice, said, the distillers planning to import Scotch could hit the price band of Rs 400 to Rs 600. "This is more true in the case of southern markets. The same product in Mumbai could cost about Rs 800 on account of differential levies," he said. The southern liquor markets, which together account for over 55 million cases of spirits annually, are mostly controlled by the State and a few have seen tax rationalisation in the recent past. On the flip side is the fact that at least two big markets in peninsular region, Tamil Nadu and Kerala, are dominated by rum and brandy flavours.