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Friday, Oct 29, 2004

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Scotch pours in; but no cheers for global brands

Boby Kurian

Bangalore , Oct. 28

THE Scotch whisky exports to India vaulted 15 per cent in value during the first half of 2004 but the global Scotch brands have nothing much to cheer about from their presence in the domestic market.

The value of exports crossed 6.2 million in the first six months of the calendar year as India joined China, Brazil, Russia and Turkey as the hottest emerging markets, according to the just released Scotch Whisky Association data.

However, the increase in exports is not adequately reflected in the sales of leading Scotch brands as the shipments to India are turning bulk in nature, as the domestic distillers are cashing in on the zero import duty on bulk imports following the removal of QRs in 2001.

The Indian distillers import Scotch in bulk for mixing with the molasses- made Indian whiskies or for local bottling at the cost of bottled-in-Scotland brands. Many Indian distillers have stated plans to roll out locally bottled Scotch whiskies after buying out registered floating labels in Scotland.

The Scotch whisky industry sources said bulk export accounted for nearly 77 per cent of the shipments to India, signalling a dramatic turnaround from the early 90s when bottled exports accounted for 82 per cent. The total exports to the country increased from 597,387 litre in 1992 to 2,288,524 litre in 2002, but Scotland bottled blends accounted for only 525,145 litre, almost on par with its 1996 figures of 528, 711 litre and much lesser than in 1995 when bottled exports peaked at 623,237 litre. The changing dynamics of Scotch exports to India contrasts with Scotland's global shipments, currently valued at GBP 982 million and growing at two per cent. Almost GBP 770 million of the earnings came from bottled-in-Scotland blends that jumped 12 per cent in volume and four per cent in value.

The Scotch whisky industry sources said the reversal of trend in the Indian market was due to the prevailing 150 per cent basic duty on bottled-in-origin (BIO) imports, which was much higher than in many other emerging markets. The lowering of import tariff on BIO liquor has been a bone of contention between the domestic spirits lobby and the multinationals in the last few years with the former arguing that India has met the WTO guidelines on basic duty and any further reduction at this point in time was not warranted. A 750 ml pack of Johnnie Walker Black Label costs Rs 3,300 in Mumbai retail trade. "Most of the BIO Scotch is going into the hospitality industry - and not in retailing - as the star hotels are allowed use a part of their foreign exchange to buy duty-free alcoholic beverages," sources said.

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