India Cuts Bourbon Tariffs: A win for American whiskey

 

As a significant step towards enhancing the trade relationship between the largest two democracies of the world i.e. India and the USA, the government of India has slashed import taxes on Bourbon whiskey from 150% to 100%. The move, following talks between India and USA, is a significant change from India’s treatment of American spirits. This change may be designed to persuade U.S. distillers, but the bigger question is: How much with Bourbon whiskey benefit, in a market in which Scotch is entrenched?

India’s Whisky Preferences: Scotch, Irish, Japanese and possibly Bourbon. India has been among the world’s largest consumers of whisky, mainly Scotch. The premium whisky market is owned by Johnnie Walker, Chivas Regal and Glenlivet. Scotch is favored here because of historic trading links with the UK and because of the luxury it has assumed as a drink.

Irish whiskey, with brands like Jameson, has become increasingly popular for its smooth, drinkable taste, which is favoured by younger consumers as well as those interested in alternatives to Scotch. Japanese whisky like Yamazaki and Hibiki has exploded in popularity among collectors and enthusiasts who appreciate its high quality and craftsmanship. These enthusiasts love the elegant taste and artistry of Japanese whisky making it one of the most sought-after choices in the spirits world.

However, Bourbon continues to have a very small market share in India. American whiskey brands such as Jim Beam and Maker’s Mark have invested a lot to establish a strong market presence in India, due to high tariffs on these products, low consumer awareness about these brands and intense competition from Scotch whisky and domestic whisky brands.

Will Lower Tariffs Attract More Global Brands?

The tariff cut could encourage more international Bourbon brands to enter the Indian market. With greater affordability, American whiskey makers will have more incentive to broaden distribution and invest in marketing campaigns directed at Indian consumers. Even with lower tariffs, Bourbon remains much more expensive than homegrown Indian whisky and some Scotch brands, which have enjoyed preferential trade deals with India.

Though, the taste profile of bourbon – often sweet, with vanilla and caramel notes from aging in new charred oak barrels – is different from the peaty, smoky, or malt-heavy profile many Indian consumers associate with whisky, which could deter wide acceptance unless brands educate consumers and promote Bourbon as an alternative & choice.The change will encourage more American distilleries to enter the Indian market, especially in the semi-premium category, offering more Bourbon options apart from the premium ones currently available in India.

Matt Magliocco, Executive Vice President of Michter’s Distillery LLC adds:

“It’s definitely a positive development for the Bourbon industry in India. Historically, India has been an attractive but elusive market for high-end Bourbon producers due to its onerous tax regime. A lower tariff level, while still high compared to most markets, should make Bourbon more accessible to Indian consumers and entice more great Indian bartenders to experiment with different Bourbon expressions.”

Will the Price Slash Attract New Customers?

One of the key challenges for Bourbon in India is its high price, which limits its reach among consumers. With lower duty, the price of Bourbon will become more competitive, opening the category to a new drinking segment. Bourbon’s sweeter and smoother taste could appeal to younger consumers as well as those looking for alternatives to Scotch. The popularity of cocktails in urban India could also drive Bourbon’s popularity, as it plays a key role in classic cocktails like the Old Fashioned and Manhattan.

Lower import duties will allow premium priced brands to enter the Indian market and will bring Bourbon within reach of more Indian consumers. A lower entry barrier could encourage more consumers—especially younger drinkers and cocktail enthusiasts—to try Bourbon. It could also lead to increased availability in bars, restaurants, and liquor stores.

“We’re very optimistic that the reduction in tariffs will lead to higher Bourbon consumption in India.  It will provide a more attractive value proposition to consumers and bartenders alike, while also encouraging American whiskey producers and local Indian importers to invest in developing the category in India.”- Matt Magliocco

Can Bourbon Ever Compete with Scotch in India?

Scotch whisky has held a dominant position in India for decades, with strong branding, aspirational positioning and well-established distribution channels. Even after tariff reduction, Bourbon faces challenges in facing the formidable position of Scotch, but rising preference for premium spirits and changing drinking patterns among young consumers offer opportunities for Bourbon to carve its own niche. It will take aggressive marketing, education and partnerships with bars and mixologists to show how versatile it can be. If American whiskey brands do that well, the tariff cut could help kickstart a steady growth story for bourbon in India.

“Bourbon culture in India will likely grow through education, branding, and associations with the right American opportunities. Distilleries must collaborate with bars, invest in whiskey education, and position Bourbon beyond just an alternative to Scotch. Overall, Bourbon has an opportunity to carve out a stronger position in India, but its success will depend on effective marketing, price positioning, and consumer education.” – avers Paul P. John, Chairman, John Distillers.

Many Indian whisky connoisseurs have tasted & appreciate Bourbon after being exposed to the category abroad – whether in London, Dubai, Toronto or elsewhere.  There is plenty of room for people who enjoy whiskey to appreciate American whiskey, with its wonderful and unique flavor attributes, alongside Scotch, Irish, and Japanese whisky, as well as all the fantastic local Indian expressions.

Conclusion

The reduction of import tariffs on bourbon whiskey is welcome news for U. S. spirits exporters, but how it will impact the Indian market is still a question mark. Affordability is no longer an issue, but consumer education and positioning are key for the future of bourbon in India. As the Indian whisky scene continues to develop, it’s hard to say whether bourbon will remain a niche category or challenge Scotch as the dominant player in India’s premium spirits’ market.