Scotch Single Malts in India: Living the Distiller’s Dream

whiskey2_1024x1024.jpeg“For a place like Delhi, where ‘happening’ parties don’t begin before 11 pm, the timing is amazing. We start at 7.30 pm sharp, the first bottle is opened at 7.35, and we’re done by 9.30,” says Nawal Khanna, the 59-year-old founder and managing director of Indesign International, a firm that designs interiors for entertainment centres in malls across India, of his ‘single-malt’ club. The group of about eight couples, mostly well-placed professionals and businesspersons gets together once a month at a member’s home.

“Even if the location is Gurgaon or Noida, we all manage to reach on the dot,” laughs his homemaker wife Sangeeta, who doesn’t drink whisky but who goes along, perhaps to keep in check what she believes is the ‘greater kick’ the single malt gives over the blended varieties that her husband favoured a few years ago.

The host of this single-malt club – and there is one in almost every whisky-drinking city in India, according to an industry insider – serves heavy snacks along with three bottles of single malt Scotch whisky, mostly bought from Delhi Duty Free on the way back from trips abroad. Once these have been studied and savoured, the group has a light dinner of perhaps biryani and yoghurt, or homemade pizza.

“All those who favoured blends earlier – Chivas Regal, Black Label, Teacher’s, Ballantine’s, Vat 69, Black Dog, Whyte & Mackay – have switched now to single malts,” says Pramod Krishna, director-general of the Confederation of Indian Alcoholic Beverage Companies, a trade body that monitors the wine and spirits industry in India. According to him, single malts replaced blended Scotch whisky as the default spirit to be served at upper-middle-class weddings about five years ago. “Reverse migration by NRIs along with increased travel by professionals abroad and aggressive marketing by whisky brands have made it far more aspirational,” says Krishna, who was a speaker at the World Whisky Conference in London last year.

Single malts are made of barley, yeast and water, and aged in oak casks in a single distillery as opposed to blended whiskies, which contain a mix of barrel-aged malt and grain whiskies, and are sourced from different distilleries. The duty-free price of a 750-ml bottle of single malt can range from $42 to $3,000 or more. Though single malts are also made in Ireland, Japan, Sweden and even India, most Indians are aware only of the motherland of single malts. “In India, people don’t drink whiskies, they drink labels. It doesn’t matter if it’s the Highland, Islay or Lowland variety, as long as it’s made in Scotland!” jokes Khanna.

The high point of the two years that this group has been religiously meeting for was undoubtedly the first anniversary party hosted for them by Glenfiddich, one of their most favoured single-malt brands and a market leader in India with a 40% market share in the category since its official entry into the country in 2009. Held at the Trident in Gurgaon, the sit-down fully sponsored dinner for about 40 persons saw the opening up of four different whiskies – from 12-year-old to 21-year-old.

“In a bid to engage with malt connoisseurs and provide them with an opportunity to experience a bespoke malt evening, we introduced the concept of Home Appreciations in 2010,” informs Rajiv Bhatia, director, Indian Subcontinent at William Grant, an independent family-owned Scottish distiller founded in 1886 that distils award-winning single malts such as Glenfiddich and Balvenie, besides blended whisky such as Grant’s and Tullamore Dew Irish Whiskey.

Hosts and guests enjoy a malt appreciation session through vertical (across ages) and comparative (across brands) tastings, says Bhatia. “Not only does this forum present us with the opportunity to reward brand enthusiasts, it helps us reach out to ‘whisky newbies’ and build the category as a whole while maintaining a live pulse on the ever-changing consumer.”

Whilst the single-malt community in India is still a relatively niche segment, there has no doubt been significant growth in certain categories. “From our interactions over the past few years, these individuals tend to be from the 30-plus age group, reasonably well-travelled with a higher-than-average disposable income, predominantly belonging to the major metros. There are significant pockets of consumption emerging in smaller cities as well,” says Bhatia, adding, “We have also seen a growth in the female consumer segment over the past few years.”

The consumer has, in fact, changed so much that Scottish single-malt distillery Glenmorangie, owned by world luxury giant LVMH, recently set up the India chapter of their elite Scotch Malt Whisky Society (SMWS) in Mumbai and Pune.

The 30-year-old members-only club has exclusive access to ‘single cask’ (high-end single malt) whiskies from 129 Scottish distilleries, and is an independent bottler. With 26,000 members around the world, it aims to add about 500 more in India within a short period, says Ashwin Deo, the founder of the group in India.

With 27 years of experience in the spirits industry and with marquee names such as the UB group, Moet Hennessy and Diageo, Mumbai-based Deo now has his own winery in Nashik and exports spirits under his brand Trinity Vintners. For an annual membership of Rs 21,910 and renewal at Rs 11,236, members of SMWS get access to limited-edition single malts which they can buy at 33% discount; discounts at partner bars and invites to special events; along with a special welcome kit that includes four 10 cl single-cask whiskies.

Needless to say, with all this hoopla around that shot of single malt, exports from Scotland have risen over the past 10 years by 190% from £268 million to £778 million in this category alone.

“India is our fifth largest market by volume [16.4 million litres of pure alcohol] and 19th most important by value [£61.5 million] for Scotch whisky,” says Peter Wilkinson, director of International Affairs, Scotch Whisky Association (SWA), UK, adding, “Typically, single malts account for around 10% of total Scotch sales.”

Though the Indian domestic market was completely closed to all imported spirits until April 1, 2001, under former import licensing restrictions, Scotch whisky was widely available through bootleggers and via duty-free allowances. Though restrictions were removed in 2001, an additional customs duty (ACD) was introduced, which raised the cumulative duty burden on imported spirits to between 450% and 700%. “Unsurprisingly, this had a significant impact on sales of high-value spirits such as single malts,” says Wilkinson. The ACD was eliminated in 2007, but import duty continues to be a high 150%.

The high price tags have naturally invited several parasites into the game. Kenneth Gray, SWA’s legal adviser, whose job is to “protect the integrity and reputation of Scotch whisky” in markets such as India, says, “We have a number of on-going court actions and more than 100 current trademark oppositions in India.” In 2012, he writes in the company’s legal report published last month, “we benefited on two occasions from speedy interventions by Indian courts to halt misleading marketing”, in one of which the court order prevents an Indian distillery from selling and exporting Indian whisky described as ‘Scotch Whisky’.

Despite fraudulent-marketing challenges and extreme import duty, single malts have seen a phenomenal rise in sales to India in the past decade. Riding high on its current surge in popularity, the malt will perhaps remain on top of beverage lists of upmarket Indian bars and restaurants for a while. Until the next big swig comes along.

First published in The Economic Times

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