Changing consumer preferences, coupled with a rise in living standards, have led to a growing demand for premium single malts, particularly among the young population. The global single malt whiskey market is projected to grow at a 7.94% CAGR over 2021-28, to reach a size of US$ 4.8 billion by 2028.
The Indian single-malt whisky industry is still nascent – there are currently 8-9 distilleries making Single Malt Whisky in India, compared to over 140 malt distilleries in Scotland. However, with growing popularity and acceptance, Indian Single Malt is competing with global brands and marking a niche of its own.
Given the highly attractive market, IBT takes a look at the evolving potential for single-malt whisky players in the domestic and international market. It also looks at the key challenges and strategies that can be adopted for growth of the industry.
Single malt whisky, for the uninitiated, is produced by a single distillery using a single malted grain (typically barley). According to FSSAI’s 2023 definition of Single malt whisky, it is made from only malted barley, in a still pot, at a single distillery. A quality single malt requires maturation of at least 3 years in an oak cask, which lends around 60% of its notes to the whisky. However, in markets like India, where we have a tropical climate, maturation takes less time.
Whisky value chain
The most popular single malt whisky is Scotch single malt, which can be explained by the popularity of scotch whisky in general. However, over the years, other countries have also begun to create good quality single malt whiskies, such as Ireland, Japan, US and Canada. As the market is growing, quality single malts are also coming from Australia, France, Germany, India and Taiwan.
India is the 3rd largest whisky market globally (HS 220830). The market reached a size of US$ 18.38 billion in 2023, with an expected CAGR of 5.34% during 2023-27. Interestingly, India is also the largest market for Scotch whisky, overtaking France in 2022. It imported 219 million 70cl bottles of Scotch during the year, exhibiting a market growth of 200% over a decade, according to the Scotch whisky association.
Recent trends indicate a strong potential in the single malt whisky segment as well in the domestic market itself. UK-based Whyte & Mackay launched in India in 2018 and witnessed 35% CAGR in sales over the past three years. It believes that as a young market with low average drinking age, India has a great opportunity. It has strategically placed India as its most significant market, after the US and China. Whisky accounts for 2/3rd of overall spirits sales in India, where 85% of the market is controlled by 10 domestic brands at lower price range, according to International Wine & Spirit Research (IWSR).
Source: CIABC
Production of single malt in India started in 1982 with Amrut Distilleries. The industry is still nascent – there are currently 8-9 distilleries making Single Malt Whisky in India, compared to over 140 malt distilleries in Scotland. However, with growing popularity and acceptance, Indian Single Malt is competing with global brands and marking a niche of its own.
Jim Murray, the famous whisky critic, recently wrote very highly of the quality of one of India’s top brands Gianchand Single Malt, produced by DeVANS Modern Breweries. Before this also, he ranked Mithuna (2021) and Amrut Fusion (2010) 3rd, the two other well recognised single malts from India, in his Whisky Bible. Indian Single Malt, Indri from Piccadilly, won Double Gold at Whiskies of the World Awards. Indri’s Diwali Collector Edition 2023 also won Best in Show Double Gold.
In the domestic market, Whisky accounts for 2/3rd of overall spirits sales in India, where 85% of the market is controlled by 10 domestic brands at lower price range, says International Wine & Spirit Research (IWSR). Home-grown single malts accounted for 33% of Indian market in 2022, up from 15% in 2017. According to recent data, home-grown single malts accounted for 33% of Indian market in 2022, up from 15% in 2017.
Even global giants are recognising the growing potential of the home-grown single malt market in India. For instance, Diageo launched an India-made single malt branded as Godawan last year.
While single-malt whisky is not isolated HS code-wise, whisky can be studied at 6-digit HS code 220830. Global whisky exports have grown at a 4.7% CAGR (2018-22), reaching US$ 15.09 billion in 2022. UK is the largest exporter, accounting for 52.2% market share, at a value of US$ 7.8 billion in 2022. US, Ireland, Singapore and France have been the other top exporters. Among the top 10, Japan & Panama have shown highest 4-year CAGR, 33% and 18% respectively.
India, with exports of US$ 121.4 million in 2022, is the 13th largest exporter in the world. UAE, Haiti and Singapore are currently its largest markets. Overall exports have grown at a CAGR of 1% over the same period. US (CAGR of 37%), Congo (CAGR of 37%), Haiti (CAGR of 31%), Tanzania (CAGR of 30%) and Nigeria (CAGR of 20%) are India’s fastest growing markets.
Potential market analysis
Source: ITC Trade Map
US, France, Singapore, Germany and Taipei are the top global importers of Whisky. Out of the top 10 markets globally, only the US and Singapore rank among India’s top 10.
What are the challenges for native industry?
Trade analysis of the overall whisky market gives a clear indication that India has a long way to go in the international market. However, whisky players have a booming domestic market to cater to, that is showing potential across the board – from low-end whiskies to premium single malts. Moreover, Indian consumers, especially the youth, no longer carry the perception that imported whiskies are necessarily superior to Indian brands. This presents a terrific opportunity to grow the industry that must be proactively explored.
Top producing countries like UK (Scotch) and US (Bourbon) have managed to create a distinctive national identity for their domestic whisky, while ensuring a low cost production environment, tax concessions and strong protection to domestic players with non-tariff barriers.
Whisky is a major sticking point in India-UK FTA negotiations, which are expected to conclude successfully in a few weeks, according to reports. One of the key demands of UK has been to cut import duty on Scotch whisky from 150% to 75% immediately and thereafter to 30% over a period of 3 years. But Indian whisky makers have in turn asked for duty to be cut to 50% progressively over a period of 10 years.
On the other hand, India’s main argument is the mandatory three-year maturation period given by UK for imports of grain spirit and ENA (extra neutral alcohol). They feel it is an unfair comparison, because as a ball park, one-year maturation in Indian conditions is roughly equivalent to around 4-year maturation in a country like Scotland. Moreover, while in Scotland, they would lose 3-4% of alcohol per year in the maturation process, India would lose around 10-15%.
Despite being home to some promising producers, India’s domestic Single Malt market is not gaining the desired growth. As mentioned above, the domestic industry is still restricted to a few distilleries and a facilitating environment for new players can prove to be a game changer.
Indian Single Malt Whisky industry is facing the following challenges:
To put the industry on a sustainable growth trajectory it is important to devise and adapt a short term as well as long term policy approach in these areas. Placing the industry into B2 sub-category from A category, and providing food processing industry status will go a long way in enhancing ease of doing business. A precise definition of product and process will enthuse new players to invest in this sector. Industry players also seek the establishment of a central regulatory authority responsible for process registration and ensuring feedstock availability.
This needs to be followed up by strong traceability norms, wherein all distillers producing single malt whisky need to be registered. Demarcation of producing area for distillers as well as finished product with appropriate incentives and facilitation can be an excellent way to attract investments from incumbents and new entrants.
Some key long term strategies for the industry’s growth in the domestic and international market are as below:
A strong push needs to be made into top import markets like France, Germany, China, Netherlands, Japan and Australia, which are among the top importing countries for whisky in the world. Even though US and Singapore count among India’s top 10 export markets, it’s share is very low in their imports at 0.2% each. Given that most of these markets are developed and high-income countries, quality Indian single-malt players may find them extremely lucrative for their future growth.
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