Mumbai: Liquor companies looking to launch their high-end offerings, especially Scotch whisky, in Maharashtra in time for the coming festival season will likely have to wait because the state government is yet to make a much anticipated announcement revising and reducing taxes on imported liquor.
Maharashtra’s capital Mumbai is the city that accounts for the most whisky consumption in the country. Another city in the state, Pune, is among the five largest whisky markets (by cities) in the country.
The issue dates back to July when the government of India waived countervailing duties on imported liquor to avoid a dispute at the World Trade Organization. Each state was expected to come up with its own tax structure, instead. Maharashtra did so, and imported liquor currently attracts a duty of 200% in the state. However, Indian companies with foreign liquor brands in their portfolio and foreign liquor firms have lobbied to have this tax reduced; the state government has agreed to do this and a decision is awaited.
Among the affected companies is United Spirits Ltd, the spirits arm of the UB group, that was hoping to launch its newly acquired Scotch brands in the state by Diwali, a Hindu festival that falls in early November. United Spirits came into the ownership of these brands after its acquisition of the Glasgow-based Whyte & Mackay Ltd in May 2007.
Vijay Mallya, chairman and CEO, UB Group
“We don’t think we can catch up with the occasion of Diwali for the first launch as the state’s notification of revised duties has not come yet. It will take at least a month or so for deciding the local prices and also to make the labelling and the appropriate marketing plans for the imported premium brands even after the government announces the new duty structure,” said a senior executive at United Spirits who did not wish to be identified.
“We have sent our recommendation on the revised duty structure to the cabinet and a government notification is expected. I can’t say when is it going to be out,” said V.S. Kudale, Maharashtra’s joint commissioner of excise.
Meanwhile, most retail “outlets in the state are running dry on Scotch brands for the last several months,” according to Sunil Mehdiratta, secretary general of the International Spirits and Wines Association of India, an industry body. “All the international liquor majors who are present in the local market have cut their imports drastically since the state introduced this new duty structure. In the existing duty regime, the retail prices of premium whiskies have gone up by more than 22% in the state,” he added. That increase translates into an average retail price of Rs3,600 for a 750ml bottle of premium whisky.
The International Spirits and Wines Association of India, which has seven members including global liquor majors Diageo India Ltd, Pernod Ricard South Asia (formerly Seagram India Pvt. Ltd.) and Beam Global Spirits and Wine (India) Ltd, has been asking the state government to reinstate the earlier duty of Rs200 per litre for imported spirits. “Putting the duty back to the old form will result in a price reduction of Rs400-Rs500 per bottle,” said Mehdiratta.
United Spirits plans to launch premium brands such as Dalmore, Whyte & Mackay, Isle of Jura, Glayva and Vladivar vodka of Whyte & Mackay in the local market. And Diageo and Pernod plan to launch new premium brands in the country. Meanwhile, the world’s fourth largest spirits company Beam Global Spirits & Wine Inc. recently launched its popular bourbon brand, Maker’s Mark here.