MumbaI: Liquor maker United Spirits Ltd’s decision to launch a local version of Whyte and Mackay whisky along with the original version may run the risk of cannibalizing its own premium whiskies in the Indian-made-foreign-liquor, or the IMFL segment, say some industry experts.
Counter-intuitive move? A file picture of UB Group chairmanVijay Mallya. The group will import the undiluted essence of Whyte and Macay from its distillery in Scotland and bottle it in India to sell it locally.
United Spirits, the world’s third-largest whisky maker by revenue and production capacity, and part of the Vijay Mallya-led UB Group, plans to launch a low-cost Whyte and Mackay, a British brand with a 13-year maturity. The company plans to sell the domestic version without an age tag at an expected price of between Rs1,000 and Rs1,200 a bottle.
The company, which acquired Glasgow-based scotch maker Whyte and Mackay Ltd for $1.2 billion (about Rs5,082 crore) in May 2007, will import the undiluted essence from its distillery in Scotland and bottle it in India. However, it will continue to sell in India the original Whyte and Mackay bottled in Scotland.
“The move will help United Spirits to keep the import duty cost to as low as 30%, instead of the 150% charged on the bottled-in-origin imports,” said a United Spirits executive who did not want to be identified.
“The duty difference will help the company work out competitive prices for both versions in the local market. But it runs a risk of consumers shifting (to the Whyte and Mackay whisky bottled in India) from its existing low-cost premium whisky brands,” said a sector analyst with a Mumbai-based foreign brokerage, on condition of anonymity.
“Making both the versions available in the market, a first in the Indian liquor market, may also result in a case of mistaken identity in brand promotion,” said an industry expert, who doesn’t want to be identified.
The United Spirits executive said the two versions will be clearly differentiated in brand promotions. “We will, however, sell all other scotch whisky brands of Whyte and Mackay such as The Dalmore, Isle of Jura, Glayva, Fettercairn and Vladivar vodka in the domestic market by importing them from Scotland, retaining their ‘bottled-in-origin’ premium scotch tag,” he added.
The Scottish distiller, now a 100% subsidiary of United Spirits, also has whisky brands such as Mackinlays, John Barr, Cluny and Claymore.
Apart from United Spirits’ Black Dog, which is bottled in India by importing the undiluted essence from Scotland, a similar product in the domestic liquor market is Haig Gold of Diageo India Pvt. Ltd.
The brand, sold at Rs580-600 for a bottle of 750ml, is bottled locally by importing the undiluted essence from the company’s Scottish distillery, but the original version is not sold in India.