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Rum deal for whisky as young Indians turn to white spirits

Rum deal for whisky as young Indians turn to white spirits
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First Published: Mon, Jul 09 2007. 12 58 AM IST
Updated: Mon, Jul 09 2007. 12 58 AM IST
At the Polo Club bar in Bangalore’s swank Oberoi Hotel, the most popular drink these days is not a whisky highball, once the automatic choice of well-heeled Indians tipplers.
For the young and rich, it’s a toss-up between a margarita with tequila, Cointreau, lemon juice, sugar syrup and fresh fruit and a caprioshka with vodka, mint and lemon, white and brown sugar, served over crushed ice. “More Indians do want to experiment with vodka and tequila-based cocktails,” said Udiksha Mehta, assistant food and beverage manager at the hotel, who also runs the Polo Club.
Drinks based on premium vodka, white rum and tequila make up half the hotel’s consumption of liquor, Mehta said, indicating a shift in preference to more expensive and mainly imported “white spirits” as the country’s economy booms.
That’s a wave foreign spirits makers are trying to ride as India opens up its rapidly growing $2 billion (Rs8,100 crore) liquor market by lowering import duties in a move welcomed by the US and the European Union.
Duties as high as 550% have meant that a bottle of imported vodka costs many times what it sells for in most other parts of the world.
Bacardi Martini has been waiting for “ridiculously high duties” to be cut to spur sales of its “super premium” Grey Goose brand in India, where it retails for more than $70 a bottle, Jayant Kapur, chief of the Bermuda-based brewer’s Indian unit, said recently.
India will do away with an “additional customs duty” on imports of distilled spirits, reducing tariffs to as low as 150%, the finance ministry announced last week.
The cut may boost already vaulting consumption of white spirits in the world’s second most populous nation, as an economy expanding at 9% a year and rising salaries leave young consumers with more cash to spend.
White spirits have doubled their share of a whisky-dominated market, which consumed 120 million cases of liquor last year, to 20% by volume and 25% by value in eight years, said Kapur.
Consumption of such alcohol is growing by as much as 30% a year, almost twice the 16% pace of the overall beverages market, as youthful Indians key into a global trend.
“With a booming economy, Indian consumers are increasingly connected to global trends and are looking for newer experiences,” said Kapur. “Young Indians don’t want to drink what their fathers and grandfathers drank.”
The median age of India’s 1.1 billion population is estimated to be 24, and college students and those in their first jobs are stoking demand for consumer products ranging from designer clothes and fast bikes to premium drinks.
Marketing professional Dhruv Ghosh, 30, says he prefers to drink white spirits because “I’ve never had a hangover on these drinks.”
“You can mix them with anything—juices, soft drinks—and have them” said Ghosh, who started with beer at age 19 and experimented with whisky but found it “too hard” for his taste. Bacardi has launched its premium Eristoff vodka in India, pitching it against Diageo’s Smirnoff in a market where consumers also have a choice of imported vodkas such as Belvedere, Absolut and Stolichnaya Gold.
“Vodka is considered trendy and more contemporary given its international appeal,” said Vijay Rekhi, president and managing director of Bangalore-based United Spirits, the world’s second largest maker of spirits.
“Greater disposable incomes and rising affordability have led to the growth in the premium product segments,” he said.
United Spirits, owned by flamboyant tycoon Vijay Mallya, in May paid $1.2 billion to buy Scotch whisky maker Whyte & Mackay, adding brands including W&M Scotch, Vladivar vodka and Isle of Jura single malt to its stable.
There is plenty of room for growth left to be tapped in a market where per-capita spirits consumption is just 0.82 litre per year compared with a world figure of 4.63 litres.
But whisky is unlikely to be dislodged anytime soon in a country where tipplers in their 40s and 50s remain loyal to the spirit and as premium brands become available for more reasonable prices following the duty cuts.
“The potential for premium Scotch in India is enormous,” Mallya, 51, said recently. “We now have a strong portfolio of internationally recognised brands that we will introduce immediately to the Indian market.”
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First Published: Mon, Jul 09 2007. 12 58 AM IST