As the UK and India seal the trade deal of the century, Scotch whisky enthusiasts are in for a treat. Whisky prices are set to get a lot cheaper, and distilleries begin to revise prices.
As the India-UK FTA falls into place, India will begin to see changes in their whisky tabs. Consumers ill benefit greatly from the price reduction in the alcoholic beverage market. The free trade agreement will cut prices, leading to relief for enthusiasts.
However, not everyone was cheering the hallmark agreement. The stocks of several alcoholic beverage trading companies went down by 5%. Last week, both countries completed a Free Trade Agreement that removed hue portions of import duties on Scotch.
Several Companies Set to Reduce Scotch Whisky Prices
Under the FTA, UK distilleries will see an initial reduction of 50% in tariff value, falling to 75%. This will continue a gradual slide until it reaches a standard of 40%.
For companies like Diageo, this means reducing prices in the Indian market. The distillery may have to consider single-digit reductions as its financial year begins in June-July. Later, the company can implement additional curbs after making its financial report.
Som Distilleries, which saw a 5.3% decline in trading, may have to implement double-digit price cuts right away. The company was one of the hardest hit by the FTA reductions.
Another surprise from DIgeo is it plans to offset some of its assets to reduce losses. According to Reuters, “Diageo unveiled a plan on Monday to cut $500 million in costs and make substantial asset disposals by 2028, as the maker of Johnnie Walker whisky and Guinness beer looks to turn around its performance and reduce its debts.”
“We see… some opportunities for what I would call substantial changes versus portfolio trimming,” Jhangiani said. “It’s clearly going to be above and beyond the usual smaller brand disposals you’ve seen over the last three years.”
