India-UK FTA’s Impact on Liquor Stocks in India
29th July 2025
On July 24, 2025, India signed an FTA pact with the UK. This free trade agreement (FTA) is expected to reshape trade across multiple sectors, including auto, textiles, pharma, services, and alcohol, particularly Scotch whisky and gin. For decades, India has taxed imported alcohol heavily, often around 150%, making foreign brands like Johnnie Walker or Chivas Regal expensive and mostly reserved for airports, luxury hotels, or special occasions.
But now, under the new agreement, import duties on UK-origin spirits will immediately drop to 75%, with a gradual reduction to 40% over the next 10 years. While state taxes still apply, the cost structure for imported spirits has now shifted, and with it, the dynamics of India’s liquor market.
According to the Scotch Whisky Association, this deal could bring the UK 1 billion pounds in extra exports to India over five years. And since India is already the world’s largest whisky market by volume, the potential is massive.
Future of Indian Liquor Companies
The move is already shaking things up on Dalal Street. Indian companies that import bulk Scotch or sell premium blends are expected to benefit the most. Let’s look at the key players:
1. United Spirits (Diageo India)
Q4 FY25 Snapshot:
Net profit: ₹421 crore (up 75% YoY)
Revenue: ₹6,634 crore (up 2%)
EBITDA: ₹460 crore (up 38%)
Net Sales Value (NSV): ₹3,031 crore (up 10%)
Company’s Strength:
United Spirits sells popular Scotch brands like Johnnie Walker, Black Dog, and VAT 69. The company is in a strong position after the tariff cuts. A significant portion of its sales, over 30% comes from the premium Scotch category.
Since the company imports both bottled Scotch and bulk spirits for blending, it stands to benefit immediately from lower import costs. This can either improve their profit margins or allow them to offer more competitive prices, making premium products more accessible to Indian consumers.
The company also has strong financials with low debt and good cash flow, giving it the power to invest in marketing and expand its distribution. For investors, this means the company is not only ready to defend its current market but also well-placed to grow in the premium segment.
Future Outlook:
United Spirits is well-positioned to benefit from lower tariffs, given its strong Scotch import volumes and premium brand portfolio. Margin gains on imported labels like Johnnie Walker could fuel profitability. While short-term price benefits may lag due to state taxes, its financial strength and brand equity make it a long-term winner.
2. Radico Khaitan
Q4 FY25 Snapshot:
Revenue: ₹4,485 crore (up 15%)
Net profit: ₹92.1 crore (up 70.8%)
Volumes: 9.15 million cases (up 28%)
Prestige & Above brands: 3.4 million cases (39% of total volume)
Company’s Strength:
Radico Khaitan has been actively working on moving its product range towards the premium segment, and the timing couldn’t be better. The company is already one of the largest importers of bulk Scotch in India, using it to create popular blended whiskies.
With import duties now reduced, Radico’s costs will go down, helping its profit margins improve. It also plans to launch two new luxury whisky brands and enter the super-premium space in the coming months.
The company’s growing exports and its presence in fast-growing categories like gin (Jaisalmer) and single malts (Rampur) show that it understands the changing taste of Indian consumers. For investors, this means Radico is not just reacting to market changes—it’s preparing to lead in them.
Future Outlook:
Radico is well-positioned to gain from reduced Scotch input costs, especially for its blended premium whiskies. With strong volume growth, a robust export footprint, and two new luxury launches planned, it is aiming to deepen its premium segment.
3. Allied Blenders & Distillers (ABD)
Q4 FY25 Snapshot:
Revenue: ₹3,541 crore (up 6.2%)
Net profit: ₹195 crore (up from ₹2 crore YoY)
EBITDA margin: 12.7% (vs 7.5% last year)
Sales volume: 33.1 million cases (up 4.7%)
Prestige & Above segment: 13.4 million cases (41% of total)
Company’s Strength:
ABD, the maker of Officer’s Choice, is focusing more on premium products and has already launched a blended Scotch brand called Arthaus Collective. With around 41% of its volume coming from higher-end products, ABD is clearly shifting more towards it.
Since it also uses imported Scotch in its blends, the reduced duties will directly help bring down input costs. That gives it room to improve margins or offer more attractive prices to consumers. ABD has a solid reach in price-sensitive markets, and its ability to scale quickly can help it take advantage of growing demand in the premium category.
Future Outlook:
With a solid volume base and a growing premium portfolio, ABD is well-positioned to tap into both affordability and aspiration-driven demand in cities.
Key Drivers & Challenges
Key Drivers:
Cheaper Inputs: With the import duty on bulk Scotch halved, companies making blended whiskies can significantly reduce their input costs, potentially boost the margins or enable more competitive pricing.
Premium Demand: India’s growing base of young, urban, and affluent consumers is increasingly opting for premium spirits, and this FTA provides the perfect tailwind to accelerate that shift.
Expansion: Lower duties open up room for both established players and newcomers to expand their premium portfolios and explore export markets more aggressively.
Key Risks:
State Taxes: Despite central duty cuts, high and varied excise taxes across Indian states may keep end-consumer prices elevated, limiting the immediate price benefit.
Competition: With cheaper bottled Scotch from the UK entering India, domestic premium and single malt brands could face stiff competition on price and brand perception.
Execution: Not every company will manage the opportunity equally well. The success will depend on strong execution across branding, pricing, supply chain, and premium retail presence.
With Indian consumers getting a taste for premium spirits and costs dropping for companies, this FTA might just be the game-changer the alcohol beverage industry has waited for. Companies with strong premium brands, smart pricing, and good execution will lead this next wave.
This is less about cheap alcohol and more about capturing the Indian consumer’s shift toward quality and experience. In the coming years, those who blend tradition with premium innovation might create long-term wealth for the shareholders.
Disclaimer
All information is sourced from publicly available data, and while every effort has been made to ensure the accuracy and reliability of the information provided in these notes from the management meeting, Ayush Agarwal Research cannot guarantee that the information is complete or free from errors.
I, Ayush Agrawal, am registered with SEBI as an Individual Research Analyst under the registration number INH000013013, effective from September 14, 2023.
I offer paid research services to my clients based on this certification. Opinions expressed otherwise regarding specific securities are not investment advice and shall not be treated as recommendations. Neither I nor my associates/ employees shall not be liable for any losses incurred based on such opinions.
All matter displayed in this content is purely for Illustrative, Knowledge and Informational purpose and shall not be treated as advice or opinion of any kind.
The content presented should not be construed as investment advice unless explicitly stated in a client-specific research report. I or my employees/associates shall not be held liable/responsible in any manner whatsoever for any losses the readers may incur due to acting upon this content.
All information is taken from publicly available sources and data. I make no warranties or guarantees regarding the accuracy, completeness, or timeliness of the information provided, including data such as news, prices, and analysis. In no event shall I be liable to any person for any decision made or action taken in reliance upon the information provided by me.
We cannot guarantee the completeness or reliability of the information presented. Readers are encouraged to conduct their own research and consult with a professional advisor before making any investment decisions.