Radico Khaitan To Boost Malt Capacity As Indian Whisky Takes On Scotch

The demand for Indian single malts is booming so much that Radico Khaitan Ltd., the maker of Rampur Whisky, is left with limited malt in stock.

The company tripled its annual malt distillation capacity to three million litres to cater to the rise in demand for Indian single malts both internationally and within the country. Unavailability of malt, however, forced the company to halt expansion in the international market, which contributes 75% of its overall sales.

"We have very limited malt available now," Sanjeev Banga, president of international business at Radico Khaitan, told NDTV Profit in a phone interview. "Although we increased our distillation capacity a couple of years ago sensing the demand surge, the process — from ageing, maturing, malting and bottling — is a lengthy one. We will expand distribution when the malt is ready."

Indian malt whisky has won over drinkers worldwide, with local brands featuring among connoisseurs' list. Indri Diwali Collector's Edition 2023, a peated single malt from Haryana-based Piccadilly Distilleries, was ranked the world's best at Whiskies of the World Award earlier this year. Amrut, Paul John and Rampur now have a dedicated following. Global giants Pernod Ricard and Diageo too launched their own local single malts, joining the nascent-but-booming segment of India's $30-billion spirits market.

To meet this growing demand, Radico Khaitan has also set up a malt maturation capacity of 10,000 barrels at the new Sitapur campus in Uttar Pradesh. Banga said the company is looking to further enhance it.

Among India’s oldest and largest distilleries, Radico Khaitan made its entry into single malt whiskies with Rampur in 2016. The brand is now available in 40 countries, while spirits from the distiller's stable can be found in 100 countries.

Rampur Indian Single Malt is harder to find than peers like an Indri, Amrut or even Paul John within India, a nation of whisky lovers. "It is currently available in 10-12 states, but in limited markets including Delhi-NCR, Mumbai, Goa, Bhopal, Lucknow, Bangalore and Kolkata," said Banga.

Moreover, unlike seven expressions available worldwide, just one is available in India. "Our priority is launching more expressions of Rampur in the domestic market this year and enter new states including Assam, Tamil Nadu and Telangana," said Banga. That apart, Radico Khaitan plans to expand distribution in the existing markets focusing on on-trade channel.

These initiatives, coupled with availability of more malt, according to Banga, is expected to help Radico Khaitan double its volumes annually for the next three to four years.

But this journey for Indian single malt, Banga said, has been a long one.

"It took two decades for the world to recognise this as a category and accept India as an origin for single malt," he said. Though the market is still nascent, Banga said the entry of liquor biggies like Diageo and Pernod shows Indian malts as a "category of future".

French spirits major Pernod Ricard's local arm uncorked its first made-in-India single malt, Longitude 77, last month. Rival Diageo unveiled its first locally made artisanal whisky — Godawan Single Malt — in 2022. It currently sells in five foreign markets, including the United States.

Indian single malt whisky is expensive. Radico's Rampur Double Cask, for instance, is priced at Rs 8,500 for 750-ml bottle in New Delhi.

Rising prosperity has primarily helped demand surge in India. Increasing availability and proliferation of high-end bars in cities beyond Delhi and Mumbai also helped companies prod their customers toward fancier, and pricier alcohol.

"This trend is here to stay," said Banga. "As income levels rise and inflation pressure abates, more people will be willing to spend on small to large premium offers. But as competition intensifies, we can only expect the survival of the fittest."

Radico Khaitan expects premiumisation, where companies try to push richer ones into pricier purchase, to aid profits.

While imported alcohol brands have an obvious cachet for Indian consumers, this is rapidly changing, according to Jason Holway, market analyst, IWSR. Data from the researcher shows the premium Indian malt whisky is growing at 16%, and it is set to grow 13% a year versus 8% for Scotch until 2027. Sales of Indian single malt whisky shot up 142% in 2022, beating the 35% annual growth in Scotch.

Banga said that taxes linked to international trade remain high and it is a key dampener in facilitating export-led growth. The industry has urged various governments to lower taxes.

The potential UK-India free trade agreement will further help in reducing costs as Radico Khaitan imports a lot of bulk scotch, he said.

"Our want has always been that it should be a level-playing field. So, the British side would also have to do away with some of the non-tariff barriers," he said. "And once that happens, the export of IMFL as well as Indian whisky and rum will also increase substantially to the UK market."

The trade agreement will also give foreign liquor companies an advantage over getting access to the large and rapidly growing Indian market. Banga, however, doesn't see Radico Khaitan's brands facing any competition.