Tag Archives: Premiumisation in India

India-European Union FTA Signed: ‘Mother of all Deals’

Indian duties on wines, currently at 150%, will be cut to 75% upon entry into force and gradually reduced further to 40%
EU and India already trade over €180 billion worth of goods and services annually
FTA to come into effect early 2027

The India–European Union Free Trade Agreement (FTA) was formally concluded on January 27, 2026, marking what leaders on both sides described as a historic reset in economic relations between two of the world’s largest democratic economies. Prime Minister Narendra Modi confirmed the signing while addressing Indian Energy Week, calling it a “significant agreement” that has opened up “a lot of opportunities for 140 crore Indians and crores of Europeans.” The deal, he said, was already being discussed as the “mother of all deals”, underlining its scale and strategic importance.

Ursula von der Leyen, European Commission President

European Commission President Ursula von der Leyen echoed that sentiment, describing the agreement as a landmark in rules-based global trade. “The EU and India make history today, deepening the partnership between the world’s biggest democracies. We have created a free trade zone of 2 billion people, with both sides set to gain economically. We have sent a signal to the world that rules-based cooperation still delivers great outcomes,” she said. The agreement, she added, is only the beginning of a stronger and more comprehensive partnership. “We did it. We delivered the mother of all deals,” she emphasised.

Commerce and Industry Minister Piyush Goyal, who has steered India’s recent trade negotiations with several developed economies, was emphatic about the scale of the breakthrough. Having concluded trade agreements with the UAE, Australia, the UK, Oman, New Zealand, Mauritius and the four-nation European Free Trade Association (EFTA), Goyal described the India–EU pact as the most consequential yet. “I have done seven deals so far. All with developed economies. This one will be the mother of all,” he said during his recent visit to Brussels, where final negotiations were completed.

A Historic and Ambitious Agreement

The India–EU FTA is the largest trade deal ever concluded by either side and will come into effect early 2027. It eliminates or reduces tariffs on over 96 percent of EU goods exports to India and is expected to potentially double EU goods exports to India by 2032. The tariff reductions are estimated to save around €4 billion annually in duties on European products.

The agreement comes at a time of geopolitical uncertainty and shifting global supply chains. It strengthens economic and political ties between the world’s second and fourth largest economies, creating a free trade zone covering nearly 2 billion people. The EU and India already trade over €180 billion worth of goods and services annually. In 2024, the EU was India’s largest trading partner, accounting for €120 billion worth of goods trade—about 11.5% of India’s total trade. India, in turn, was the EU’s ninth-largest trading partner.

Trade in services has also grown rapidly, reaching €59.7 billion in 2023, nearly doubling from €30.4 billion in 2020. The FTA grants privileged access to the Indian market of 1.45 billion people, with an annual GDP of €3.4 trillion and projected growth above 6 percent, making it one of the fastest-growing large economies in the G20.

The agreement also significantly reduces agri-food tariffs. Indian duties on wines, currently at 150%, will be cut to 75% upon entry into force and gradually reduced further to as low as 20%.

SpirtsEUROPE and ISWAI welcome FTA

Sanjit Padhi, CEO, International Spirits & Wines Association of Indian (ISWAI)

The CEO, International Spirits & Wines Association of Indian (ISWAI), Sanjit Padhi said, “Following the successful conclusion of the IND-UK FTA, the India–EU FTA marks another significant milestone for the alcobev sector. This agreement not only deepens trade ties between India and the EU, but also fosters stronger collaboration and strategic partnership in the industry. It underscores the shared commitment to fair, balanced, and mutually beneficial trade that drives sustainable growth for both regions.”

On tariff reduction and mutually beneficial trade: “While the detailed provisions of the agreement are awaited, the initially released agreement indicates that the proposed reduction in import tariffs from the current 150% to 75% across all EU spirits & wines categories from the entry into force of the agreement, is a clearly welcome development. The agreement further outlines that the tariffs will then be lowered to 40% for spirits and as low as 20% on wines in a phased approach. Taken together, these measures under the India- EU FTA offer significant strategic benefits for both markets. India’s increasingly aspirational and discerning consumers will gain improved access to premium international brands at more accessible price points. This broader choice is expected to enhance the overall consumer experience, accelerate premiumisation within the alcobev sector, support growth in allied sectors such as tourism and hospitality, and contribute positively to state revenues.”

“A progressive FTA reinforces India’s position as a compelling investment destination and a growing export market for the alcobev sector. As the industry scales new heights, continued government support through tariff rationalisation and improved market access will be critical to sustaining growth momentum. The Indian alcobev industry is rapidly transitioning from a price-sensitive market to one driven by value creation and premiumisation, with Indian single malts leading this transformation and competing successfully with global benchmarks. The FTA will further enable Indian brands and Bottled-in-India products to access international markets, strengthen global partnerships, and truly advance the vision of ‘Make in India’ on the world stage.”

spiritsEUROPE calls it transformational deal

spiritsEUROPE has called the EU-India Free Trade Agreement (FTA), a transformational deal for the EU spirits sector that will significantly improve access to one of the world’s most important spirits markets.

Mark Titterington, spiritsEUROPE Director General

“This agreement is a real game changer for our sector,” said spiritsEUROPE Director General Mark Titterington. “Cutting tariffs from 150% to 40% will unlock long-term growth, create new jobs across the value chain, and give Indian consumers greater choice through a complementary, rather than competing, offering. The deal benefits both sides: a stronger EU presence will support market diversification, boost revenues, attract investment, and generate downstream employment in India, without displacing domestic production.”

India is the second-largest spirits market globally by volume, after China, and its consumers drink more spirits than beer or wine. While the market remains primarily whisky-driven, growing demand for quality, authenticity, and premium products means all EU spirits categories stand to gain.

Under the agreement, tariffs on EU spirits will be cut by half upon entry into force, followed by a gradual reduction to 40%. This represents a step change for the sector, building on a decade in which the value of EU spirits exports to India increased sixfold, despite historically high tariffs and regulatory barriers.

spiritsEUROPE also welcomes the creation of a dedicated EU-India Working Group on Wine and Spirits, which will allow both sides to deepen regulatory dialogue, enhance mutual understanding and address market access concerns.

“The EU-India FTA opens a new chapter for spirits trade,” Mark Titterington added. “We look forward to working closely with authorities on both sides to ensure swift implementation. This agreement demonstrates how strong partnerships and open trade can deliver tangible growth and benefits for both economies.”

Alcobev Sector in Focus

Among the sectors expected to see transformative impact is alcoholic beverages (alcobev), an area that has long been constrained by steep tariffs and regulatory complexity. Barring agriculture, the FTA covers technology, pharmaceuticals, automobiles, textiles, steel, petroleum products, electronics and the alcobev sector. For European wine and spirits producers, India represents one of the last major high-growth markets still guarded by triple-digit tariffs.

India currently imposes some of the highest import duties globally on alcoholic beverages. Basic customs duties on wines and spirits can reach 150 percent, before state excise duties, additional levies and distribution mark-ups are applied. These high tariffs have historically restricted volumes and confined imported products largely to affluent urban consumers.

Yet the Indian alcobev market is undergoing structural change. The industry is witnessing premiumisation, with consumers in metro and tier-one cities increasingly trading up from mass-market domestic brands to premium and imported labels. Rising disposable incomes, exposure to global lifestyles, growth of organised retail and e-commerce (where permitted), and a younger demographic are reshaping consumption patterns.

Imports of distilled spirits into India were valued at approximately $572 million in 2023, reflecting steady growth in demand for premium international brands. Trade data for FY 2023–24 shows India imported wines worth about $412.4 million from the EU and spirits and liqueurs valued at $22.3 million. In contrast, India’s exports to the EU in wines were around $1.5 million and spirits and mixed products approximately $64.9 million. The asymmetry highlights both the EU’s dominance in premium alcohol categories and the untapped export potential for Indian producers.

Globally, the EU exported nearly €29.8 billion worth of alcoholic beverages in 2024, with wine accounting for the largest share, followed by spirits and liqueurs. India currently accounts for only a small fraction of these exports, underscoring the headroom for expansion if tariff barriers are eased.

Trade Flow	Product Category	Value (Approximately)
India-EU Exports	Wines	USD 1.5 m
	Spirits and Mixed Products	USD 64.9 m
EU-India Imports	Wines	USD 412.4 m
	Spirits & Liqueur	USD 22.3 m

FY 2023–24 trade data Ministry of Commerce

Tariff Rationalisation and Market Access

Under the FTA, phased tariff reductions on wines and spirits are expected to improve price competitiveness for European brands. While final schedules will determine the pace and depth of liberalisation, even gradual reductions could significantly narrow price gaps between imported and domestic premium products.

European producers—including wine exporters from France, Italy and Spain and spirits companies from France, Ireland, Germany and the Netherlands — view the agreement as a pathway to expand beyond niche luxury segments into broader premium categories. Multinational companies such as Pernod Ricard, Diageo, Rémy Cointreau and Beam Suntory have consistently advocated for lower duties and greater regulatory clarity in India.

From the EU’s perspective, the agreement is not solely about tariff cuts. Industry stakeholders have long sought improvements in regulatory predictability, faster label approvals and clearer distribution norms across Indian states. Alcohol in India is regulated at the state level, leading to a patchwork of excise structures, registration requirements and marketing restrictions. Greater transparency and streamlined processes under the FTA framework could reduce compliance costs and encourage deeper market penetration.

Lessons from UK and Australia Agreements

India’s approach to alcohol liberalisation has been cautious and calibrated, as seen in its recent trade agreements. Under the India–Australia pact, duties on premium Australian wines were reduced significantly, leading to improved competitiveness without overwhelming domestic producers. The India–UK FTA included phased duty reductions on certain spirits but maintained a protective stance toward wines.

The India–EU FTA, given the EU’s global leadership in wine exports, is expected to be broader in scope. European negotiators have pushed for meaningful tariff reductions, while Indian industry bodies such as the Confederation of Indian Alcoholic Beverage Companies (CIABC) have advocated safeguards such as minimum import prices, strict rules of origin and anti-dumping protections. These measures aim to prevent under-invoicing and trans-shipment while ensuring domestic manufacturers are not destabilised.

Opportunities for Indian Producers

For Indian alcobev companies, the FTA presents both competitive pressure and strategic opportunity. Lower import duties could intensify competition in premium segments such as single malts, gins, brandies and boutique wines, where European brands enjoy strong heritage appeal. However, Indian producers have been steadily upgrading quality and brand positioning.

Indian single malts and craft gins have gained international recognition in recent years, winning awards in global competitions. Companies with export ambitions see the EU as an attractive destination, offering a sophisticated consumer base and established distribution networks. While EU tariffs on alcohol are relatively low, non-tariff barriers, branding challenges and limited market access have constrained Indian penetration. Stronger intellectual property protections and improved services access under the FTA could ease some of these hurdles.

The agreement’s provisions on IP protection are particularly relevant for premium spirits, where trademarks, geographical indications and brand identity are central to market success. Enhanced enforcement mechanisms could help both European and Indian producers safeguard their brands against counterfeiting and misuse.

Structural Transformation and Long-Term Impact

The timing of the FTA aligns with broader shifts in India’s alcobev landscape. Urbanisation, hospitality sector growth, premium retail expansion and rising tourism are all contributing to category development. A more open trade regime could stimulate investment in distribution, warehousing and marketing infrastructure.

At the same time, policymakers must balance revenue considerations. Alcohol taxation is a significant source of income for Indian states. Any tariff rationalisation must be calibrated to avoid fiscal disruption while promoting trade expansion.

Ultimately, the India–EU Free Trade Agreement has the potential to reshape the alcohol trade between the two regions. For European producers, it opens the door to one of the most promising long-term growth markets in the world. For Indian companies, it presents a dual challenge: compete more effectively at home while leveraging improved market access to expand abroad.

Trilok Desai and R. Chandrakanth

Set Whiskey Free

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The import tariffs for Bourbons have been reduced to 100% for bottled products, while bulk imports and other segments still attracting 150% duty structure. In a conversation with Trilok and Bhavya Desai, Chris Swonger, President & CEO, Distilled Spirits Council of the United States (DISCUS) speaks about the evolving dynamics between American and Indian alcobev markets, the impact of tariff reductions and the growing global appetite for premium spirits. Excerpts:

Chris Swonger, President & CEO, Distilled Spirits Council of the United States (DISCUS)

Trilok Desai (TD): The tariff on American whiskey has recently been reduced under the new trade framework. How significant is this change for U.S. distillers looking to expand in one of the world’s biggest whiskey markets?

The excitement is immense. With the Prime Minister and the President working together to reduce the tariff on bottled bourbon from 150% to 100%, it marks a major milestone. Of course, 100% is still high, but it’s a strong start. This creates real opportunities—we’ve seen in other markets that when tariffs drop to zero, both sides benefit. We believe this move opens the door for significant growth and stronger US–India trade relations.

The ultimate goal is to eventually move toward zero-for-zero tariffs, though that might take time—perhaps a decade. But it’s a step in the right direction. Both Indian and American consumers will gain from this exchange of distinctive products and cultures.

Bhavya Desai (BD): Have there been any further discussions between DISCUS, the U.S. government and the Indian government regarding further tariff reductions?

Yes, absolutely. We are in regular communication with the administration, the U.S. Trade Representative and the Department of Commerce. They are well aware of our aspirations. For context, between 1997 and 2018, the U.S. and EU maintained zero-for-zero tariffs, and trade in spirits grew by over 450%. That’s the kind of growth we hope to replicate between India and the U.S.

TD: Traditionally, India has been a Scotch-dominated market. How do you plan to position and expand American whiskey against such strong competition?

We work closely with the Scotch Whisky Association, and there’s no rivalry between us—in fact, our relationship is collaborative. My counterpart, Mark Kent, and I share the belief that standards matter—whether it’s American whiskey, Scotch or Indian whisky. All the economic data shows that when tariffs are reduced, every side benefits.

BD: How do you plan to raise awareness for bourbon in India? Scotch and Indian whiskies are already well established, but bourbon still feels relatively new here?

It’s really about bottle by bottle, sip by sip. The more Indian consumers get to experience American whiskey, the more they’ll appreciate its diversity and craftsmanship.

And awareness starts with accessibility. The recent tariff reduction is an encouraging first step, because it encourages American distillers to invest in this market. We’ve seen six leading American distillers participate at the recent exhibition, showcasing everything from bourbon and rye whiskey to Tennessee and American single malt.

TD: But India is a price-sensitive market and bourbon tends to be more expensive than Scotch—atleast the current ones?

That’s true, largely due to tariffs and import costs. However, premiumisation is an important global trend. Consumers here increasingly seek quality and authenticity. For those who want to experience something distinctive, American whiskey is worth it.

TD: Are American distillers exploring the possibility of bottling in India, like some Scotch producers do?

Some are certainly exploring that. A few already have arrangements to bottle locally or import in bulk. It’s an evolving opportunity, and companies are evaluating how best to bring their products closer to Indian consumers.

BD: Beyond tariff reductions, what other near-term goals does DISCUS have for the coming year?

Education—that’s our top priority. From bartenders and mixologists to retail professionals, we want to build understanding about American whiskey: its heritage, its role in classic cocktails, and its versatility.

American whiskey has a proud history—even George Washington was a distiller. Educating both the trade and consumers about this legacy will be essential to our long-term success.

BD: With ongoing trade tensions between India and the U.S., do you see these issues posing a challenge to your efforts in the alcobev space?

While there are certainly broader geopolitical challenges, we remain optimistic. The relationship between both governments is constructive, and recent dialogues have been encouraging. We’re confident that continued collaboration will bring positive results.

The key is recognising that our industry is interconnected. American whiskey can only be made in the U.S., Scotch in Scotland, and Indian whisky in India. We’re not competitors—we’re collaborators in a shared global culture of spirits.

TD: How is Indian whiskey perceived in the United States?

There’s a tremendous opportunity to introduce Indian whisky to American consumers. Just as we hope more Indians will discover American whiskey, the reverse should happen too. Both industries can benefit from a cultural exchange rooted in craftsmanship and appreciation.

TD: Some small U.S. distilleries have recently closed. What’s driving that trend?

The U.S. market has grown rapidly—from just 60 distilleries 25 years ago to over 3,000 today. Naturally, some smaller operations face challenges due to market pressures. Still, the overall growth of craft distilleries remains a major success story.

We now have craft distilleries in nearly every state. It’s a vibrant ecosystem, much like what’s emerging here in India.

TD: Do you think the growing popularity of Irish whiskey globally has affected bourbon’s market share?

Not necessarily. Irish whiskey’s growth has actually helped expand the overall whiskey category. More variety leads to more consumer interest. Removing trade barriers and increasing accessibility benefits everyone—from bourbon to Scotch to Indian whisky.

BD: Over the years, spirits have overtaken beer and wine in U.S. market share. What’s behind that shift?

Twenty-five years ago, spirits had about 28.7% of the beverage alcohol market. Today, that’s over 42% by value. We’re even projected to surpass beer by volume by 2031. That growth comes from authenticity, innovation and the rise of craft distilling.

Chris: Let me ask you both—why did India historically impose such high tariffs on imported spirits?

TD: Mainly to protect the domestic industry. The tariffs used to be even higher—around 250% years ago—and were gradually reduced to 150%, and now 100%. The plan is to lower them further over the next decade. It’s about giving Indian producers time to mature and strengthen their market presence.

BD: Exactly. India’s spirits sector has evolved rapidly. Domestic producers are now competing in premium segments and exporting globally. Once the industry fully matures, we’ll likely see a more open and balanced playing field.

TD: American whiskey, being corn-based, has a sweeter profile. Do you think that suits Indian palates?

Absolutely. India is a sweet-loving market—rum and sweeter Scotch profiles are already popular. We believe bourbon’s natural sweetness will resonate very well here.

If I may add an analogy—just as parents must eventually set their children free to learn and grow, markets must also open up. India should set its whisky free, allowing it to compete and thrive alongside global peers. When that happens, both Indian and international spirits will flourish together.

Bacardi India, Engine of Growth for Bacardi Global: Vinay Golikeri

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Bacardi Limited, the world’s largest privately held international spirits company with a portfolio comprising over 200 brands and labels. In a conversation with Bhavya Desai on a podcast, Vinay Golikeri, Managing Director of Bacardi India explains why India is a key market for Bacardi and more. Excerpts:

The market opportunities in India, both from a macro-economics and spirits perspective, are huge. Substantiating this Golikeri said, “In the global market place, premium spirits account for 50% of brands, while in India it is 5 to 6%, which means there is ample headroom to premiumise.” In India, between 2020 and 23, premium spirits had a growth of over 40% while globally it was around 7 to 8%.

Adding 20 million LDA every year

As regards Bacardi, Golikeri mentioned that vast majority of products were premium and ‘we have a long runway of growth for premium’ aided by factors such as rising affluence, consumers are drinking better, the demographic dividend (every year India is adding 20 million coming in to the legal drinking age (LDA) bracket), sea change in the retail environment, top notch bars, trading up is happening across price points. “Put all that together, the premium plus segment is really accelerating.” The median LDA in India is 28 whereas in the US and China it is over 40. “The number of affluent households is expected to more than double from 77 million in 2020 to over 177 million by 2030.”

Inflation-linked price mechanism needed

However, he said that two things from the regulators were essential – ease of doing business and consistency in policy, both of which will go a long way in driving growth for the industry and revenues for the government. “Several States have not given price increases for years. There is inflation and cost of raw material has gone up, affecting investment capabilities. The government should introduce inflation-linked price mechanism.”

With the alcobev sector in India being a highly regulated and complex market, Golikeri said, “It is like dealing with 28 countries rolled into one, policies change every year, route to market changes every year.” Taxes and duties are about 65 to 70% of the MRP (maximum retail price) and the rest goes to each level of the chain – wholesale, retail and brand owners. “Our taxes are significantly higher than anywhere in the world. We need inflation-linked pricing mechanism. We need to invest to grow the brand and for that to happen, price becomes critical.”

Best 10 Strategy

Continuing on Bacardi’s plans in India, Golikeri pointed out, “We started out in India in 1997-98 with Bacardi rum, then in early 2000s with Bacardi Breezer, mid 2010 with Bombay Sapphire, Grey Goose and a few years back with Patron. It’s being a great run. Bacardi India is an engine of growth for Bacardi globally.

“We at Bacardi are going along with our Best 10 strategy… that is making the next 10 years the best ones yet. We want to grow our India business six times by 2030. We have been having strong double-digit growth and we are on track. Experiential marketing is key for us. It is going to continue in importance as a growing number of consumers are experience-seeking. It is going to be equally about experience as much as the product.”

Cocktail Culture Evolution in India

“The bar scene in India has changed considerably, not just in metro, but also in Tier 2 cities. There is a lot of experimentation and we are seeing real evolution of the cocktail culture. It is not just Mumbai or Delhi. Recently, I had been to a bar in Guwahati and If I showed you their cocktail menu, you would think it was some bar in London or New York. Our products are positioned at half of the cocktail culture. This is an interesting opportunity for us to leverage the cocktail culture.”

Golikeri cited the sixth annual Bacardi Cocktail Trends Report, which identifies the five key trends poised to reimagine cocktail culture and the spirits industry in 2025. The report, created in collaboration with The Future Laboratory (TFL), draws on data from Bacardi-led and external research, consumer surveys, bartender interviews and TFL insights to reveal the movements that are influencing cocktail experiences, flavour profiles, and culture the coming year.

Quoting Mahesh Madhavan, the Bacardi CEO, Golikeri said the company has embraced the shift from consumption to curation, where consumers are not just seeking drinks, but meaningful experiences enjoyed over a cocktail.

Do What Moves You

Bacardi has launched a marketing push to launch its brand purpose ‘Do What Moves You’, which aims to “shine a spotlight on the brand’s belief in the power of self-expression”. “It has music experience, delicious cocktails, wonderful merchandise, its 360 degrees, bringing all together to a compelling experience. We amplify that digitally where a few experience, but gets seen by many.”

Legacy, Made in India

Talking about ‘Legacy’ whisky, the make-in-India product, Golikeri said its ‘tested, researched and produced in India’. “We have put the consumer in the heart of it. We have had strong results from the consumer to the product. We initially went into three States – Maharashtra, Uttar Pradesh and Telangana and we know we have a winner on hand. We will be rolling out in other states too and Legacy is a response to vocal for local.” The roll out plans include Goa, Pondicherry, Jharkhand, Odisha, Meghalaya, Assam, Tripura, Arunachal Pradesh, Kerala, and Rajasthan. The focus, Golikeri said, is going to be on Legacy, Irish whiskey brand Teeling; tequila brand Patron El Cielo, and vodka brand Grey Goose Altius.

However, he said that Bacardi rum which was introduced in 1997-98 continues to be popular. “For Bacardi Breezer, the main player in the RTD (ready to drink) segment, the market share in India is 90%. Launched in 2002-03, it is a great liquid and has had good activations. We had the winning recipe. We were an early entrant and we have cemented the product.”

Three F’s that Drive Bacardi culture

Asked about his experience so far in India, he said, “I came from Dubai in early 2023 and the first few months, I just travelled across the country, visiting almost all states, meeting with our teams, stakeholders and also consumers. It was an exercise to understand the challenges, the market and to help shape our strategy. I put all this on paper and took it to our board of directors. One of the learnings from the travels has been there is incredible opportunity for Bacardi to grow here.”

The company, he adds, encourages entrepreneurial mindset and helps in taking bold decisions, all coming from Bacardi’s focus on three F’s – Family; Founders and Fearless. “In Bacardi everyone is treated as family. We are all ‘Primos’ (cousins in Spanish), where we care for each other and help in making bold decisions. We are all a passionate team of Primos.”

India, Golikeri adds, contributes hugely not just in terms of business, but also as a global talent hub. Bacardi has so many career programmes and India is a key pillar when it comes to talent sourcing.