Johnnie Walker Maker Diageo Eyes Price Cuts After UK-India FTA

British spirits maker Diageo Plc says it will cut prices of its liquor brands once the new free trade agreement (FTA) between India and the UK comes into effect. The world’s largest liquor company, which sells over 50 brands in India including Johnnie Walker, Black Dog, Black & White, and Tanqueray, expects the FTA to be fully implemented by fiscal 2027.

Speaking to analysts, Diageo’s CFO Nik Jhangiani said that the reduction in import duty on spirits—from the current 150% to 75% initially—will allow the company to pass on a high single-digit decrease in consumer prices.

Under the FTA, the import duty on spirits is expected to fall from 150% to 75%, and eventually to 40% over a decade.

“Now keep in mind that this will take some time to embed into legislation. The belief right now is that it will come through by 2027, but we will keep monitoring it. We intend to pass this benefit on to consumer pricing fully, in conjunction with our trends at USL, to really drive growth in what is an exciting category,” said Jhangiani during the third-quarter earnings call.

He added, “It will likely enable a high single-digit decrease in consumer prices, which we believe should lead to a similar high single-digit percentage increase in volumes.”

“Of course, the impact will vary across Scotch categories—depending on whether it's bottled at origin or in India. But broadly, the intention is clear: to fully pass through the price decrease and drive volume growth,” he noted.

Will Consumers Actually Benefit?

According to Elara Securities, while competition from imported Scotch whisky may rise, the Indian alco-bev sector—which uses bulk whisky as a raw material for blended Scotch—also stands to gain.

For United Spirits, which is majority-owned by Diageo, the duty-free premium could reduce from 31% to 20%, making Scotch more competitive in the Indian market and possibly giving a much-needed volume boost, the brokerage said.

However, according to industry body IWSR, the actual price drop for bottled-in-origin (BIO) Scotch may be closer to 10%, despite some claims of up to 30%. The benefit may not be consistent across states and may not reach consumers in the short term. Liquor companies are already pricing lower due to high duties, and state governments may resist further price cuts due to potential revenue losses, they added.