Impact of the India-UK Free Trade Agreement on Liquor Prices
The recently announced India-UK Free Trade Agreement is expected to bring about changes in the prices of popular liquor brands in India. Multinational brands like Johnnie Walker, Chivas Regal, and Ballantine’s are likely to see price reductions ranging from Rs 100 to Rs 300 per bottle, depending on the market segment.
However, the actual extent of these price cuts will be subject to various state-level pricing mechanisms, including excise duties and ex-distillery pricing, which are crucial sources of revenue for state governments.
Consumer Impact and Industry Response
Vinod Giri, Director General of the Brewers Association of India, has mentioned that any price drops experienced by consumers may be limited or temporary due to these factors.
Despite the overall economic potential of the India-UK FTA covering aspects like trade, services, and intellectual property, the immediate reaction in the liquor sector has been one of investor caution.
Analyst Insights
Analysts tracking companies like United Spirits Ltd. and Radico Khaitan have varied recommendations. Out of 25 analysts following United Spirits Ltd., 16 advise buying, 3 suggest holding, and 6 recommend selling the stock.
Similarly, for Radico Khaitan, out of 15 analysts, 10 recommend buying, 3 advise holding, and 2 suggest selling.
With Tilaknagar being covered by only one analyst, a ‘buy’ call has been maintained on the stock.
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