Shares of Radico Khaitan, a prominent Indian liquor company, experienced a decline following the announcement of a free trade agreement (FTA) between India and the United Kingdom. The stock dropped 1.69% in recent trading, reflecting investor concerns about potential impacts on domestic liquor manufacturers.

Impact on Indian Liquor Stocks

The newly signed FTA between India and the UK has sent ripples through the Indian liquor industry, affecting several key players:

• Radico Khaitan: Down 1.69%
• Tilaknagar Industries: Fell 2.09%
• United Spirits : Declined 0.69%

Key Points of the India-UK Free Trade Agreement

The FTA introduces significant changes to the import duty structure for spirits:

• Immediate Reduction: Import duties on Scotch whisky and gin will be cut from 150% to 75%
• Long-term Plan: Further reductions to 40% over a ten-year period

Potential Benefits for Consumers

The trade agreement could lead to more affordable imported spirits for Indian consumers:

• Estimated price reduction: Rs 100.00 to Rs 300.00 per bottle
• Beneficiaries: Multinational brands such as Johnnie Walker, Chivas Regal, and Ballantine's

Market Implications

While the FTA presents opportunities for imported spirits, its impact on the Indian liquor market may be nuanced:

• State-level Pricing: The actual consumer price impact could be limited due to existing state-level pricing mechanisms
• Excise Duties: State excise duties may also influence the final retail prices

Industry Perspective

The Brewers Association of India has weighed in on the potential outcomes:

• Price drops may be temporary
• The scope of price reductions could be limited

As the Indian liquor industry adapts to these new trade dynamics, companies like Radico Khaitan may face increased competition from imported brands. However, the full extent of the FTA's impact on the domestic market remains to be seen, as state-level regulations and consumer preferences will play crucial roles in shaping the industry's future landscape.

United Spirits (USL), a major player in the Indian alcoholic beverages market, has announced plans to acquire 100% ownership of NAO Spirits & Beverages, maker of premium Indian craft gin brands, for ₹130.00 crore. This move significantly strengthens USL's position in the premium gin segment and expands its craft gin portfolio.

Acquisition Details

The acquisition will be completed in stages, with the process expected to conclude by June 2026. Initially, USL's stake in NAO Spirits will increase from 30.00% to 97.07%. This phased approach allows for a smooth transition and integration of NAO Spirits into USL's operations.

Strategic Importance

This acquisition is a strategic move for United Spirits, aligning with its earlier decisions to invest in and expand its presence in the premium gin market. The deal will give USL full control over NAO Spirits' popular craft gin brands, including:

• 'Greater Than': A London Dry style gin
• 'Hapusa': A Himalayan Dry gin

These brands have gained significant popularity among gin enthusiasts for their quality and unique Indian flavor profiles.

Market Implications

The full acquisition of NAO Spirits underscores USL's commitment to capitalizing on the growing premium gin market in India. As consumer preferences in the Indian alcohol market continue to evolve, with increasing interest in premium and craft spirits, this move positions USL to meet changing demand effectively.

The integration of NAO Spirits into USL's portfolio is expected to create synergies in distribution and marketing, potentially leading to expanded market reach for the craft gin brands. Additionally, USL's resources and expertise could accelerate the growth and innovation within the NAO Spirits product line.

Industry Impact

This development marks a significant step in the consolidation of the Indian craft spirits industry. It demonstrates the growing interest of major players in the craft and premium segments of the alcohol market. The move could potentially set the stage for further innovations and investments in the premium alcoholic beverages segment in India.

As the craft gin movement gains momentum in India, USL's full ownership of NAO Spirits could provide the brands with the resources and reach to expand their market presence, both domestically and potentially in international markets.

This strategic acquisition by United Spirits reinforces its position as a key player in the evolving Indian spirits market and signals its intent to lead in the premium gin category.