Grand Met in Indian venture

INDIA, still technically a bastion of prohibition, is allowing Grand Metropolitan to establish a joint venture to produce and market alcoholic drinks for local consumption and export, writes John Shepherd.

The move is further evidence of India's determination to lower defensive trade shields, and comes less than two months after Guinness was cleared to forge a link with UB Group of India.

Despite a traditional opposition to the sale and consumption of alcohol, the Indian government has allowed individual states to set their own taxes and regulations.

As Kevin Feeny, an analyst at Henderson Crosthwaite, said yesterday: 'The situation has improved a lot from the days when you needed a certificate from the doctor to say you were an alcoholic to buy a drink.'

Grand Met has yet to name who will link up with its IDV drinks subsidiary, but did disclose that it would hold a majority stake in the venture and it would be operational by Christmas.

IDV intends to produce Gilbey's gin, Malibu and possibly Smirnoff vodka. It will target the burgeoning wealthy middle classes, who total 80 million and have the same per capita spending power as the Portuguese. Annual sales for foreign spirits produced in India are estimated at pounds 800m.

The one big barrier, however, is India's 400 per cent tariff on imported spirits, which pushes the price of premium Scotch whisky to pounds 50 a bottle.