Flying off the Shelves: Duty-Free Liquor Sales At Indian Airports Surge 13%

Duty-free liquor counters at Indian airports are witnessing unprecedented demand. In 2024, sales volumes rose 13%, more than double the 6% growth seen in domestic retail outlets. Whisky continues to dominate, but categories like vodka are emerging as strong contenders. With rising disposable incomes, changing traveler behavior, and a new India–UK Free Trade Agreement (FTA) set to reshape Scotch pricing, duty-free is becoming a crucial growth engine for global drinks companies.

Duty-Free vs Domestic: Stronger Growth At Airports

• 13% growth in duty-free liquor volumes in 2024 versus 6% in domestic stores.
• Whisky accounted for nearly 75% of duty-free sales, growing 12% despite an 8% decline in India’s domestic whisky volumes.
• Other categories are catching up, with vodka leading at 48% growth in duty-free – almost three times faster than at home.

Whisky Still Rules, but Indian Labels Catch Up

• Scotch whisky grew 11%, maintaining its dominance in duty-free shelves.
• US whisky rose 8%, reflecting steady global demand.
• Indian whisky expanded 10% by volume and an impressive 18% by value, though it still represents less than 2% of global travel retail whisky sales.
• Analysts note Indian whisky’s presence in global duty-free outlets was negligible until a few years ago, but is now steadily increasing.

Why Duty-Free Is Booming

1. Air Passenger Growth: India’s air traffic is projected to grow 50% in the next five years, fueling airport retail.
2. Premiumisation Trend: Younger consumers (Gen Z and millennials) are shifting from price sensitivity to brand consciousness and experiential spending.
3. Airport Dwell Time: Travelers use waiting periods to explore and experiment with premium and luxury labels.
4. Diversifying Palates: Consumers are broadening their repertoires beyond whisky, trying vodka, gin, rum, and niche spirits.

India–UK FTA: A Gamechanger for Scotch Pricing

• Current import duty on Scotch whisky: 150%.
• Under the new FTA:
• • Duty will first be reduced to 75%,
  • Gradually falling to 40% over 10 years.
• Impact on prices:
• • A Scotch bottle retailing at INR 5,000 today may cost INR 3,500– INR 4,000 post-FTA, depending on state taxes and distributor margins.
• Caveat: Industry experts caution that near-term retail price cuts may be limited (<10%) since import duties form only part of the final consumer price.

The Bigger Picture: Global Travel Retail (GTR) Outlook

• Global alcohol consumption is expected to remain flat between 2024 and 2029.
• In contrast, travel retail volumes are forecast to grow at a 3% CAGR globally and 4% in Asia.
• For global drinks firms, Indian travelers are emerging as a critical growth driver within GTR.

Summing Up

India’s duty-free liquor market is at an inflection point. Whisky remains king, but vodka and Indian labels are making strong inroads. Rising disposable incomes, expanding travel, and evolving consumer tastes will keep fueling growth in the years ahead.

The India–UK FTA promises to reshape Scotch pricing, potentially boosting demand further gradually. For global drinks companies, India’s travelers are no longer just consumers – they’re the future engine of growth for global travel retail.