Indian Ownership?

By now you've heard about the potential buyout of Whyte & Mackay by India's brewing king Vijay Mallya.

At first strongly denied, it is looking more and more like it's a real possibility that the discussions are taking place.

The immediate response from purists is "Indian Ownership?!?".

Of course you know that foreign ownership is nothing new. England-based Diageo (arguably the least foreign) owns a number of distilleries, as does France-based Pernod. Japan-based Suntory owns Bowmore, Auchentoshan, and Glen Garioch; US-based Fortune Brands (via subsidiary Beam Global) owns Laphroaig; French Moet Hennessey owns Ardbeg & Glenmorangie; Italian Campari owns Glen Grant; Bacardi USA owns Dewars. The list goes on and on...

In fact, foreign ownership far exceeds Scottish ownership. And in many cases, foreign ownership has been a good thing for the industry. It has certainly prevented more distilleries from being mothballed or closed; and it has allowed for broader distribution of many brands.

So why should foreign ownership of Whyte & Mackay worry anyone? Whyte & Mackay is already under foreign ownership - South-African Vivian Imerman and Iraqi Robert Tchenguiz are the current owners of the company. The company was previously owned (partially) by a German Bank, and prior to that, owned by US based Beam Global (previous called Jim Beam Worldwide).

It shouldn't be an issue, and among practical people, it is not.

Enough history. Let's talk about why Indian ownership of a whisky company might actually be good for the industry.

One of the biggest issues currently being faced is the industries' attempts to get real Scotch whisky on the shelves in India. Unfortunately (as previously discussed), the discriminatory taxation on Spirits imported into India is preventing this. Mallya, with his strong political ties, is one of the big reasons that India has the punitive taxes for imports in place. The protectionist taxes are in place to prevent imported products (at fair prices) eating sales of his and other Indian products.

If Mallya successfully completes the purchase of W&M, he'd (theoretically) have to support the lowering of the tariff in order to import his W&M products into India.

While I'm sure that many in the whisky industry don't relish the thought of Mallya joining the ranks of distillery owners, the practical upside will likely outweigh their disdain. Though I'm also sure that there are secret hopes that WTO sanctions might be forthcoming - obviating the need for Indian ownership as a way to help remove the tariffs.

If Whyte & Mackay is truly on the market, this could lead to other bidders popping up and cherry picking Whyte & Mackay brands; similar to what happened with the Allied-Domecq buy-out.

Stay tuned. This will CERTAINLY get more interesting.