For decades, the story of Scotch whisky on the world stage has been relatively straightforward. Make it in Scotland, ship it to America, watch the money roll in. But that story is getting complicated fast, and the numbers coming out of the Scotch Whisky Association are forcing an entire industry to rethink where its future actually lies.
The SWA released export figures recently that confirmed what many in the industry had quietly feared. The value of Scotch whisky exports to the United States dropped four percent in 2025, while volume fell by more than nine percent compared to the previous year. Those are not catastrophic numbers on their own, but the direction of travel is what has distilleries worried.
The real damage showed up in the second half of the year. After President Donald Trump imposed a blanket ten percent tariff on all foreign imports back in April, the numbers got worse in a hurry. Between May and December, the value of Scotch heading to the US fell seven percent, and volume dropped fifteen percent. Mark Kent, the chief executive of the SWA, acknowledged that tariffs and what he called geopolitical tension had created significant turbulence in some key markets. That is a polished way of saying the industry took a hit it was not fully prepared for.
And the situation could deteriorate further. A 25 percent tariff specifically targeting single malt whiskies has been suspended for five years, but that suspension is set to expire later in 2026. Single malts are among the most valuable products that Scottish distilleries produce, commanding premium prices and attracting serious collectors and enthusiasts. If that tariff comes back into play, combined with the existing ten percent, American buyers would be looking at a combined rate of 35 percent. That kind of cost does not disappear into thin air. It gets passed along, and at some point, even loyal consumers start reaching for something else.
The origins of that single malt tariff trace back to a long-running trade dispute between Airbus and Boeing over government subsidies. Scotch whisky had nothing to do with that argument, but it got caught in the crossfire anyway when the tariff was first imposed in October 2019. It remained in place until March 2021 before being suspended. The prospect of it returning has left a lot of people in the industry watching calendar dates very carefully.
So where does an industry turn when its most lucrative market starts looking shaky? The answer, increasingly, is India.
Export figures for India tell a very different story. The value of Scotch shipped to India rose fifteen percent in 2025, reaching £286 million. That is a meaningful number, and it comes at a moment when a landmark trade deal between the United Kingdom and India is about to change the economics of the entire relationship.
India is already the largest market in the world for Scotch whisky when you measure it by how many bottles actually get consumed. The country imports around 220 million bottles a year. France, which holds second place, imports 152 million bottles. The United States, despite being the top market by value, does not come close to India in sheer volume. The Indian appetite for whisky is enormous, and it has been largely untapped by Scotch because of one enormous obstacle: tariffs.
Until recently, Scotch whisky entering India faced a 150 percent import tariff. That kind of barrier does not just make a product more expensive. It effectively puts it out of reach for the vast majority of consumers. Scotch became something of a status symbol precisely because it was so hard to get. As one researcher put it, Scotch has been the premiere whisky in India going back to colonial times, but it simply has not been accessible to most people in the market.
The new UK-India trade deal changes that equation substantially. Under the agreement, the tariff on whisky drops from 150 percent down to 75 percent, with the change expected to come into effect in April 2026. After ten years, the tariff is set to fall further, down to 40 percent. It is not a complete elimination of the barrier, but it is a dramatic shift in the competitive landscape.
The SWA estimates that Scotch currently holds about three percent of the Indian whisky market. With the new tariff structure in place, the association projects that share could double to six percent. Over five years, that expansion could contribute an additional £1 billion to the UK economy. Those are projections, not guarantees, but they reflect genuine optimism within the industry.
Major players are already positioning themselves to take advantage. Diageo, which owns some of the most recognizable Scotch brands in the world including Johnnie Walker and Talisker, has been open about what it expects the tariff reduction to mean in practical terms. The company's finance chief said on an earnings call that the reduction would likely enable a high single-digit decrease in consumer prices, and that a similar percentage increase in volumes would likely follow. Lower prices in a market as large as India can translate into a significant jump in sales very quickly.
Smaller operators are moving too. The Artisanal Spirits Company, which sells premium whiskies to its members, announced franchise deals in India shortly after the trade deal was signed. The company acknowledged that returns would be marginal at the start, but its chief executive, Andrew Dane, made clear that the strategy is built around the long-term picture. He described the opportunity in India as significant for the wider industry, not just for his own firm.
There is a reasonable case to be made that India's growing middle class, increasing disposable income, and longstanding cultural affinity for Scotch whisky create exactly the conditions where a tariff reduction can produce dramatic results. When you take a product with genuine aspirational appeal and suddenly make it more affordable to tens of millions of people who already know the brand, the math can get very interesting.
But the path forward is not without obstacles, and anyone expecting a simple march into a wide-open market is not reading the situation clearly.
Indian distillers have been busy. Over the past several years, domestic producers have been scaling up their own single malt production, which is the same premium category where Scotch holds its strongest position. In 2017, domestically produced single malts accounted for just fifteen percent of the Indian single malt market. By 2023, that figure had jumped to 53 percent. Indian brands like Amrut and Paul John have not just been winning over local consumers. They have been picking up awards internationally, building reputations that reach well beyond their home country.
Analysts at Commercial Spirits Intelligence, Duncan McFadzean and Martin Purvis, pointed out that Indian distilleries are already constructing what they called a premiumisation narrative, which is precisely the territory that Scotch has historically owned. That matters because premium whisky drinkers are not simply looking for a foreign label. They want a story, a sense of craft, and a reason to feel that what is in the glass is worth the price. Indian distillers are learning how to tell that story.
Indian producers also have a geographic advantage that Scotland can never replicate. The tropical climate in much of India dramatically accelerates the aging process. Depending on the region, one year of aging in an Indian warehouse is roughly equivalent to three years of aging in Scotland. That means Indian distilleries can bring aged product to market faster, turning inventory more quickly and responding to demand more nimbly. It is not a small edge.
Then there is the regulatory environment, which is genuinely complicated. India is not a single unified market with one set of rules. Each of the country's states operates its own excise system with its own licensing requirements and regulatory quirks. That means a company trying to sell across India is effectively navigating more than 28 different markets, each with its own hurdles. McFadzean and Purvis described this directly, noting that what looks like one country is really a patchwork of distinct regulatory environments.
Researchers who follow Indian trade policy also note that regulatory changes in India can happen quickly and without much warning. The rules around alcohol in particular can shift in ways that are difficult to anticipate, reflecting political considerations at the state level that have little to do with market forces. Building a long-term distribution strategy in that environment requires patience and a willingness to adapt constantly.
None of this makes India a bad bet for Scotch producers. The fundamentals are too strong to dismiss: the largest whisky market in the world by volume, a population that has strong cultural associations with Scotch, a rapidly growing segment of consumers with money to spend, and a trade deal that makes the product meaningfully more affordable. The industry is right to be excited.
But the transition is not going to be clean or easy. The United States is not disappearing as a market. Even with tariff pressures, Americans drink enormous quantities of Scotch and spend serious money doing it. Losing ground there while building ground in India is a balancing act that will require careful management of pricing, inventory, and marketing across very different cultural contexts.
What is clear is that the industry is at an inflection point. The comfortable reliance on American consumers cannot be taken for granted in the way it once was. Tariff pressures from Washington and the rise of domestic American craft spirits have been quietly reshaping the market for years. Trump's tariffs accelerated that shift in a way that caught some by surprise.
India represents something that the Scotch industry has not had for a while: genuine growth potential at scale. The question is whether distilleries can move quickly enough, adapt smartly enough, and hold their ground against capable local competition to capture a meaningful piece of it. The trade deal opened a door. What happens next depends on whether the industry walks through it with enough preparation to make it count.
