Whisky business

Scotland exports it, India consumes it, but East and West are having a hard time drinking together.

Published July 10, 2007 5:34PM (EDT)

The British Raj brought whisky to India, along with empire. An Englishman, Edward Dyer, founded the first whiskey distillery in India, high up in the Himalayas in 1855, although he was forced to adapt to local circumstances and use molasses as the chief feedstock for his brew, instead of barley. In 1915, a Scotsman, Thomas Leishman, consolidated four local breweries into a conglomerate, United Breweries, that eventually became one of India's largest spirits companies.

Today, Indian consumes more whisky than any other country, and United Breweries is owned by an Indian tycoon, Vijay Mallya. In May, Mallya flipped the reverse-imperialism switch, and purchased one of Scotland's largest breweries, Whyte & MacKay.

Here's the best part. Scotland may be the largest exporter of whisky in the world and India the largest consumer, but the flow of Scotch whisky to India is constrained by huge (550 percent!) tariffs in India, and the flow of Indian whisky to the European Union is forbidden because the E.U.'s definition of "whisky" does not include liquor made from molasses.

So both sides are accusing each other of being protectionist.

The World Trade Organization has initiated an investigation into India's whisky tariffs, and there is talk that the trade restrictions may be lifted in the next year, particularly now that Mallya, who happens to be a Member of the Indian Parliament, owns a Scottish brewery conglomerate. The E.U. is likely to be stickier on the definition of "whisky," however. Such definitions, which also include geographical regions, along with specific ingredients, are considered important brand attributes in the competitive markets of a globalized world.

How the World Works would never be able to tell, by tasting, whether a whisky was made from molasses or barley. But we like what Neelakanta R. Jagdale, a managing director at Amrut Distilleries Ltd of Bangalore, India, said when questioned about the controversy.

Cross-culture insemination is the fundamental theme of globalization. This means whisky as produced in different ways in different countries should be freely competing against each other.

Cross-culture insemination! You can't stop it. You can't even hope to contain it.

Time Magazine has a good wrap up of the larger story. Trade Diversion examines the trade/protection issue more closely.

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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