India's FSSAI bans Old Monk, Diageo brands over fake rum and whisky flavours. Diageo challenges order in court. DEO Alpha Score 50.
Alpha Score of 51 reflects moderate overall profile with moderate momentum, moderate value, weak quality, moderate sentiment.
India's food safety regulator has banned the sale of three variants of Old Monk, alongside whiskies from Diageo India's United Spirits and other brands, after laboratory tests found they were using artificial flavours to mimic the taste of aged spirits.
The Food Safety and Standards Authority of India (FSSAI) said in a Sunday press release that manufacturers were adding rum flavour to rum and whisky flavour to whisky, a practice it called “deceptive” and “sub-standard.” The regulator added that such products should be sold as “flavoured/premix rum” rather than standard rum or whisky.
“There is no internationally recognized manufacturing practice whereby rum flavour is added to rum or whisky flavour is added to whisky,” the FSSAI said.
The ban covers three Old Monk variants – The Legend, Gold Reserve, and XXX Matured Rum – made by Mohan Rocky Springwater at its Khopoli unit. Also targeted are McDowell's No. 1 Rum from United Spirits (a Diageo India subsidiary), Bagpiper Deluxe Whisky and Old Cask deluxe XXX Rum from Inbrew Beverages, Central Province Whisky and McDowell's No. 1 Celebration matured XXX Rum from Associated Alcohol & Breweries, and Antiquity Blue Whisky and Royal Challenge Whisky from United Spirits' Madhya Pradesh unit.
Diageo India has moved the Bombay High Court against the FSSAI order, arguing the labelling practices are consistent with long-standing industry norms in India. The company said there was no legal hurdle in the declarations on its products.
The FSSAI also took issue with Old Monk's label claim that its rum is “7 years blended.” According to the regulator, the aged spirit in the product is less than 5% of the total, with the rest being neutral (unaged) alcohol. The FSSAI noted that the age claim must be based on the youngest spirit in the blend under its 2018 regulations.
“This is also a clear violation of existing regulations, as the age claim of the spirit should be from the youngest of spirit in the blend,” the FSSAI said.
The regulator clarified that adding natural flavours like coffee or vanilla is permissible. But adding rum flavour to rum, it said, is akin to “adding tea flavour to tea and coffee flavour to coffee.”
The parent company, Diageo plc (NYSE: DEO), carries an Alpha Score of 50 out of 100, classified as Mixed in the Consumer Staples sector. The ban adds reputational and regulatory risk for Diageo India, which is the country's largest alcohol company by market share. The affected brands – McDowell's, Antiquity Blue, and Royal Challenge – are among its top sellers.
Beyond the immediate ban, the FSSAI has issued notices to six other manufacturers in Maharashtra and has conducted inspections at Mandexi Distilleries & Breweries in Goa. Further action is expected.
The Bombay High Court has not yet scheduled a hearing date for Diageo's petition. The case will test whether the regulator's interpretation of flavouring rules holds up against a challenge from one of the world's largest spirits makers.
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