India regulator told Diageo its 'matured in American oak' whisky claim was misleading

NEW DELHI – India's food safety watchdog told Diageo the label on one of its top-selling whiskies was misleading because most of the spirit inside had not been matured, a confidential government notice shows.

The July 20 notice from the Food Safety and Standards Authority of India, reviewed by Reuters, said the whisky's claim of being "matured in American oak casks" was false because the majority of the product was unaged grain neutral spirit.

"The complete alcohol is not matured in wood cask as claimed on the label, and therefore misleading the consumer," the FSSAI wrote. "Any claim regarding age of the spirit used in the product must refer to the youngest spirit used in the mix, not the oldest."

The regulator also said Diageo's mention of "Scotch" on the label was vague and did not inform the product's true characteristics, and ordered the company to specify which Scotch was used.

Diageo India, the local unit of the London-listed drinks giant, told Reuters it remains committed to the highest quality standards and is "actively engaging with FSSAI to address their queries on labelling."

The notice is separate from a broader crackdown this month that prompted the FSSAI to ban sales of some Diageo and Inbrew spirits in specific states. The regulator said on Sunday it had prohibited sales of Diageo's Royal Challenge Whisky made in Madhya Pradesh, along with Antiquity Blue Whisky from the same state, and Inbrew's Bagpiper Deluxe Whisky and Old Cask Deluxe XXX Rum, for using artificial flavors instead of proper ageing.

Domestically made Royal Challenge is one of Diageo's top sellers in India, moving over 4.5 million nine-liter cases annually. The company calls it a product of the "mid prestige price segment." A 375-milliliter bottle costs about 360 rupees ($3.80) in Uttar Pradesh.

The front label reads: "A rich blend of Indian grain spirit & imported scotches, matured in American oak casks." The back label lists "demineralised water, grain neutral spirit, Scotch" and notes the use of permitted natural coloring and added nature-identical whisky flavoring substances.

United Spirits told stock exchanges this week it anticipated no financial implications from the ban but was monitoring the matter closely.

The crackdown on India's $40 billion alcohol industry comes as the regulator increases scrutiny of liquor companies, energy drink makers like PepsiCo, and food producers over what it contends are incorrect labeling and weak compliance. The industry says it complies with the law.

Diageo's India business, which trades as United Spirits, carries an Alpha Score of 55 out of 100 on the AlphaScala platform, reflecting a moderate overall assessment within the consumer staples sector.