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India emerging, but slowly

Katherine Lindh

Prospects for Australian wine and technology export to India was one of the main issues raised at a recent wine cluster meeting in McLaren Vale, hosted by the Onkaparinga Exporters’ Club.

Bob Shepard, general manager of The Exporters Club in Australia, was one of the key speakers at the meeting. As managing director for Shepard International Pty Ltd, a leading international marketing and strategic consulting business, Shepard’s experiences with the Indian export market are diverse.

Shepard visited India in March as part of a Trade Mission led by the South Australian Premier, Mike Rann, and speaking to the Onkaparinga Exporters’ Club gathering, he said there are good prospects for trade with India.

“The Indian market offers great potential for Australian wineries, and anyone who is not watching developments closely, is not serious about exporting wine,” Shepard said. “But the immediate opportunities in India for wineries probably lie in the sale of ‘know how’.”

“While the demand for export wine to India is steady, wine consumption is growing rapidly,” Shepard said. “The country consumes around a billion litres of liquor annually, including beer, sprits and wine.”

Knowledge about wine, perception and drinking concepts are changing, which brings with it a new ‘wine culture’ virtually nonexistent in the past. India as a society is fast becoming culturally diverse and more affluent.

“There is a growing network of individuals with a lot of disposable income,” Shepard said. “Wine consumption in India stood at six million litres in 2006 and in the last four years, has risen over four-fold according to UK-based International Wine and Spirit Record.

“While these figures reflect very solid recent growth and predict strong future growth, the base is very low. For immediate export sales growth, strategic thinking would probably dictate that there are markets other than India which deserve more attention.

“Only a few days ago I looked through the liquor section of the duty-free shop at Delhi Airport. In terms of wine, it was dominated by French, Italian and USA products and a few New Zealand wines but not one from Australia. The quality of those on display were not from the high end.

“What comes into the country will most likely be governed by which overseas wine conglomerates companies such as Indage invest in and form partnerships with. VinExpo Chairman Dominique Heriard Dubreuil recently told media that most of the wine consumed in the country is locally produced, accounting for 75% of the total volume. Other sources put the percentage as high as 85–90%,” Shepard said.

According to an ABARE Report, Australian wine industry’s strategic global directions and Australian outlook to 2010–2011, Australia’s total wine exports are forecast to rise to 1.3 billion litres in 2010–11, with a value of $4.3 billion (O’Donnell 2006).

While there are niche opportunities in India through premium wine sales to a growing five-star hotel and tourist market, the present growth is occurring in bulk wine sales. The Australian Wine and Brandy Corporation Wine Export Approval Report for December 2007 indicates that the volume of bulk white wine exports to India increased by 325% (408,000 tonnes), compared with December 2006. In value terms the result was a 285.3% increase over the same period with the bulk whites value reaching $402,240.

While these trends are positive, according to Shepard, larger companies are the ones benefiting from the Indian market.

“The Indian market today is probably more a market for large stable companies, rather than a market for smaller exporters,” he said.

Shepard said opportunities exist for Australian vignerons to expand winemaking facilities, work in vineyards, and teach winemaking techniques in India.

“The opportunities for international relations with India are growing, with prospects for the sale of winemaking technologies, grapegrowing, oenology and wine appreciation techniques,” he said.

“There is also a niche market for imported wine to clubs, fivestar hotels and duty-free shops, which attract higher income groups and tourists,” Shepard said. “In addition, supermarket chains in India are now receiving direct sales to consumers.”

While India remains a market that is important to watch, a punishing import tax regime on wine continues to present a major challenge for producers who might wish to expand their bottled wine sales into India.

This article first appeared in the May issue of Australian & New Zealand Grapegrower & Winemaker — the best-value wine industry trade publication available and the biggest-selling magazine in Australasia. Do you subscribe? Get your news first, home delivered. www.winebiz.com.au

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