The Hindu Business Line : Australia bullish on more wine exports to India

``We are incredibly optimistic about India. We see quite exciting prospects and good opportunities for Australian wine,'' said Mr David Dean, Marketing Manager, Australian Wine Export Council, over telephone from Adelaide.

Though Australia is bullish about the prospects, India is seen as a ``embryonic market' for wine exports, according to Mr Dean. ``China and (South) Korea are markets we believe which have potential in the medium to long term,'' he said.

However, what raises hopes about India are its growing middle class. ``The current middle class is embracing a different life style, is travelling abroad for education and job and is more comfortable abroad. Also, there is a generation of change from alchoholic drinks to health spirits like wine,'' Mr Dean said.

What was dampening was the tax structure, both at the Centre and State levels. ``The tax regime is proving to be a disincentive,'' he said. India imposes a 250 per cent customs duty on wine. ``On top, the State Governments too levy taxes. Also, the complicated licensing system of the Union and State Governments have to change,'' Mr Dean said.

At the Central level, the requirement is that all liquor and wine labels will have to be registered and renewed every 12 months at a fee of Rs 3,000. ``Considering that a portfolio of wine has be introduced by a new player, the investment for the distributors to just get the licences seems to be higher,'' he said.

At the State levels, there are States which prohibit consumption of liquor, while other have separate licensing for wholesale and retail sales. ``These restrictions are going to slow down the growth of liquor intake,'' he said.

Mr Dean said wine exports from Australia would witness a slower growth during the next three to four years. ``The growth is not likely to be quicker unless India changes its tax structure and licensing regime,'' he said.

Currently, Australian wine exports to India total A$ 800,000 (A$1=Rs 35.50), mainly through a few tie-ups. Australian companies such as Jacob's Creek and South Corp have entered into tie-ups for distribution of their wines. ``Quite a few wineries are interested in marketing either through the distributors or other global players in India,'' Mr Dean said.

With domestic liquor consumption rising 20 per cent annually, Australia sees the momentum building up for Indian liquor manufacturers. ``We expect the momentum to build up quickly with such a growth and lead to rise in wine consumption. Ultimately, we see wine imports by India making up 20 per cent of the total wine consumption,'' he said. ``We are optimistic on India as unlike as other emerging markets. We see Mumbai and Delhi as large markets for our wine,'' Mr Dean said.

The wine export council had held promotional events in January in India and feel the response to Australian wines has been good. ``We are also seeing more younger women becoming independent and are looking out for different experiences. We hope this would also help in growth of wine consumption,'' Mr Dean said. While the wine exporters are positive about the prospects, local Australian wine makers, especially small players, are finding the going difficult.

``One of the problems we face are the regulations of the local councils. And no explanation is given for these restrictions,'' Mr John Large of Centenial Vineyards, Bowral in New South Wales, said.

With restrictions beginning from space between manufacturing units and storages to picking up of grapes, the small players are facing a difficult time, according to Mr Large.

But innovative marketing and setting up of their own sales points are helping them to survive.

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