Exporting wines to India ... Some factors to consider

Mumbai,India

Many foreign wineries now want to rise with the Indian wine tide; a market which is growing by close to 20% y-o-y has caught global attention over the last few years.  France and Italy were go to nations a decade back and now Spain,Australia, Chile, New Zealand , South Africa , Argentina, California have  also made their presence felt.  Even Georgian wines have carved their way out on to the shelves of the Indian modern retail and are seeking audience. The discerning Indian consumer; a fractional percentage of the population is making an effort to wake up to the wine phenomenon by knowing his Cabs from the Pinots. The picture looks rosy and I am Gung-ho about it too in the long run.  I would however play a devil’s advocate when it comes to the imported wine scene in the country.  India imports around 500k cases of wine per year however those many cases comprise, conservatively speaking at least 1000 labels. If you do the math, it is 500 cases a label. If you are still optimistic, great! I am too.  Let us look at a few points to consider before you enter India:

Taxes and regulations:  By the time your wines reach India, they go to 8-10 times of your ex-cellar price in retail and sold at almost 3 times the retail price in institutions. Also every state in the country operates with its own set of taxes and regulations making it a hurdle in interstate supply chain both financially and in terms of logistics. Do you have a portfolio across price ranges!!  Lastly with FSSAI (Food safety and standards authority of India) being active, lot of customization with respect to labeling etc may be required, ingredients, additives etc on the label could become a mandate. The regulations here are still ambiguous; time will make things more clear.

Importer: Interstate regulations can be a roadblock for distribution impacting successful reach. A well entrenched importer with a good distribution network is essential.  With around 10-15 major distributors in the country, it becomes essential to go through their portfolio to confirm your interests do not clash with the brands they hold. Lastly Mumbai, Delhi, Goa and Bengaluru account for 80% of wine sales in the country; you know where to look now.

Storage: With hot and humid conditions in most parts of India it is essential to have air-conditioned wine warehouses. Ensure this part is covered or be happy to see your young whites being served deep gold and oxidized.  Also most of wine retail is not air-conditioned, a major concern in my opinion.

Marketing:  If your aim is to dump your first order, make money and get out then this goes not apply to you. For the rest, the importers have limited resources and a big portfolio of brands. Human tendency of getting the maximum out of least effort applies and the importers focus on brands which support them with marketing to push their brands in the trade.  It may be in the form of winemaker dinners, communication materials and memorabilia, stocks for sampling in private tastings and shows, sponsorships for winery tours for trade and media etc.  It is completely your call albeit in alliance with your importer, but do ensure you budget for it.  Remember alcohol advertisements are not allowed in the country so experiential marketing works best and your presence once in a while is solicited.

Credit:  In typical transactions, the time taken for the wine consignment to be shipped, received and released from the bond houses is around 40 days. Then the distribution in trade and their credit period especially with a product like wine is many a time 2 months and this leads to working capital lock-in period of at least 4 months for the importers. Are you willing to extend credit!!!

Lastly India habits are certainly evolving in terms of wine; knowledge and pricing are the crux to expand the wine market in the country (read more about it here). And for the seasoned wine drinkers; importers like Wine Park, Aspri, Brindco, Ixora, Fine Wines and more , Wine society of India  etc are keeping the audience engaged with some quality imports. 

Santé