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Wine education crucial to growing exports to India

Primary Industries

As wine companies around the world ride high on a surge of demand from China, Australian wineries are beginning to move in on a new target, India.

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Exports of Australian wine to China grew in volume by 19 per cent and 63 per cent in value in the year to December 2017 to reach AU$848 million, strengthening Australia’s position as the second largest wine exporter to China behind France.

In the same period, volumes of Australian wine exported to India grew by 48 per cent to a modest 1.5 million litres with an increase in value of 51 per cent to $5.3 million. While this still places India outside the top 20 destinations for Australian wine, exports have more than doubled since 2012 and the trend looks set to continue.

Alcohol sales in India are growing at about 9 per cent a year with wine (12 per cent) outpacing beer (10 per cent) and spirits (7 per cent) albeit from a significantly lower base.

According to the inaugural India Wine Insider report released last year, the consumption of wine is relatively low in India with 2-3 million people drinking a total of 24 million litres of wine a year.

However, the report also found consumer interest in wine was growing significantly, particularly in major urban hubs such as Mumbai, Delhi, Goa, Bangalore and Pune.

The majority of wine consumed in India is locally produced and enjoys a distinct price advantage as imported wines are subject to a 150 per cent customs tariff on top of state taxes.

Wine Australia figures show that Australian wine exports to India rank No.1 in volume and No.2 for value behind France as two-thirds of French exports are Champagne. While there are only 23 Aussie wine companies exporting to India, some have multiple brands in the market.

About 15 of the Australian wine businesses exporting to India are from South Australia, which produces 80 per cent of Australia’s premium wine and 50 per cent of the country’s bottled wine.

This year the South Australian Wine Industry Association will lead education sessions in Mumbai and Delhi to increase wine knowledge and appreciation of Australian wine among Indian buyers, distributors, wine writers and sommeliers.

South Australian Wine Industry Association Chief Executive Brian Smedley said high taxes and complex regulations around labelling and the transportation of alcohol in India were inhibiting the growth of wine imports.

However, he said education had been identified as an important step to increase awareness of not just South Australian wine but of wine in general as a drink option in India.

“It is a maturing market – they know how to drink beer and spirits very well, wine is not necessarily a drink of choice but things are changing,” Smedley said.

“There is a need for wine education so our prime focus for at least 2018 is to use South Australian wine as a vehicle to provide some form of education about wine in India.

“Ultimately we want to see more sales of South Australian wine in that market but we need to take different steps that we would in other markets.”

South Australia is home to world-renowned regions such as Barossa Valley and McLaren Vale and big brands including Penfolds, Jacob’s Creek and Hardys.

One of the smaller companies making inroads in India is the McLaren Vale and Adelaide Hills based Wines by Geoff Hardy, which is enjoying spectacular success in China and was crowned Australian Exporter of the Year in November.

The company produces close to a million litres of wine a year, which it sells in Australia and in 14 countries across its four brands Pertaringa, K1, Hand Crafted by Geoff Hardy and GMH.

Wines by Geoff Hardy began exporting to India two years ago through distributor Berkmann and sends about 250 cases a year of mainly premium red wine with its Adelaide Hills Pinot Noir the biggest seller.

CEO Richard Dolan said there were similarities between the Indian market now and China a decade ago.

He said increases in disposable incomes and wine consumption were matched by an increasing thirst for wine knowledge.

“There is undoubted opportunity there over the next 5 to 10 years so for a family wine business like ours that’s in it for the long haul it makes sense to be in there as an early adopter and start doing some of the work now ahead of it taking off,” Dolan said.

“For the small to medium companies like ours it’s a very lean market initially but the belief is that the pay-off will come because people will remember who was in India at the very start before it became the big boom time.

“The regulatory environment is tougher than China but there are barriers to entry in every market you go into and it’s about not letting those barriers put you off.

“The challenge for our business is to diversify that export base but for us the immediate opportunity in China is far greater than in some of the more mature markets like the UK or US.”

Wines by Geoff Hardy is in its seventh consecutive year of double-digit export growth. About 85 per cent of its exports and 60 per cent of its total production is sold to China.

The company has lodged an expression of interest to be part of the Indian education sessions being planned for the second half of the year by the South Australian Wine Industry Association.

Dolan said while India was a vast country with a huge population, a large portion of imported wine was sold to high-end restaurants in five-star hotels mainly in the large cities.

“You’ve just got to be prepared to put a bit of shoe leather on the ground in terms of building some of those initial sommelier contacts and that’s the beauty of this education program – you can reach 15 of those in an afternoon in Delhi and another 15 in an afternoon in Mumbai,” he said.

“A lot of countries are really focused on the huge opportunity there is in China but there are lots of other markets where there is either a huge immediate opportunity or a huge future opportunity.

“Longer term, as regulations inevitably relax, the market frees up and supply and distribution chains improve I think we’ll see a wonderful opportunity in India not just for wine but for a range of South Australian products.

“We’ve got this fantastic clean, green part of the world where we grow top quality products and people are going to be prepared to pay a premium for that in regions like India.”

This is a Creative Commons story from The Lead South Australia, a news service providing stories about innovation in South Australia. Please feel free to use the story in any form of media. The story sources are linked in with the copy and all contacts are willing to talk further about the story.

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