Fine wine trade eyes up India

With a growing taste for wine, India’s elite offers a tantalising prospect for producers in the West, yet tax remains a huge issue.

Jeffrey Davies with his other passion: Harley-Davidson“I’m convinced that as Indian consumers learn more about wine, starting with their

own indigenous production, they will become a significant wine market,” said the Bordeaux-based American négociant, Jeffrey Davies who runs Signature Selections. With active plans to expand into India, he explained: “We’re sifting through the current wine & spirit importers and distributors to figure out who’d be the best fit for our range of wines.”

He believes others in Bordeaux feel the same way. “With the tremendous slowdown in China, and a certain slowdown in America, they’re looking to other markets within the BRICs. Russia’s having embargo troubles, so India and Brazil are becoming areas of interest.”

But the biggest barrier to India remains tax. “The current duty situation is a limiting factor, and I don’t think it’s going to change any time soon,” Davies conceded. “We ran some cost analysis and found that a wine that left Bordeaux at say €5 ended up on a retail shelf in India at €25.”

Mark Walford, co-founder of wine importers Richards Walford that was bought by Berry Bros. & Rudd in 2012, knows the Indian market well. “The potential is enormous,” he said. “We’ve done tastings for the Delhi wine club and you get a very sophisticated audience. There’s a new, affluent generation that have been educated abroad at the likes of Oxford, Yale and M.I.T who’ve picked up the habit of drinking wine. Yes it’s an elite, but like China it’s a very big elite indeed.”

However, despite annual trips there for 6-7 years, Walford claimed he “never managed to sell more than a few cases in India itself.” He blamed: “the absolutely punitive taxation. Every State is different, but you can end up paying 280% or more which makes anything but the cheapest wines absurdly expensive.”

According to Walford and Davies, most foreign wine is sold through a quota system by the country’s 5 star hotels to tourists. “At one point the Imperial in Delhi had a French manager who was selling wine below London and Paris prices, but sadly his successor wasn’t interested,” said Walford. There are also the embassies, particularly from poorer countries, which use their duty-free status to operate as unofficial off-licenses.