Australian winemakers eye Indian export market

Australian Vintage Limited chief executive Craig Garvin believes India, with a population of more than 1.4 billion and growing middle and wealthy classes, will be a $290 million export market within five years.

The company is currently working with local partners and making contacts. Garvin will also fly there in February to meet with potential distribution partners with an eye to cracking the Indian market.

“From there I’d like to think that we’ve got some relationships established in the next six months of which we then start longer term [distribution efforts],” he told the Sydney Morning Herald.

Australian Vintage is one of an increasing number of Australian wine companies turning to India as a potential market to replace China, which imposed of heavy tariffs on Australian wine in late 2020. About 800 Australia wine exporters affected, with the Chinese market shrinking by about 97%. Before tariffs were imposed, China was the largest export market for Australian winemakers, with sales passing $1.2 billion a year.

Despite having the world’s third largest alcoholic beverage market, wine is a relatively new category in India. It currently accounts for just 1 per cent of alcohol sales in India, with spirits and beer dominating the market.

But India’s only qualified master of wine Sonal Holland (pictured main) said that was beginning to change.

“Wine is the new media symbol of sophistication, success, aspirational living, and celebration,” she told ABC News.

The biggest brand currently in India is Pernod Ricard’s Jacobs Creek, which entered the market 21 years ago.

“In the past year, we’ve actually grown at 118%,” said Helen Strachan.

Australian Vintage will focus on two cities initially – Mumbai and Delhi – which have populations of 21.3 million and 43.3 million respectively.

“You don’t need to conquer the whole of China or the whole of India … in Mumbai, in Delhi, there’s a million millionaires,” Garvin (above) said.

Tariffs reduced on Australian wine

As of 29 December 2022, tariffs on premium Australian wine exports to India are substantially reduced under the Australia-India Economic Cooperation and Trade Agreement (AI-ECTA).

Spotting opportunity, Australian exporters are working to cut a slice of the Indian wine market that is projected to grow by 8% per annum to 2024.

In 2021, Australia was India’s largest source of wine imports, with Australian exports increasing by 81% on the previous year.

Between September 2021 and September 2022, Australian wine producers exported 3.6 million litres of wine to India at a total value of $16.2 million. The market is dominated by still reds followed by still whites with shiraz blends, chardonnay and shiraz most popular, respectively.

India presents long-term opportunity

Fourth Wave Wine is one Australian exporter with strong ambitions for growth within the Asia region, and establishing a presence in India is key to those ambitions.

In 2022, the Newcastle-based company launched its Elephant in the Room pinot noir and chardonnay in India, trialling a smaller 375ml bottle to cater to lower consumption rates. The price was targeted at customers looking for an affordable alternative to high-end varieties.

Peter Ham, Asia Export Manager for Fourth Wave Wine, said Australia’s early position as India’s key exporter provided a unique opportunity to grow with the market.

“One or two Australian wine brands have paved the way for Australian wines in the Indian market, and there is an opportunity for innovative Australian brands to consolidate Australia’s position as the leading imported category in India,” said Ham.

“Wine consumption rates are still very low per capita, but given the size of the population, India certainly represents a good opportunity in the future as more consumers enter the wine category.”

AI-ECTA paves path for Australian wines in India

AI-ECTA provides an immediate cut to the 150% federal tariff on wine imports. Bottles priced between US$5 and US$15 will see tariffs reduced to 100% and 50% in 10 years. While bottles priced US$15 and over will see taxes reduced to 75% and 25% after 10 years.  

“India has some of the highest import tariffs on wine imports in the world,” said Ham. “Although the initial reductions being introduced will only benefit a very small volume of wines above a certain FOB price point, any reduction can only help Australian exports to India.”

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