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Europe
Spanish wine-makers brace to enter Indian market
May 13, 2007 - 11:40:58 AM

Ciudad Real -, May 13 - Wine-makers of La Mancha, made famous by immortal Spanish character Don Quixote and his crony Sancho Panza, are bracing to meet a new challenge: to enter the Indian market already awash with a variety of old and new wines of international fame.

Many of the world's major wine makers see in India a large prospective market and want a share of it. Spain is relatively a late entrant, and wants to make up with an aggressive sales pitch, promising 'much more value for money than some of the more famous French and Italian counterparts.'

There is no Quixotic tilting at the windmills, as it were. The approach is direct. A dozen Indian wine importers were for the first time invited to the Spanish National Wine Fair - FENAVIN 2007 - last week.

Although many other regions grow and make wine in Spain, FENAVIN's fourth edition was not only exclusively Spanish, it was also largely a showcase of wines from La Mancha.

The fair's venue, Ciudad Real, 188 km south of Madrid, falls very much within the picturesque region, where people live with their wine heritage that goes back to several centuries.

It is the region 'where pleasures are born.' And that lends the theme to a special cultural show put up for the delegates to the fair at Almagro, the medieval village that falls on what is called 'Don Quixote Route.'

Literally, a thousand wineries attracted scores of entrepreneurs from across the world. While the results of the Indian foray would take a while to come, a small beginning will be made next month.

The state-run India Tourism Development Corporation - will begin operating its duty free shop at Sahar Airport, Mumbai, in collaboration with Spanish firm Aldeasa. More airports are to be covered under this JV for which clearance is being awaited.

While neither side would want any kind of monopoly, the Spanish partner is bound to provide Spanish wines more than just a toe-hold in the Indian market, said S D Rawat, ITDCs representative at FENAVIN.

The number would still be small, considering that Spanish wine and Indian market have mutually figured quite low so far. In fact, Spain exported only 3,000 cases during 2006, which is nowhere near what France, Australia, the US and even a newcomer like Chile exported, as per the report of IWSR, a Scottish firm that keeps a tab on wine trade worldwide.

What marks a change in the Indian wine scenes is the 65 per cent growth in imports last year that stood at 168,000 cases. Estimates for the current year are for over 200,000 cases and could touch the 300,000-mark if the government withdraws or reduces the 75 pr cent Overriding Duty - being currently levied, says B K Pardal, president of the Indian firm, World Wines and Spirits.

Imported wine is subjected to cent per cent duty to protect the growing Indian wine industry. A proposal to withdraw the OD is awaiting a cabinet clearance.

The matter has gained urgency following pressures from the US and the European Union -, who have signalled readiness to impose similar taxes on Indian wine exports. The matter is now before the WTO for arbitration.

The government would also need to factor the powers that rest with the states to impose local taxes, something they have tended to do, treating alcoholic beverages as a luxury item.

While India regularly participates in Vinexpo, at Bordueax, France, Vinitaly at Verona, Italy, Prowein, Dusselddorf, Germany and the London Wine Fair in the UK, the participation in FENAVIN's fourth edition could help bring India brands like 'Torres' and Rioja' that would be priced much lower than their French, Italian or German equivalents.

Like others, Spain too is awaiting a positive signal from India, participants at Fenavin said. Spain has an image of being able to supply cheap wines in the UK, which is an advantage, said Robert Joseph, noted British author and Chief Editor of Wine Business International.

Pricing its wines reasonably is essential for Spain to improve its presence in India, says Subhash Arora of the Delhi Wine Club. The government on its part would need to slash the duties. Since Indian-made wine is available for Rs 400, an average Indian consumer is ready to spend between Rs 550 and Rs 750 for a foreign brand, but not much more.

The arrival of more imported wine, however, is no threat to the burgeoning Indian wine industry, growing at 35 per cent rate annually that has already gone in for collaborations.

'It is an overcrowded market now. But everyone is pitching for the future in wooing the middle class with dispensable incomes, with the Indian economy recording a nine percent-plus growth,' Arora says.



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