Many wine producers cry foul when they know of their competitors importing bulk wines and marketing it as Indian wine and making windfall profits, at the same time making selling tougher for them.

Fingers are often pointed towards companies like Indage who own a winery or two in Australia. Last year, the figures released by Australian Wine and Brandy Corporation, the government body releasing the export figures had claimed that equivalent of 150,000 cases of Australian wine had landed on the Indian shores. This included about 110,000 liters of bulk wine which was branded and sold some place or the other in India.

The question is what is wrong with this, if Indage or any other company does it? The bulk wine is very cheap in Australia, Chile or South Africa-bargains can be also found from Spain and Italy. Anyone licensed to produce wine can import it, pay the duties and sell it.

The same wine bottled in the country of origin, like Golden Mile will be BIO (bottled in origin) and will be taxed as an imported wine. If however, the producer chooses to import it in bulk and bottle in his own brand, he pays import duty at 150%, bottles it and sells it as Indian wine.

As an example Vinbros in Pondicherry is bottling and packaging a Grenache based red-Globus Wine from South of France along with other labels.

Under the Indian laws (there are practically none!) it is legal to do so, until the National Wine Board comes up and takes cognizance of the issue. Chinese industry reportedly imports 90% bulk wine and sells it as Chinese wines as the laws so permit. Italian and French table wines are full of cheap imported wine.

Is it immoral or unethical? There will be diversified opinions on it. Is it commercially viable? Must be, else why would the producers not doing so raise their hands in frustration?

With the cost of grapes going sky high, this may be one way of prices under check.

What do you think about it?

Subhash Arora
January 16, 2009

Comments:

# John Says:
this is cool
Posted @ January 22, 2009 09:16

# Alok Chandra Says:
One thing everyone (except Hr Ahuja) seems to have totally missed is the role played by Cusotms Duty in India, which is 150% of the CIF value of both bottled and bulk wines. Unless a company is indulging in some really fancy (and totally illegal) footwork and avoiding paying any customs duties altogether, it's landed cost of bulk Aussie wine would be about Rs 100/litre (assuming CIF A$ 1.00/BL)- which is about what people here are paying for domestic bulk wines. And people would only go for that if the quality of the imported drop was much superior. This also gives rise to another question: why should wine in India be 3 times more expensive than the stuff in Australia? Is this not the same mentality that gave us 50 years of the Ambassador car?
Posted @ January 20, 2009 16:20

# Subhash Arora Says:
You are obviously not the only one, my friend! Satyam, Shivam,Sundaram.
Posted @ January 20, 2009 14:40

# Wine Fool Says:
So my lingering suspicion on all those bottles originating from the Indian wineries with labels of Cabernet SAuvignon, Shiraz, Chenin Blanc, Pinot Noir and Chardonnay etc etc are obviously not all grapes grown in India. If it were so we would have very large acreages of the grapes under cultivation and bearing fruit to account for the amount of bottled produce available for such wine grapes. I have tried asking for these grapes from growers in Nashik area but have not been able to procure even 5 kgs. I have no idea where the truth lies. CAre to enlighten us ?
Posted @ January 20, 2009 14:30

# Subhash Arora Says:
Gitesh is right. As more and more people understand about the footprints and big consuming nations like UK take a substantive lead, buying in bulk and bottling at destination will perhaps become more of a norm. Countries like Australia, Spain, Chile, Argentina, France and Italy would take the lead based on today’s performance I believe it is ..unless?????? that people seem to be concerned about. Thanks.
Posted @ January 19, 2009 16:50

# Gitesh Agarwal Says:
Hi..E'where it says, the Indian Wine market is growing.. and the laws are ensuring that it is an 'arrested development'. Australia makes some of the finest new world wines.. Importing in Bulk, reducing carbon footprint, and bottling locally is a great way to present consumers with Good & affordable liquid.. I would wonder what would someone bottle Aussie wine and call it Indian.. unless ??????
Posted @ January 19, 2009 16:00

# Subhash Arora Says:
I think you have hit the nail on the head, Ravi. People expect miracles from the Indian Industry. I am sure, given the time it will come up and possibly Indian wines may become cheaper than the equivalent Aussie wines in future with proper collaborations, expertise and other necessary inputs. The issue that concerns a consumer is what product he is getting and what he is being made to pay for. There will always be quality and price gradients. One can import and bottle bulk wine in entirety and it may still be the cheap or premium quality wine. But the honest declaration either through the governmental control or an autonomous body should be in place.
Posted @ January 19, 2009 12:42

# Ravi Gurnani Says:
There is no harm in importing a cheaper product and selling it locally in order to overcome high domestic costs. However in wine, one of the differential characteristics of a product is its source of origin. So passing off cheap Aussie wine as Indian not only amounts to fraud but also acts as a killer for other domestic wines. It is cheaper to produce a better wine in Australia than in India. So the cheaper and sometimes better wine will give the importer an advantage by claiming that they are making 'better Indian' wine. And it will be impossible to match the quality at that price with Indian made wine. Not that good wine cannot be made here. It certainly can but not cheaper than Australia.
Posted @ January 19, 2009 12:35

# Mark Cohen Says:
Different countires have different rules, not all to save money on Duty. Australian wine is shipped with 100s million litres exported every year. Some to intercompany transfer, other to International bottlers, as shipping glass is expensive, 9000 litres by container against 24,000 litres in bulk,so the carbon footprint has its role here too. Calling the wine Local when its imported is in my view wrong, although I know cosumers would prefer to drinkg Australian wine than chinese or Indian, not because the local wine is not good, but the imported wine conjures up feelings of romance, travel and adventure. Australian wine cannot be exported unless it is sold to accredited Bulk Bottlers to protect its integrity, however if the claim to Australia is not made, the rules are somewhat relaxed. Australia is sitting on record surpluses rioght now and we have bulk wines from .50c A$ p litre,so sales are needed to clear surpluses. From my view,we are happy it get sold, as long as its not blended into something that is undrinkable, or gives us a bad name. cheers from OZ in 09
Posted @ January 19, 2009 12:00

# Mark Gishen Says:
Hi Subhash I can only agree with most of the comments so far. Practices that 'pass off' wine of one origin as another are not likely to be of benefit to anyone in the longer term. In a market economy some regulation of declaration of origin is likely to improve consumer confidence. Mark Gishen, Gishen Consulting (Adelaide, Australia)
Posted @ January 19, 2009 11:29

# Woodie Says:
Where it should not be labelled as Indian wine if made anywhere else I think it is a good idea to transport bulk wine from the point of view of carbon emissions. Bottles are too heavy to tranports and add to the carbon footprint of wine. The UK is using this strategy to make wine greener. So why not India.
Posted @ January 19, 2009 08:05

# Nish Kotecha Says:
India already has many barriers to entry for the wine world, if this method allows some imported wines to be brought into India then great, you have two benefits: 1. People can buy cost effective "imported" wines 2. There is the added value of packing in India creating jobs and prosperity. Remember it's not just the packer making money but glass, label, closure manufacturers too! Sit back and enjoy a glass of wine in this torrid economic climate!
Posted @ January 17, 2009 11:45

# Hans Raj Ahuja Says:
Mr Arora, A very pertinent question or rather a few of them. Is it profitable, may be yes, if no custom duty is paid by importing the bulk wine against advance licence and the export obligations are met by exporting equivalent quantity of wine. Ethical: Definitely no Impact on Exchequer: Very high because by selling it as domestic wine, the producer gets exemption from excise duty in Maharashtra. I suggest you initiate another debate on Govt policy of protection through tax differential between imported and Indian wine, its impact on quality of Indian wine and depriving the consumer of a rightful choice.
Posted @ January 17, 2009 11:40

# Avtar Singh Sandhu Says:
I would term branding an imported wine as Indian Wine a 'FRAUD. We in India find ingeneous ways to circumwent the law. This is also true of most 'IMFL'. Indian Made Foreign Liquor, the terminolgy makes zip sense....some how we are enamoured with something 'Phoren'. Nearly all IMFL is molases based alcohol and is a RUM. This has been widely discussed. Adding Whiskey, Gin or Vodka Flavor, does not convert a 'Donkey' into a 'Horse'. I hope your article recives wide publicity.
Posted @ January 17, 2009 11:30

# dkraju Says:
Take out Wine from liquor list and apply similar taxes as on FMCG,then either imported in bulk and bottled or bottled in origin or made with indigenous production of Grapes, all will have more or less the same level playing field, one learning from the other in being very competitive. dkraju
Posted @ January 17, 2009 10:16

# Tony Devitt Says:
Hi Subhash, I tried to email you recently and I don't know whether it got through. We judged together in South Africa recently for South African airways. I am trying to contact you to discuss a couple of matters. In response to your question I believe it is totally unethical to claim something that is not yours, and particularly wine which is supposedly a product of fashion (at least good wine is) and can lose a reputation quickly if something underhand is done. Life is too short to drink bad (cheap) wine and I don't understand why people persist in doing it. Education is badly needed.
Posted @ January 17, 2009 08:59

# Alok Chandra Says:
Dear Subhash I think that using imported wine to IMPROVE a domestic blend is ok, but selling an imported wine without declaring it as such is unethical. A common convention is that blending upto 25% of the total is acceptable - this is what I am told is done by Grover for La Reserve. However, if Indage is trying to pass off Aussie wine as Indian, this surely contravenes some rule or law, and the autorities should take note (and take action). In the end, however, I think that the Indian industry must regulate itself rather than seek government intervention - as it is, we suffer from an overdose of taxes and rules that are imposed with little understanding or sensitivity of what is required to allow the wine industry to grow and start to make a decent return on investments.
Posted @ January 16, 2009 17:00

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