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Delhi Wine Club

Posted: Monday, 21 June 2010 15:50

Blog: Five Ps and Payments from India

In the eagerness to deal with India, increasing number of producers are falling into the trap of giving liberal payment terms to importers, some of whom are either taking undue advantage while the others with their cavalier approach import at the risk of the producers many of whom burn their fingers and leave with bitter feelings about India.

A couple of years ago, I was invited as a speaker at a wine show called Fenavin, where importers were sponsored. I was there as a journalist even though I was reluctant to go as it was primarily for importers so that they could have B2B meetings with producers of their choice.

Principle of Five Ps

While speaking to the audience who wanted to do business with India,  I advised them to follow my principle of 5 Ps: Price, Passion for India, Partnership in Sales, Personal Appearance and Participation in wine shows. The details of the following article I wrote, are valid even today though there have been gradual improvements in the scenario:

The Sixth Sense

Summarizing my presentation, I cautioned the exporting producers with the sixth P which I had deliberated excluded when I coined my dictum: payments. I strongly advised them to secure their payments and be reasonably precautious.

I was criticized by many importers who felt that I implied that the Indian producers are unfair, unethical or poor paymasters. I had explained to them that this was a mere precautionary and good commercial advice which should be followed by any astute businessman and did not reflect on India’s image or style of working.

Besides, DelWine and I are both for growth and sale of wine in India through fair trade practices. Whether it is buying bulk wine, bottling it and selling it as Indian wine at ten times the costs or whether it is importing against clear credit for a period and then start ducking and hiding behind recession, government policies or other lame excuses, is unethical and needs to be exposed at a proper forum and time.

Implicit in my assumption is that the fair payment terms allow for the shipment, storage and receivable period, which is well over 4-5 months.

However, there are people charging for services and not providing them. One such case is under scrutiny and might be shared under our ‘Red Alerts’ policy. Another importer who claims to be a food importer is known to avoid payments, conveniently changing the name of his enterprise frequently and  is difficult to trace or be censured..

While it is difficult to prove a fraud has been committed and the Indian judicial system is unfortunately slower than a snail, it is important for the producer to check the ethics and the status of the importer- not an easy task. However, their embassies and commercial sections generally keep a tab and may be in a position to help. Indian Wine Academy offers the service of rating the importer at a nominal cost. But these are at best, indicators and not fool –proof methods.

Most countries have credit guarantee scheme run by their government, which gives 80-90% of the payment up-front but are not necessarily up-to-date with credibility of the importer. Unfortunately, wine is not like gold (liquid gold but metaphorically!) which can be imported only against cash or an L/C. Due to the excitement of getting a share of the golden treasure, producers throw caution to the wind and become an easy target - and pay for it  due to their cavalier attitude.

Interestingly, a few months before Fenavin, I had been a speaker at a BRIC conference at Pro-Wein in Germany  and a similar one at Vinoble last month in Jerez, Spain. The problem of payment is fairly acute in these countries as well.

Caution is the keyword

Barring one or two importers, and the otherwise joint ventures like Moet and Hennessey or Prestige Wines (JV with Torres), a majority of importers have defaulted with some producer or the other. If you as a producer would like to share your experience to warn others or as an importer, you feel I am talking in the air, please send your comments.

Meanwhile, India is a successful story- at least in the foreseeable future. Any transient stage of a new industry has its own similar problems. We, at DelWine would like to make the bumps less painful and dealing with India as much fun and enjoyable as a bottle of fine wine.

Subhash Arora



Gianander Dua Says:

I belive that if we really need to have a fair trade and bring back the image, then we must highlight these kind of people so that the trade is not spolit and the impage of india should be upheld. the next question will come in minds if they change the name of there companies then what , why dont we use the complete name images of the candidates to be spoted through this medium to save and all of us in the trade become winers.

Posted @ June 25, 2010 17:10


Abimalek M David Says:

It's sad but true that many many so called importers of wines spring up from nowhere and disappear also to nowhere after collecting the samples and after importing the wines without paying for it and at times even refusing to clear the wines from ports and airports across India.Many of the reputed importers also have fallen into this category which may be a sad reflection on us as a country!

Posted @ June 23, 2010 16:48


Subhash Arora Says:

Chris, you are right. But the problem is that most of the times there is a grey area. The importer creates a dispute-and I am well aware of the importers in other countries who have been shafting poor Indian textile exporters on some pretext or the other-for instance. That;s why I would like to see the producers who feel genuinely cheated to let us know how they were cheated, The importer can then respond as well. But most definitely, the ones who are openly defying the commercial norms and a couple of them are on our radar, would not be spared. Our effort is to have a clean dealing for the producers abroad. Subhash

Posted @ June 23, 2010 14:10


Chris Pohl Says:

Dear Subhash, it would be great if we could have a 'RED ALERT' system, whereby we importers know defaulters. Since we will be bringing in our own wines and have to work within the structure let us share this kind of information - for our own good and the benefit of others that don't default.

Posted @ June 23, 2010 14:00


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