The report states that wine exports from Australia to India have gone up four times to 1.4 million liters from 360,000 liters just a year ago, suggesting that Indians have started taking to Australian wines like mother's milk.
It quotes Ali Hogarth, regional manager for emerging markets, Australian Wine and Brandy Corp saying, "Over the last 12 months to the end of October 2007, bottled wine exports have increased by more than 50 per cent and total wine exports (to India) have quadrupled to more than 1.4 million liters.'
The Indian government's withdrawal of additional customs duty on imported wine this July also helped, he is quoted as saying
So what is so puzzling in these figures? Well, if one converts the liter values to the more palatable and comparable, 12- bottle, 9-liter cases, this implies that the imports have increased from 40,000 cases last year to 155,000 cases on a year-to year basis!
Australian Wine and Brandy Corporation is quite meticulous in reporting its figures. We carry many of their announcements to keep our readers and the industry appraised of the wine scene in Australia. So their figures cannot be challenged.
But does it mean that the Indian market is flooded with Australian wines? I have not seen it in the market place. Though Jacobs Creek is very aggressive in the market, their estimates of import into India last year were 12,000 cases at best. At the generally agreed 18% market share in the 160,000 case markets last year (200,000 expected this year), their share would have been about 30,000 cases. A 50% annual growth, as reported wont be out of place, though. In fact, it would indicate an optimistic trend w\for imported wines, in general
Mr. Hogarth seems to be happy with the ACD removal, but he is perhaps not aware of the 150% excise duty that was levied in Maharashtra a week after their removal (now increased to 200%). I am sure he is aware that the basic duties were increased to 150% from 100%, making premium wines slightly more expensive even outside Maharashtra.
Assuming that only cheap, bulk Australian wines are exported to India and assuming that the optimistic imports are 40,000 cases, where are the balance 115,000 cases of the total 155,000 cases going?
The answer could be in our assumption-that we are importing cheap, bulk wines. These are perhaps being imported by the Indian producers and mixed with the local wines and palmed of to the Indian customers. It could also be that bulk wines are being bottled. Nothing wrong with that- except that it is not the farmer that gets the benefit, it is not the consumer that gets it either; it is the producers who are crying hoarse, pleading to be protected against the onslaught of cheap imports are the big winners.
This analysis is based not on hunch alone. The report adds, 'Currently, Australian wine exports to India total $800,000 (Rs 28 million), mainly through tie-ups. Australian companies such as Jacob's Creek and South Corp have also entered into distribution tie-ups for their wines.' A simple math calculation shows that the average cost as reported indicates the cost per liter of Rs.28!(Here I must say, there is something wrong in the report-editor)
This can only indicate two things-either the importers are getting the wines at less than $1 a bottle and raking it in or some producers are importing the equivalent of 115-120,000 cases of wine in bulk (about 20% of Indian wines) and quietly making huge profits while crying on the shoulders of powerful politicians and the bureaucrats in Maharashtra and Delhi.
I would love to be educated more on this issue. And if what the news report says in the beginning, 'as the festive season kicks in, even hardcore whisky drinkers in India are going for a glass of Australian red' is correct, surely the 155,000 cases story would have a nice mouth-feel, with a nice and long after-taste.
December 1, 2007