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Metro Expansion in India good for Wine Industry

Posted: Friday, 11 February 2011 17:14

Metro Expansion in India good for Wine Industry

The announcement by Germany’s biggest retailer Metro on Wednesday that it plans to open as many as 50 wholesale stores in India during the next five years should bring a note of 'cheers' to the Indian wine industry as it would definitely provide more opportunity to showcase wines and increase availability to the wine drinker in some ways, opines Subhash Arora.

India, along with China and Russia, will be one of the top three markets for the German retailer in the coming years, Eckhard Cordes, CEO of Metro, said in an interview in New Delhi on Wednesday, while on a two-day visit.

Metro debuted in Bangalore in 2003 in a bid to reduce dependence on the home market, where sales have stagnated in the new millennium. It has six wholesale stores in India since. Current rules prohibit foreign companies from opening multi-brand retail stores, although there have been louder noises of Retail in FDI being allowed eventually.

Metro was instrumental in promoting wine sales through easier availability through the authorized retailers, corporates and whosoever was allowed according to the law including restaurants and hotels. Today Bangalore can claim to have leapfrogged to the current number 3 city in terms of wine consumption where Metro has made a positive contribution. If the same policy is applied to the other cities-where wine is allowed through such outlets, it would be a big boost for the wine industry and would definitely help in increased wine consumption.

Incidentally, wholesale stores can sell their goods not only to other retailers like the mom and pop kirana stores but also to other establishments such as hotels, restaurants and caterers which are strong marketing channels for wine consumption.

Interestingly, there is more expansion in store. “Our target of 50 stores by 2015 won’t be the end, we definitely see a potential of three-digit number for our stores here,” Cordes reportedly said without specifying the actual target or the time frame. “I think the market potential for cash-and-carry business in India, if you do it right, is huge.”

Cordes admitted that the German retailer has been “very slow” in expanding stores in India. “The reason is that in the first years we have not been able to put in a successful (model) due to several reasons,” he said. “Then the financial crisis came and we scaled down our investments globally.”

Not every one of the 50 wholesale outlets may ever sell wine but it offers a silver lining in the world of wine retail, nevertheless.

Subhash Arora


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