Australian wines are finding their way onto drink orders at Indian bars, restaurants and social gatherings.
Despite having the world’s third largest alcoholic beverage market, wine is a relatively new category in India.
Over the past two decades India’s palate for wine has begun to grow. Changing demographics and attitudes toward alcohol has led to an increase in wine consumption.
Spotting opportunity, Australian exporters are working to cut a slice of the Indian wine market that is projected to grow by 8% per annum to 2024.
In 2021, Australia was India’s largest source of wine imports, with Australian exports increasing by 81 per cent on the previous year.
Between September 2021 and September 2022, Australian wine producers exported 3.6 million litres of wine to India at a total value of $16.2 million.
The market is dominated by still reds followed by still whites with shiraz blends, chardonnay and shiraz most popular, respectively.
Fourth Wave Wine is one Australian exporter with strong ambitions for growth within the Asia region, and establishing a presence in India is key to those ambitions.
In 2022, the Newcastle-based company launched its Elephant in the Room pinot noir and chardonnay in India, trialling a smaller 375ml bottle to cater to lower consumption rates. The price was targeted at customers looking for an affordable alternative to high-end varieties.
Peter Ham, Asia Export Manager for Fourth Wave Wine, says Australia’s early position as India’s key exporter provides a unique opportunity to grow with the market.
‘One or two Australian wine brands have paved the way for Australian wines in the Indian market, and there is an opportunity for innovative Australian brands to consolidate Australia’s position as the leading imported category in India,’ says Ham.
‘Wine consumption rates are still very low per capita, but given the size of the population, India certainly represents a good opportunity in the future as more consumers enter the wine category.’
Ham says India is a long-term opportunity that requires a well thought out market-entry plan, targeting the right regions with the right brands, at the right price.
The key to popping the cork on exports is to look beyond the challenges that India presents and take a long term, patient approach, says Ham.
‘India is a highly regulated and complicated market, with similarities to the US in terms of complexity across the various states,’ he says.
‘India is also a very value-conscious market, driven in part by the extremely high duties and taxes in each state making the prices of wine very high relative to other categories like local beers and spirits,’ he adds.
Virtual seminars, hosted by Austrade in late 2021, helped Ham and his team better understand the market and identify opportunities. Engaging with Austrade’s wine experts in India, Ham also got a grounding of export basics across the country, including pricing policy, credit terms, bottle format, label requirements and cultural nuances which he advises were critical to the sealing the deal with his current partner.
In September 2022, Ham joined an Australia-India Business Exchange (AIBX) Mission to India. During the weeklong business trip, Ham along with other representatives from Australia’s wine industry met with key players in the Indian market in New Delhi, Mumbai and Bangalore.
‘It's critical that suppliers have an idea of their ambitions for a market before getting involved in something like the AIBX Mission,’ he says. ‘The AIBX Mission was then extremely helpful for Fourth Wave to validate and reshape our market entry plans.
‘It gave us a comprehensive understanding of the key wine markets within India and connected us with all levels of trade customers as part of the trip.
‘We had some excellent business matching events and went on some insightful market visits in the three key cities. Importantly, Austrade support has continued beyond the Mission, as Fourth Wave look to capitalise on the relationships formed during event,’ he says.
As of 29 December 2022, tariffs on premium Australian wine exports to India are substantially reduced under the Australia-India Economic Cooperation and Trade Agreement (AI-ECTA).
This paves the way for Indian consumers to enjoy a greater variety of Australian wine at more attractive prices.
AI-ECTA provides an immediate cut to the 150% federal tariff on wine imports. Bottles priced between US$5 and US$15 will see tariffs reduced to 100% and 50% in 10 years. While bottles priced US$15 and over will see taxes reduced to 75% and 25% after 10 years.
‘India has some of the highest import tariffs on wine imports in the world. Although the initial reductions being introduced will only benefit a very small volume of wines above a certain FOB price point, any reduction can only help Australian exports to India,’ says Ham.
‘India is a long-term play, driven by value-conscious consumers,’ he adds. ‘Whilst the tariff reductions may not directly benefit Fourth Wave or other suppliers immediately, we still believe it is important to establish a presence in key Indian wine markets. We hope that tariffs will continue to be reduced, and Indian consumers are attracted into the wine category, and into more premium price categories, via the AI-ECTA.’