Australia’s new trade agreement with India is helping wine exporters to diversify export markets.
In mid-2022, South Australia’s Pacific Vintners shipped a first order for over 14,000 bottles of own-label wines to Delhi. The company followed this up with a private-label shipment to Mumbai.
Pacific Vintners says Austrade’s business-matching services helped at every stage. Advisers in Delhi and Mumbai helped Pacific Vintners find potential partners and business contacts.
‘The trade agreement will help us compete against wines from Europe and North America,’ says Jamison Lim, International Commercial Manager, Pacific Vintners. ‘We started with economy-level wines, but as we build confidence, customers will progress to premium wines. That’s where the trade agreement gives us a major advantage.’
Pacific Vintners is a newcomer in South Australia’s historic Barossa Valley. In 2014, a group of seasoned growers, technologists and logistics investors saw an opportunity and worked together to set up new vineyards. Their aim: to bring new scientific techniques to the craft of high-quality winemaking.
Today, Pacific Vintners has a 400-acre, multi-vineyard business and contracts grapes from other regions in South Australia. The company produces up to 7.5 million litres of wine per year. It has begun the complex transition to organic wine production.
Its endeavours paid off. In 2018, Pacific Vintners was awarded ‘Wine Exporter of the Year’ from South Australia’s Chamber of Commerce.
By 2020, Pacific Vintners had built a major export business to Asia. The company also sold wholesale into the UK and Scandinavia. But it wanted to diversify, and executives believed India was a good, long-term prospect for wine exports.
‘We believe we can grow in India over the next 10 years,’ says Lim. ‘We think that in time the wine market will become like China, the UK and the US.
‘Today, there is a strong Western influence with younger Indians. Many have been to universities in Australia, the UK or the US. These graduates gain high-paid jobs back in India and want to recreate Western lifestyles. That’s the long-term opportunity.’
The new Australia-India Economic Cooperation and Trade Agreement (AI-ECTA) means Australia becomes the first major wine exporter to gain preferential access to India’s wine market.
The 150% tariff that used to apply on bottles arriving in market at US$15 per bottle has fallen to 70%. Further phased annual reductions will result in a 25% tariff on 1 January 2032.
Mid-range Australian wines also benefit. Wine priced between US$5 and $15 has seen tariffs already reduced to 95%, with a phased annual reduction resulting in a tariff of 50% on 1 January 2032.
In addition, a ‘most favoured nation’ clause means Australia will be able to benefit if another country negotiates a better tariff reduction with India for wine.
Austrade advisers in India note that up to 85% of India’s wine market is currently dominated by major brands, but say the trade agreement will help smaller wine exporters.
‘The AI-ECTA will change current market dominance,’ says Austrade’s Business Development Manager (BDM) in Delhi. ‘By reducing tariffs on quality wines, the trade deal will help smaller companies into the market so they can compete with the majors.’
Austrade helped Pacific Vintners make connections in India via its business-matching services.
‘The adviser in Delhi set up virtual meetings with potential distributors for us in mid-2021,’ says Lim. ‘We learned what was required to export to India and negotiated our first consignment. Our first shipment was delayed by sky-high freight rates but we made our first delivery in mid-2022.’
This initial order for over 14,000 bottles was for one of Pacific Vintners’ own labels – ‘Celebration’. The importer managed customs clearance and sold the shipment in the Delhi area.
‘Exporting to India for the first time is challenging, but Austrade will help,’ says Lim. ‘Austrade’s India-based advisers helped us find potential, reliable partners, and we had confidence in the people we met through Austrade.’
Two months after this first export win, Lim got a call from Austrade in Mumbai.
‘An adviser contacted me to say they knew a wine-seller who wanted to market an Australian wine under their own label,’ says Lim. ‘Also, they wanted to take this new local brand all the way from economy to premium wines.’
Lim sent shiraz and cabernet samples. Within 2 months, he signed an export order for 2 containers, or around 28,000 bottles.
‘Our new customer designed their own label,’ he says. ‘We made sure the design requirements met Australian and Indian standards. Then we put the label on the bottles and shipped it under their brand. The shipment arrived in-market in October 2022.’
Pacific Vintners’ dual market-entry strategy is working. Seven months after the first shipment of their own label wine, the importer is negotiating a second consignment.
However, Lim also recommends considering the private-label route as a market entry strategy.
‘A company that wants to sell your wine under their own label is a good option for getting into India,’ he says. ‘We make wine from different regions. So, we figure out what kind of blends work for the customer and then bottle it specially for them.
Austrade’s advisor in Mumbai says that securing the right importer is key to success.
‘India is an importer’s market,’ he says. ‘The first step is to bring an importer on board, who has complementary wines rather than similar wines from other countries. Importers will generally prefer big family-owned and international award-winning wineries from well-known Australian wine regions with good story of winery, vineyard, and labels.’
Lim says India is a long-term strategic investment for his vineyard.
‘Exporting to India helps us diversify,’ he says. ‘India is not a nation of wine drinkers, but neither was China 20 years ago.’