Soma & Soma & Soma & Soma & Soma & Soma & Soma & Soma & SurahiSurahiSurahiSurahiSurahiSurahiSurahiSurahiWine & the Bottle

…& The …& The …& The …& The …& The …& The …& The …& The IndianIndianIndianIndianIndianIndianIndianIndianParadoxParadoxParadoxParadoxParadoxParadoxParadoxParadox

San Fernando, Chile ,14 July

Wine and Indian Mythology• Gods (Devas) consumed wine as

their royal drink of choice.

• Asuras The dark contemporaries

(Demons) literal translation (One

Who doesn’t consume wine)

• The ninth chapter of Rig Veda devotes 114 verses in praise of Soma- Wine, considered to

be the ‘elixir of immortality’.

• In the practice of Yogic meditation too, Soma, the nectar of life was considered to bring

about a higher consciousness.

• Wine has been compared to Amrit & elaborated in the story of Samudra Manthan where

divine treasures were distributed between the gods and demons after a prolonged battle.

Location: South of Asia , between Arabian Sea and Bay of Bengal

Borders : Pakistán, China, Nepal, Bangladesh, Bhutan and

Myanmar.

AREA: 3.3 million square kilometres

CAPITAL: New Delhi (Pop. 16 million)

POPULATION: 1.18 billion; 28.9% Urban & 71.1% Rural

DENSITY : 343 habitants per square kilómetres

Republic of India

Geography

Demography

Demographics

DENSITY : 343 habitants per square kilómetres

LIFE EXPECTANCY : 66.06 years (2009).

FORM OF GOVT.: Federal Republic; 28 States & 7 Union

Territories.

PRESIDENT: Pratibha Patil

PRIME MINISTER: Manmohan Singh

Demography

Government

Wine Demographics• Young Nation – Over half of the current population is under 30 years age.

• During the next 15 years it will add heavily to the potential wine drinkers.

• Growing middle class expected to be 584 million according to a study by

McKinsey & Co.

• 94 million of this population will enjoy a higher purchase power owing to

the influx of MNCs.the influx of MNCs.

• Increasing number of women consuming wine.

• Growing social acceptance of wine in traditional events.

The Challenges of Modern TimesChallenges of the Indian Constitution

1. India is a federal constitutional republic consisting of 28 states and 7 union territories with a parliamentary system of democracy.

2. Each State can formulate its own policy and taxes under Article 47 of the Indian Constitution.

3. Article 47 says- …among its primary duties and,in particular, the State shall endeavour to bring

Trade Barriers

1. Cumbersome procedures: Any

technical lacunas and one could be

prosecuted and jailed.

2. Complicated license and registrationin particular, the State shall endeavour to bringabout prohibition of the consumption except formedicinal purposes of intoxicating drinks and ofdrugs which are injurious to health.

procedures that can cause too many

delays.

3. De-bonding after a year- no recourse

to send the material back

4. Transfer Permits-time consuming

5. Each State of India formulates its ownprocedures.

6. Dealing with 33 countries to sell.7. Complicated licensing and registration

procedures.8. Prohibition in two states – Gujarat and

Mizoram.

Warehousing Challenges1. Most public bonds not temperature controlled

2. Many private bonds work with air conditioning but

switch of air con at night to save money

3. Transportation is through non cooled trucks

4. Storage at the importer’s end not always proper

5. Storage at the retail shops mostly very poor though

now the big stores have become air-conditioned.

Challenges (Contd.)…... Duty Structure

Customs Duty (Federal) 150% on Assessable Value, CIF value+1% =151%

Additional Duty (Refundable): 4% on the total value=10%

Hotels & Restaurants – Nil , subject to conditions

Excise Duty: Varies in each state

VAT- Generally 20% but some states have lower while others are higher.

Average=20%

Delhi: 20-30% of MRP-Max. Retail Price appx.= customs duty or more

Mumbai : Slab rates- varies from appx. Rs.225-500, avg=Rs.300 a bottleMumbai : Slab rates- varies from appx. Rs.225-500, avg=Rs.300 a bottle

Bangalore : Approx. Rs. 225 a bottle

Related Links :-

Delhi : http://www.indianwineacademy.com/item_6_313.aspx

Mumbai : http://www.indianwineacademy.com/item_2_318.aspx

Bangalore : http://www.indianwineacademy.com/item_1_253.aspx

1 USD = 47.00 INR

Wine Vs. Whiskey etc.

Whiskey 150

Wine 1.5

Whiskey 150

Beer 140

Country Liquor

200

Million Cases Per Annum

Evolution of the Imported bottled winesEvolution of the Imported bottled winesEvolution of the Imported bottled winesEvolution of the Imported bottled wines

• Imports of Wine Restricted till 2001. Govt. liberated import policy in the same year

• Hotels & Restaurants allowed Duty Free Exemption in 2002

• Bulk wines were imported earlier from Australia, South Africa and Chile

• Import of Bulk wine allowed but not economical due to heavy taxes

• The Market has grown by 20 - 25% in the last 5 years (Except 2009). It is expected to grow annually by 20-25% in the next 5 years.

Evolution of wine imports in India.

(Period 2004/2008, Values in USD thousand)(Period 2004/2008, Values in USD thousand)

Code Item 2004 2005 2006 2007 2008

220421 Bottled Wine 5,470.50 8,100.50 9,135.60 13,169.70 11,224.60

220410 Sparkling Wine 1,225.00 2,250.00 5,500.00 6,240.50 5,643.90

220429 Bulk Wine 635.00 789.20 846.60 2,144.00 1,669.60

Total 7,330.50 11,139.70 15,482.20 21,554.20 18,538.10

Annual % change - General 52.00 39.00 39.20 -13.90

Annual % change - Bottled 48.10 12.80 44.10 -14.70

Competition of imported bottled Competition of imported bottled Competition of imported bottled Competition of imported bottled winewinewinewine

• Approximate Imports 200,000 cases (2009).

• French 40%

• Australia & Italy 12-14% each

• Chile & USA 8-10 % each

• Others 15-20 % • Others 15-20 %

(Argentina, Spain, South Africa, New Zealand, Germany, Austria, Portugal etc.)

• Price Range :

• Majority Wines at low end price range ( Less than US$3)

Desired Retail Price around Rs. 1000

• Reasonable Market Between $3 - $5

Psychological Barrier Rs. 1500

• Desired Level for Restaurants $3 - $9

• The sale of premium wines more than $12 is very limited.

• $51 to $500 also sell, though share less than 1% .

• High Duties / High Hotel Margins are the restrictive factors.

Distribution ChannelsDistribution ChannelsDistribution ChannelsDistribution Channels

• Any individual, firm or company can import

• Bonded Warehouses Essential for Importers

• Private / Public Bonded Warehouses Allowed

• Excise Bonded warehouse mandatory for sales. Handled • Excise Bonded warehouse mandatory for sales. Handled

by importer / wholesaler / distributor

• Importers not allowed direct retail

• Retailers must buy from licensed wholesalers

• Retails allowed through License only

Perception of Chilean Perception of Chilean Perception of Chilean Perception of Chilean wines. wines. wines. wines.

• Value for Money wine

• Available more easily in Retail

• Sparkling Wines have little presence

• People don’t know much about the Carmenere, though • People don’t know much about the Carmenere, though they like the wine

• Sauvignon Blancs are highly appreciated

• Chardonnays are considered too Oaky

• Some Popular Brands : Frontera, Casillero del Diablo, Anakena, Tarapaca, Caliterra, San Medin, Valdivieso, Baron de Rothschild, Errazuriz, Montes, Casa Lapostolle, Santa Digna , Santa Carolina

Recommendations

The Principle of the 5 P’s

1. Price – Focus on Low Price But not quality

2. Passion for India

3. Partnership – Marketing Equity and Long Term

Approach

4. Personal Appearance – Regular Visits of Wine Makers / 4. Personal Appearance – Regular Visits of Wine Makers /

Owners Required

5. Participation in Wine Shows, Festivals and

Competitions

6. THE SIXTH SENSE – Protect your payments

7. Selecting the Right Importer - Critical and Difficult.

For further information visit

www.indianwineacademy.com

www.delwine.com

Acknowledgements :

Mr. Nestor Riveros , Minister Counsellor Commercial – PROCHILE, New Delhi

Mr. Suprio Bose , Commercial Advisor – PROCHILE, New Delhi, India.

Conclusion

Indian market is growing fast including imports. But it is a long term, difficult market with

good results expected, especially for the Chilean wines because of the good price-quality

ratio.

Good luck. Buena Suerte!