China isn’t world-renowned for winemaking and India isn’t known as a nation of wine drinkers, yet these two markets are playing an increasingly prominent role in the industry.
As incomes increase and the middle class expands, wine is growing in popularity in both countries. According to a Vinexpo/International Wines and Spirits Record study, India will become the world’s tenth fastest growth nation for wine consumption between 2009 and 2013. Another study by Vinexpo shows that China’s wine consumption is likely to grow by 19.6% between 2010 and 2014, making it the sixth largest wine consumer in the world.
Can China’s winemakers tap this growth in India, or will Indian drinkers turn to the tried and trusted wines from places such as France and Italy and New World vineyards in California, South Africa, Australia, Chile and elsewhere?
China will find it difficult to knock these more established wine-making nations off their perch, but it is still pushing forward in India, making the most of 2011 being the “Year of China-India Exchange,” which was officially launched on April 13 by Chinese President Hu Jintao and Indian Prime Minister Manmohan Singh.
“Experience China – Sichuan Week in India”, which ended Saturday, was one of the events that kicked off the year of exchange. The event included a “Sichuan Wine and Cuisine Appreciation Conference” in New Delhi.
“We wanted to highlight China’s 2000-year history of wine producing. All this is an effort to further business and people to people exchanges between India and China,” a press officer at the Chinese embassy in New Delhi said.
One Indian trait – the love of experimenting – could favor the Chinese wine industry.
“Indian buyers are very open to experimenting and hence I see them experimenting with Chinese wine too,” says Gagan Sharma, Sommelier and Wine Educator at New Delhi-based Wi-Not Beverage Solutions Pvt Ltd.
However, it’s not easy to enter the Indian wine market because of stringent taxation rules and a government that discourages the consumption and advertising of alcohol.
“In India, we have a huge duty on imported wines. It is almost 160%. So a 100-rupee-wine becomes 260 rupees. Then, add to it [other] taxes and other market factors and it becomes almost 10 to 20 times the original price when it reaches the customer,” says Mr. Sharma.
If even the best-known winemakers find it difficult to penetrate the Indian market, how can the Chinese make their presence felt?
Initially, they will have a “tough time entering the Indian market,” says Indian Wine AcademyPresident Subhash Arora.
“China has a fairly mediocre image as far as winemaking is concerned,” he said.
Mr. Arora suggested that making cheap wines could be a way to enter India, and also selling Chinese wines through the many Chinese restaurants here.
A relaxation in import duties by the Indian government is on the cards, which should make it easier. “A policy change in the import duty is expected to come by June-end or July start. This will reduce the import duty and make the Indian market more open towards international wine,” Mr. Sharma added.
But will the taste of Chinese wine appeal to the Indian consumer? The quality of Chinese wine has improved over the years, says Cecilia Oldne, head of international business at Sula Vineyards, one of the largest wine producers in India.
She says that the best wine she tasted from China was from Grace Vineyards, which has a Joint Venture with Spain’s Torres.
“Most successful wines in China have a JV with European countries,” she told India Real Time. “The Chinese are ahead India in generating a presence on a global scale. China has been producing wines for centuries.”
Government laws in China are quite liberal as companies are allowed to import the best wines, adulterate them with local wine, and then export as ‘Chinese wine’, Mr. Arora added.
“The law is such that a wine needs to have minimum 15% Chinese content to qualify as ‘Chinese wine’. So China can export a wine with 85 % foreign content and only 15% Chinese content as ‘Chinese wine’.”
Indian wines are 100% locally-made, he added.
China may not have a glowing reputation as a winemaker, but the country is ahead of India in terms of production and consumption.
“The total production in China is 80 million cases as compared to India’s less than one million cases. Talking about consumption, in India it is 10 ml per capita as compared to China’s 650 ml,” Ms. Oldne said.
“The Chinese have a long tradition of drinking wines [including fruit wine and rice wine]. India does not have a tradition of wine drinking. We have a tradition of drinking whisky and beer,” she added.
However, Mr. Arora noted that India’s wine industry is growing faster than China’s. According to the Indian Grape Processing Board, which was set up by the Ministry of Food Processing Industry in 2009, the Indian wine market is growing at a rapid 25-30% a year.
China’s winemakers will be hoping to benefit from that growth.