For four South African winemakers and producers who wish to export to India, the challenge was obvious within a week of their presence here. At the India 2011: International Trade and Investment Initiative conference to promote their wines in Mumbai earlier this year, they found their sample bottles never made it past customs, leaving them with no option but to hope that brochures would substitute for taste.
Denise Stubbs, director (business development) of Thokozani, a shareholding venture at Diemersfontein Wine and Country Estate in Wellington, South Africa, says: “For us, it’s sad. You need to taste wine to understand it.”
None of the four found what they came looking for—an importer who would take their India vision forward.
Bunty Khan, CEO, Cape Dreams from Robertson near Cape Town, is just a year old in the business. Paul de Wet, owner and director, Zandvliet Wine Estate and Thoroughbred Stud, from the same region, carries the fourth-generation name of de Wet, whose farms started in the late 19th century. Their common goal, and challenge, is to find an importer and distributor in India.
“This is the second visit of the company to India,” says de Wet, “with the sole purpose of finding an importer for our wine. We have discovered that in India, because of cultural, historical and religious constraints, importing wine is difficult. We have spoken to people and I am sure in the next few months, we will know who we can do business with. We recognize it won’t happen overnight, but will take at least two years to establish a channel.”
Between 30-40 South African wine brands are already in the Indian market, according to the South Africa Wine Industry Information and Systems (Sawis), a non-profit outfit that collects industry information. According to the Euromonitor International report of March, 0.6 million litres of wine imported was from South Africa in 2008, roughly 18% of the total of 3.3 million litres of wine imported that year.
French, Italian and Australian wines dominate the market. But this is changing slowly for South Africa, the ninth largest producer of wine in the world. According to Wines of South Africa (Wosa), an industry organization that helps producers on a cooperative basis, about 30-40 new labels will be launched in India by 2012, doubling the number from two years ago. A Wosa report from last year says wine exports from South Africa to India grew by 44% in 2008 alone, even as combined wine sales have been increasing in India at the rate of 25-30% annually.
“The percentage of South African wine in India is quite small,” says Neethu Sheth, owner of The Wine Rack, Mumbai, which imports 23 labels of South African wine. “But it has grown steadily in the three years I have been in business.”
Sheth says that as with any imported product, there are challenges in dealing with red tape and customs laws. Since it is a time-sensitive product and falls under the food and beverage category, different organizations are involved in the approval process. Procedures are lengthy. And since it’s a heat-sensitive product, you have to be careful your wine doesn’t get spoilt in storage, says Sheth.
For these four small winemakers, who predominantly export wine and sell only small quantities locally, India is simply a logical next step. For instance, Cape Dreams exports 80% of its wine. Zandvliet, with 150 hectares of vineyards, produces 1.2 million litres of wine a year, exporting 30%—mainly to Holland and Germany, and now China. Thokozani, with 180 hectares, exports the same percentage to Sweden, the Netherlands, US, Belgium and Denmark. Waterstone Wines, a company in Stellenbosch near Cape Town, exports every drop of the 3 million litres it produces a year. Most of it goes to China, the west coast of Africa and Europe.
Wosa sees investment in the Indian wine market as a long-term strategy. The new hopefuls have learnt that lesson quickly. “It’s not possible for me to bring wine into the country through DHL or in some small consignment without an importer,” says de Wet. “We have to get an import licence, which is a long process because of federal laws. Then every state has its own unique set of rules, in excise and custom laws, which we respect. But wine is being imported from other countries, including South Africa, so it’s possible to do it.”
All four representatives have so far had little luck with finding that critical importer. “I need to secure an established importer with the necessary distribution channels,” says Khan. “Though I have sent a lot of emails to major importers, I have not got a meeting with any. I am not sure if the timing is bad, or they have a lot of brands or they are not interested. I haven’t met people from the wine industry, which is sad for me.”
Andries de Klerk, from Waterstone Wines, has a theory about why he has a “good feeling” about this. The only one from the four who managed to bring a bottle in his suitcase—like the others, Waterstone’s samples were also stuck at Mumbai airport—de Klerk is also the only one who is in the business of making wine, not just selling it. Sent here after his marketing manager could not make it, de Klerk decided he would make the most of this trip by exploring the wine region of Nashik, about 180km from Mumbai. He did not have enough time, but managed to do his homework, sampling Indian wines such as Sula, Grover and Indage.
“The wines I tasted have a French influence,” says de Klerk, who has 15 years experience in the business. “It’s probably because of the climate, you get a French feel from the wines, and the same styles in all of them. But as the country gets more educated, exposed to global travel, their curiosity will increase. Most educated people will look for different wines, not to mention that French labels are so difficult to read. Our quality is drinkable for the price you pay. Somewhere, people will find the taste they like.”
De Klerk is confident of being able to take on the local competition, even though he admits it’s early in the game. “At this stage, if we get on the same playing field, we will out-compete them (Indian producers) because we have a longer history.”
The winemaker says they are willing to tweak their product up to a point, depending on the market. The experience comes from making dark red, slightly sweeter, wine for China. But though he realizes Indian tastes lean towards stronger stuff, he is unwilling to increase the alcohol content in his wine just to suit that palate. “It’s wrong etiquette when you market your wine to say here, drink my wine, and get smashed. It’s not a product to get drunk; you can buy gin and add anything to it for that experience.”
De Klerk concurs with the others that the price range should be kept at $4-20 (Rs 180-900) for the imported wine to be competitively priced, after the various taxes and duties.
Stubbs goes further: “We need to educate each other about appreciating wine, not just to drink it. I will sell my wine with a story. I grew up on a farm at a time when workers of colour got paid in kind, with wine, instead of money. The first time I tasted wine was five years ago. I will sell it by taking you back to where we were and where we are now. As you hear the story, you start tasting.”