ITALY - INDIA TRADE: UP 70% FOR ITALIAN WINE. CUSTOMS DUTY RATES SLOW. SECOND ONLY TO FRANCE FOR EXPORT, BUT PRESSING FELT FROM NEW PRODUCING COUNTRIES

Italian wine exports to India have increased by 70%. And they could grow even more with the cancellation of elevated commercial customs taxes that is to be determined by bilateral diplomatic meetings after the European Union requested that the WTO initiate a consultation with India in order to obtain a regime change in taxes that are applied to the sector. The Italian agricultural organization, Coldiretti, is hoping that, in concurrence with the diplomatic mission to India by President Romano Prodi, this will emphasize that wine is the main food export product to India.

In fact, it is the heavy customs duties, which surpass 100% of value, that are hindering exports on such a greatly growing market. Regardless, sales for 2006 are estimated to have reached over 300,000 bottles of Italian wine for a total value of about one million euros, according to elaborations by Coldiretti on data gathered by Istat.
The consumption of wine in India is still limited and represents just one percent of the entire liquor market, but growth trends have been much faster in respect to other alcoholic drinks, registering an average increase of 22% over the past 3 years, in respect to 7% for the entire sector.

The main wine suppliers on the Indian market, who hold a total value of 50 million euros are, in order, France, Italy, Australia, United States, and Chile.
Young people are, above all, the main wine consumers in India. They are usually middle to higher class residents living in large urban centers. But the demand is destined to expand to other segments of the population at an equal pace as that of the economic growth of the country. In particular, four cities (Mumbai, Delhi, Goa and Bangalore), represent 70 to 80% of total consumption and about 65% of the bottles acquired are in the under 15 euro price range, which is a value that is very high considering the average earnings of the population.

In 2006, Italian wine exports registered a record growth of 7.4% in value, with particularly good results in the U.S. (+6.6%), making it Italy’s top client for wine production. And significant success has also been had on emerging Asian markets, where a +15.7% growth rate has been registered. The total annual value of foreign commerce for Italian wine surpassed 3 billion euros, making it the top earner among exported food products.
Coldiretti concluded that these results demonstrate the presence of new opportunities for sector growth thanks to a harvest in 2006 that is estimated to produce 50 million hectoliters of wine, with a stable production rate in respect to the previous year, and an excellent qualitative level, over 60% of which can be sold under one of the 453 denominations of origin (DOCG, DOC; and IGT). In 2006, Italian wine reached total earnings of 9 billion euros, of which almost one third was due to exports.