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Global Reach
The 2007 high in export sales was double the $792,000 in 2007, which in turn had more than
doubled from $376,000 in 2006. This is the result of ongoing trade pressure from the EU—and
later the U.S.—for India to live up to its WTO commitment to reduce total wine and spirits tariffs
to no more than 150%. In July 2007, India set the national tariff at 150%—up from 100%—
maintaining that it would displace all other taxes and special duties, including to special surcharges
that had effectively raised national tariffs to 300%, as well as various restrictions imposed
by states. But it is still not clear whether, and over what time period, the national government
will be able to preempt state barriers. Tamil Nadu, for example, has banned sales of imported
wines altogether, as have 12 other states, and Maharashtra imposes a special excise duty to offset
the federal duty exemption of airports and luxury hotels.
India’s two largest wineries, Chateau Indage and Sula Wines (the latter started by a Stanford
alumnus, Rajeev Samant), have led the lobbying effort for higher federal and state duties, supported
by Agriculture Minister Sharad Pawar, whose family owns the Bosca winery. Recently,
however, high import costs have had unintended consequences for some Indian producers, who
have been forced to import, blend and repackage bulk wine to meet rising consumer demand.
Another practice creates a further limitation: alcohol consumption is prohibited on 21 “dry”
holidays each year throughout India. And there are infrastructure problems, according to Joe
Rollo, international director of the Wine Institute. “They don’t have the trucks or the refrigerated
distribution warehouses,” he says, “and I’m told that in many local stores, when the proprietor
goes home for the day and turns off the lights, that means he also turns off the refrigerator cases,
so the wine eventually goes bad.” California wineries such as Ernest & Julio Gallo and Joseph
Wente have made sales in India but, overall, the industry sees India as a long-term opportunity,
with perhaps as much as a 10-year time horizon or longer.
Levi Strauss: Evolution of an Indian Brand
Of the 30 countries ranked in A.T. Kearney’s 2009 Global Retail
Development Index, India is ranked as the world’s most attractive
market for international retailers. While sales growth slowed from
nearly 40% in 2007–08 to low double digits in 2008–09, Indian
consumer markets have held up well by global standards.
There are some restrictions on foreign operations, however. Under
Indian law, multi-brand foreign retailers are barred from selling directly
to consumers. Opposition from the country’s large numbers of
small, family retailers has so far kept large chains at bay, but Wal-
Mart Stores recently formed an innovative partnership with Bharti
Enterprises to apply Wal-Mart’s volume management expertise by
wholesale marketing to smaller businesses. The cash-and-carry
business will sell to licensed store owners and institutions. Meanwhile,
the field is open for single-brand retailers like Levi Strauss.
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