High import duty restraining India's potential in fine wine market: experts

London [UK], Jan 31 (ANI): India is a large market for global wine makers but the high import duty is playing a spoilsport, according to Philip Staveley, head of research at Amphora Portfolio Management.
"India’s wealth is increasing, as it is in China. Amphora who has been active in India since 2014 noted an uptick in interest in the last two years where client acquisition overtook that of China and Hong Kong combined in 2018," Staveley said.
He further stated that wine remains exclusive for high net-worth individuals, as the import duty currently sits at 160 per cent. It implies that buyers have to store wine in the UK or Dubai and carry an allowance back into India when they travel.
According to Staveley, if and when the import duty is reduced, a significant restraint on local demand will help open up the market.
The fine wine market has long attracted investors from Europe and the US, who have a long legacy of winemaking, because of strong returns over the last decade. Adding to this is a growing theme of purchasers from the Chinese ‘Middle Class’.
Sommelier consultant Jean-Louis Naveilhan, who advises clients worldwide, observes several trends sustaining the rising demand from Chinese clients.
"More and more people are being classified as 'middle class'. There are the 'young' returning from overseas studies and their economic growth, averaging between 3-6 per cent a year. Furthermore, taxes on wine in China have been lowered. Apart from this, there is the growth of big e-commerce platforms through which people feel confident to order wine online," Naveilhan said.
With the requisite numbers in the bag, popular trends suggest that the Chinese prefer red wine, aromatic whites and fruity sparkling wines.
Europeans and British nationals account for the bulk of customers at 50 per cent, while 10 per cent were from America and the rest of the world.
Hong Kong has long been established as a major hub for fine wine, particularly since it cut taxes on wine imports from 80 per cent of its value prior to 2007 to zero in 2008. Which is why Sotheby’s, the auction house, has been present in Hong Kong since 1973.
Adam Bilbey, Head of Sotheby’s Wine, Asia, has found that “the wines of Burgundy are certainly taking centre stage. In particular, the likes are Domaine’s Romanée-Conti, Leroy, Armand Rousseau and Roumier”.
Sotheby’s Hong Kong recently set the world record for a bottle of wine, selling one bottle of 1945 Domaine Romanée-Conti, Romanée-Conti for USD 5,58,000.
With the expansion of the Chinese middle market, Bilbey says prospective investments are seeing an uptick.
Staveley also agrees with the increasing Chinese prevalence in the wine industry.
"As ‘developing economies’ evolve, the millionaires created often aspire towards ownership of Western luxury goods, fine wine undeniably fits this bill," Staveley said. "There is a tradition in China to invest in physical assets such as gold, diamonds or property, particularly at times of uncertainty and ownership of another consumable asset has found a great deal of attraction."
In his experience, Chinese buyers are “not put off by price, but rather go by a 'higher the better', and high-end Burgundy remains a favourite.
Bilbey says wine has turned into a global marketplace now, an embodiment of which is the steady growth of the sector in South East Asia and South America. (ANI)