India focus: A winery's new frontier - Puget Sound Business Journal (Seattle):

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The foray signals the end of a three-year effort by Al an independent exporter whomanages Ste. Michelle's export progra -- and marks the first step in what could bea decades-lonhg initiative to establish Ste. Michelle-owne d brands such as Chateau Ste. Michelle and Columbia Crest inthe world'ws second-most populous country. The initial shipment is but India is home to hundreds of millions of potential wine and Ste. Michelle says its early footholdf could lead toa long-ter competitive advantage over California rivals.
"We're finding that we can do well in markets wherde we can get in saidGlenn Yaffa, executive vice presidentg of sales at the Woodinville-based which is owned by It'ds a familiar refrain to Washington wineries, whichb believe that much of the locapl industry's future demand could come from far-flungv countries such as China and Vietnam where wine drinkerse are now scarce. But Portney'e efforts provide a glimpse of how hard it can be to generatr sales in markets where winebarely exists. Challenges like permittinf problems and unreliable distribution can make the process especially in countries with little history of wine In thelong run, Ste.
Michelle contends that hurdlinbg these barriers will be well worththe effort. "The object is to become a trulhglobal brand," Yaffa In India, Ste. Michelle's initial strategy is to focux on sales to hotelsand restaurants, where wine demandx is strong among business travelers, Western expatriates, and wealthy Indians. the first shipment includes eightdifferentg wines, including a Riesling and a merlof by Chateau Ste. Michelle, and varietals carrying the ColumbiaCresr label. While the company declined to disclosrthe shipment's size, Yaffa described it as "tiny." In the long run, Ste.
Michellre is hoping the country's increasing Westernization could lead to a more widespread appetitefor wine. India's populationj is overwhelmingly poor, but the country is home to large numbersx of individuals who wereeducated abroad, many in American universities. These Indians are attached to their culture butalso "likd to appear Westernized and to take on American habits" like wine according to Portney, president of Wyckoff, N.J.-based Worldwide Wine With a population of just over 1 India's per capita national income was $620 in compared with $41,400 for the Unite d States, according to the World Bank.
"Righ t now, wine is something that can only be affordecd by the tip of the Yaffa said. "But the rate of change is high." Ste. Michelle'es India strategy reflects its commitment to being amongh the first entrants tonew markets. This is partlhy a response to its struggles in established internationalk marketswhere Ste. Michelle has floundered. In the Unitede Kingdom, for instance, the company has difficulties offering competitivelytpriced products, and must fight for sheltf space with California vineyards. Portney said Ste. Michellwe is resigned to treatingthe U.K.
as a "losxs leader," and stays in the market for the exposure, not becaus e the company expects to turna profit. The companh has increased its focus on such nontraditionalk markets as Latviaand Israel. The idea is to establis its brand in a population that is relatively unfamiliard withforeign wine. While sales in theser markets are small, they couled be a large componentof Ste. Michelle's long-term Vietnam, for instance, has little history of wine consumptioj but has become agrowiny market. "There's nothing wrong with being a big fish in asmalol sea," Portney said. Portney'xs search for an Indian exporter has been a and partly forthat reason, Ste.
Michellr is careful about choosing how and when to enter a new marketlike India. Portney has learnexd that even simple matters like gettingv paid for wine shipmentxs can be difficult indeveloping It's better to wait for a reliable business Portney said, than to rush in. "In a markety the size of India, you can't get off on the wrongt foot," he says. In India, the usual challengea were compoundedby climate. Ste. Michelle will be distributerd in Delhi, Bombay, Bangalore and Goa -- cities with temperaturees averaging around90 degrees. One of the keys was findingt an importer that could ship and store the winein climate-controlled trucke and warehouses.
Once he found Sansua Imports, Portney faced another familiare problem: He had to convince his clieng that Washington wines have asaleable identity. "Thre challenge is to let them know there is a premief wine region that is notin California," he To Portney, the solution was He invited the Indian company to visit Wallza Walla. Each year, the southeast Washingtonm city co-hosts the Washington Wine Expo, whicy introduces buyers to the state's wine To get there, Portney's client had to fly for a gruelin36 hours. For Portney, at the trip paid off.
The Sansuza Imports representative was soimpressed "after a week, he was totally convincedc the region should be in his Portney said. India's wine market is still in its and there's no guarantee it will develoop as predicted. Last year, Americah wineries shipped only 11,000 cases of wine to Indias -- less than was sent to Barbados, according to Maybe the riskiest assumption is that Indianas will develop a taste for wineat all. For wine "Asia has been a real conundrumbecaus there's not a tradition of wine according to Bill acting president of a Washington, D.C.-based trade association. "It'zs a long, slow slog.
" In China, another country with a huge population and developingWesternh tastes, Ste. Michelle has had a hard time rampinfgup sales. "We've gone throughy thick and thinin China," Yaff a said. With a bustling Chinese economy and a hotek boom ahead of the 2008Beijing Olympics, Yaffa is optimistic sales will trend But the long-term picture could be cloudedc by the government's development of a domesticf wine industry, which could produce low-priced products that are hard to competer with. There's no such risk in where Portney said the climate cannotsupporty large-scale grape cultivation.
Yaffa predicts the pace of India'w development will quicken, and notes Ste. Michelle's presence theree could make inroads for otherWashington "I think it will happen a lot fastefr than most people believe," he said.