Wine Diplomacy

Vinitalty "" a wine fair held in Verona and considered the most influential in Italy and the largest in the world "" is hardly new to India. The Indian chapter of Vinitaly's third edition this month attracted not just 70 exhibitors but also Italy's minister for agricultural policies come to lobby with his counterpart to make sense of the government's protectionist duties.

It is evident though that Paolo De Castro made little headway with Sharad Pawar despite (or because of) the Indian minister having an interest in the growing grape industry in Nashik.

But at best, this is only a tiny hiccup for a country that has manoeuvred the perfect relationship between price and quality, overtaking French wines in the American market to emerge as number one there.

"We produce very large quantities that we are learning to convert to quality," De Castro explained, something Italy is also doing with olives which it imports, converts into oil and then exports.

This is something where India and Italy could partner, he offers "" perhaps in the production of olives (they are being grown in Himachal Pradesh) or even in the making of mozzarella cheese, not just for the Italian but also the European market.

Australia, for instance, also "produces parmesan exactly as we do" "" though Italy is currently hoping to establish its association with parmesan as a territorial indicative, much like champagne, or basmati rice.

"Italian food is linked with gastronomy," De Castro suggests, and its produce is very strongly linked to territory" "" raising images of terroir as the most important contributing factor to its popularity "" "and Italian food is our ambassador, the second-most popular cuisine in the world after Chinese. How many Italian restaurants," he turns to his country's ambassador in India, "are there in New Delhi?"

And having received confirmation that the number is substantial, says, "Even an American study confirms that the Mediterranean quality of life is better on account of the healthy diet "" olive oil," he muses, "tomato, pasta..."

Of course, De Castro knows he is in a win-win situation. The talkative minister (but then, which Italian isn't?) led a delegation to sell the idea of technology to the Indian industry. "Italian farms," he explained over a shot of espresso, "like Indian farms, tend to be small" "" though at an average one hectare's holding in India versus Italy's seven hectares, there is still a substantial difference "" and Italy has the agricultural machinery and the knowhow to maximise yields, something the Indian agri-industry could benefit from. "Italian farms," he insists, "are highly mechanised."

The idea is not just to push the Italian agenda for selling machinery, however. "We import much of our produce," says De Castro, "we can help India open up to the Italian market," pointing out that countries like France and Spain have a more protectionist agenda than Italy. That's because Italy may export agri-products worth ¤20 billion, but its imports "" and a wedge of that could be a potential market for India "" are worth ¤220 billion.

Other than just knowhow, De Costra says India could also benefit from the cluster system that operates in Italy "" pointing out the clusters, for instance in Verona and Parma, that have an advantage in terms of integrating knowledge as well as market distribution, processing and sales.

"We have 6,500 food companies in Italy," the minister says, "but very few are bigger than ¤100 billion. Ninety-nine per cent are small, but the technology for dairy, olive oil and wine is very well positioned, and its characteristics and structure can be shared with India."

Indian exports to Italy have been on a fast track, with overall bilateral trade in the fiscal 2006-07 growing at 43 per cent. De Costra says that the wine component in India's agri exports forms 25 per cent "" though only a little of that makes its way into India. India's wine market, for now, is well below a million cases, even though it has grown at 30 per cent on a very small base since the market opened up to imports in 2001.

Though duties on wine have dropped to 150 per cent in recent months, local taxes in Maharashtra (which accounts for 40 per cent of all wine sold in India, according to industry estimates), at 200 per cent (to protect the vineyards of Nashik ostensibly), have caused a huge downslide in sales and consumption.

Vinitaly India, part of an international food and wine show, attracted a chunk of the industry, including standalone restaurants, that finds Italian wine good value for money "" wine imports from Italy are number two, behind France, but ahead of Australia and the United States.

Meanwhile, De Costra, who is anxious that Indian produce be standardised with European norms, says he has signed MoUs for an agro food park, and a food testing facility (in Kolkata). "India," he says, "can be an agri-platform for Asian countries." But before that happens, De Costra "" and Italy "" are waiting for a signal from India.

"There is an opportunity for big business," he says, "for exports to Italy touching ¤100 million and growing at 20-25 per cent annually." But before that happens, De Costra submits, "We need to see what the Indian authorities show us." Over to you, Mr Pawar.