European drinks firms keen on India, seek tax cuts

MUMBAI (Reuters) - European drinks makers are keen to increase their presence in India's fast-growing $1.8 billion alcoholic drinks market, but want better trademark protection and lower tariffs on imported wines and spirits.
The European Union is pressing for lower duties on wines and spirits, which it says are as high as 550 percent on spirits and 264 percent on wines due to federal and state levies.
"India also has an interest in solving this problem because it affects how we do trade," EU Farm Commissioner Mariann Fischer Boel told reporters.
"The taxes put our wines and spirits at a huge disadvantage. If we do not see a clear sign from India, we are considering raising a panel for dispute settlement," she said.
If the World Trade Organisation forms a dispute settlement panel and rules against India, the EU could impose retaliatory tariffs on imports from India.
Diageo Plc., Pernod Ricard and LVMH's Moet Hennessey are among European firms setting up operations in India.
Moet Hennessey's local unit imports about 50,000 cases of champagne, cognac and wine annually, and the firm plans to double sales in three years.
"We believe India will be among the top 10 champagne markets for us," said Yves Benard, director of Moet Hennessey's champagne activities and wine resources. "Maybe not No.2 or No.3, but in the top 10."
Moet Hennessey has a minor stake in Indian wine maker Grover Vineyards, and may consider making wine in India, he added.
"India is a wine producing country and it could be an interesting proposition for us," Benard said.
ZERO TOLERANCE
India's spirits and beer market is dominated by the UB group, which is close to acquiring Scottish spirits maker Whyte & Mackay to bolster its portfolio of premium brands.
But the head of the Scottish Whisky Association, which has Whyte & Mackay among its 53 members, cautioned that if UB became a member, it would also have to take up the association's fight to protect trademarks and intellectual property rights worldwide.
"We look forward to having (UB's) Vijay Mallya join us. It will give us a different perspective," SWA Chief Executive Gavin Hewitt said. "But, along with the privileges, are responsibilities and obligations, and we have a zero tolerance policy."
The SWA has opposed the registration of UB's popular McDowell's whisky brand, and pursued other local Indian brands for using names that suggest a Scottish lineage. It recently won a case against an Indian brand called Red Scot, Hewitt said.
"It took us 20 years to win that, but we are very clear: no Scottish names, no tartan, no stag's head," he said.
UB, whose United Spirits Ltd. is the world's third-largest spirits maker by sales, wants the EU to relax the description of whisky to permit Indian whisky, made from molasses, to be labelled as whisky in Europe.
But Hewitt is firm.
"We have no difficulty with Indian whisky coming in, but it must be labelled as that."
"Just as we are providing you with market access, we want you to be able to go to a shop here and be able to buy a Scotch whisky at the same price as your local whisky."

Source: Reuters