India's wine consumption grows 25% per annum
Domestic wine market will grow around 25% per annum to touch around 9 million litres by 2010 from current estimated level of over 5 million bottles a year with major cities like Mumbai, Delhi/NCR, Chennai, Kolkata, Pune, Bangalore and Hyderabad producing a good deal of wine consumers, according to The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
In a ASSOCHAM Paper on “Wine Consumption in India”, Chamber President, Mr. Sajjan Jindal said, “India's wine market is currently growing with 20% but likely to grow at 25% in next 2 years in view of rising consumption wine patterns not only among youngsters but equally so in aged group”.
The demand for wine, nearly 80% is accounted for by major cities of New Delhi, Mumbai, Chennai, Kolkata, Pune and Bangalore (41% of the wine quaffed in India is consumed in Western India followed by the North at 29%). Around 63% of the volume sales of wine are through off-trade channel in five-star hotels, pubs and bar-restaurants. Now even the emerging tier II cities working professionals and younger generation are also consuming wines a lot.
Mr. Jindal pointed out projects that various factors could amount to rising wine consumption in India which include a large teeming population under 30 years fold and estimated around 650 million will witness attitudinal shift in alcohol consumption and shift to develop a penchant for wine. Secondly, the rising disposable incomes among the people imply that a greater part of the population can afford such products.
Thirdly, the influence of the Western World is pushing the Indian youth to change their lifestyle and standards of living. Fourthly, measures and pressures adopted by the government aimed at weaning the population off stronger and more harmful drinks like spirits have aided growth of the wine industry. Many state governments have reduced duties on wine, eased restrictions on distribution allowing wine to be sold in supermarkets and have provided incentives for wineries to establish new facilities.
Fact Sheet of Indian Wine Industry
Indians consumed more than 300 million cases of beer, 90 million cases of whisky, and other spirits in 2007-08
The Indian wine market is approximately 5 million litres in volume terms and Rs. 500 crore in value terms.•
Wines sales in 2007-08 were 8,20,000 cases. France accounts for almost half of India’s wine imports and Italian 30%.
Lastly and most important, in India the cost for opening and setting up a wine plant with capacity of around a lakh litres comes only to somewhere between the Rs. 10 - 15 million mark. As a result many entrepreneurs, Indian and foreign, are jumping on the Indian wine bandwagon.
The conducive conditions thus formed for winemakers have already drawn the likes of top drinks maker Diageo, Pernod Ricard, LVMH's Moet Hennessey and SABMiller in India that was once described as comprising of small and mid-sized players. Other companies like Anheuser-Busch Co. Inc. and Danish brewer Carlsberg are also on their way.
Steps that can be taken by wine promoters to increase wine consumption in India as per ASSOCHAM include that all companies that are seeking to enter the Indian wine market should be aware of the regional nature of Indian wine consumption. Apart from major cities, upcoming tier II and tier III cities should also be the primary targets for the wine manufacturers, as these cities will increase the country's total wine consumption. The soaring popularity of imported brands, which sell at much higher prices than domestic varieties, offers international companies great opportunities for strong value growth.
The wine producers in order to market wine in India have to educate the lot and ensure a positive media coverage. They have to introduce and make understand the hospitality industry staff and consumers about it. For this, huge numbers of tasting, sampling events should be held. Also winemakers must make available a regular supply of wine.
The Indian wine industry should understand that it is quality, not quantity of wine that matters in order to not lose its momentum. Going for cheap bulk wine is great for the short term, but leads to serious problems for the middle and long term. So, growers should concentrate on producing less, but higher quality grapes. As long as quality is improved every year, then the quantity will take care of itself.
Some of the measures recommended for the government to support Wine Industry include creation of infrastructure, protection & subsidization, reduction in rates, better methods of sales promotion and promote classification of Indian wine regions.