India Wine Comes Of Age

India is heading for a Wine revolution and consumption will triple within the next three years. An overview of changes in production in 28 countries and consumption in 114 markets over a ten-year period augurs well for the wine industry-specifically in Asia.

To start with, the outlook for India in the wine market has been seen as-at the least- very promising.

Amitabh Joshi reports on the changing trends in wine consumption worldwide and specifically India.

India fine on wine

In India, the annual consumption of grape-based wine was estimated at 66,000 hectolitres in 2006, equivalent to 8 million bottles, which was four times more than in 2002 (up 312.5%). It is expected to triple again by 2011 and to reach 188,000 hectolitres.

According to a study commissioned by Vinexpo and carried out by British consultancy, the International Wine and Spirits Record (IWSR), this rapid growth trend of around 30% per year corresponds to the strong growth observed in the economy and tourism sector.

However, in comparison to its size, India’s consumption is still quite low.

“While it has the second largest population in the world and will soon catch up with China in terms of demographic density, India is only the 77th greatest consumer of wine in the world, despite improved growth in consumption over the past five years”, says Vinexpo Asia-Pacific chief ,Robert Beynat .

Almost a quarter of still light wines drunk are imported. In 2006, consumption of locally produced wines represented 45,000 hectolitres or 75% of all grape-based wines consumed in India.

The Vinexpo/IWSR study forecasts similar growth in the consumption of imported and domestic wines between 2006 and 2011 (180% for the former and 197.7% for the latter), which indicates how open the market is.

Having supplied 41.7% of all wines imported into India in 2006, France remains the leading supplier of still light wines to the sub-continent.

Australia and the US in second and third position, respectively, have seen substantial growth in their export volumes.

Opening bottlenecks

Despite the bright lights the study is shining on the country’s wine map, it seems the biggest challenge for India remains the poor storage and transport facilities in a tropical climate. Add to this the restrictions on direct promotional activities, along with fluctuating state taxation and distribution policies- and you have the proverbial bottleneck.

In fact, awareness of the health benefits of wine is practically non-existent. Interestingly, the biggest wine consumption of up to 80 per cent is confined to major cities like Mumbai, Delhi, Bangalore and the tourist destination of Goa. The rest of India has only 20 per cent consumption-and that would seem to be the huge hidden potential for the market players. Already, Grover Vineyards and Sula Vineyards are keeping up with world standards and are producing fine quality wines which are even exported.
Nobody is missing out on the fact that Indian society is changing. Lifestyles in urban areas and even some semi-urban pockets are developing. People are travelling abroad more frequently and women-seen as a major wine-consuming force-are growing in the work force-especially in the echelons of the corporate world.
While the industry walks a thin line between policies at cross-purposes, the government’s once-stated domestic promotion strategy for Indian wines included studying the internal support mechanisms and considering easing tariff barriers. And India is still keen to target the US, the European Union, South Africa and Southeast Asia for its international sale of wines.

Asia’s big billion

“Wine consumption in Asia overall has touched an all-time high”, says Vinexpo Asia-Pacific Chairman, Dominique Hériard Dubreui. Research says that for the first time in 2006, the consumption of grape-based wines (in a market where other fruit- and rice-based wines are traditionally consumed in high quantities) reached 8.009 million hectolitres or 1.07 billion bottles, an increase of 21.14 per cent compared to 2002.

The region accounted for comprised China, Hong Kong, Japan, South Korea, Singapore, India, Taiwan, Thailand, the Philippines, Vietnam and Malaysia.

Revised forecasts for growth in consumption have gone upwards for the period up to 2011, predicting a figure of 11.856 million hectolitres in 5 years time, representing overall growth of 48% between 2006 and 2011.

This consumption growth rate is in effect double that of the period 2002 – 2006 and is a record 8 times faster than the rest of the world.

By 2011, Asia will account for 4.8 per cent of world wine consumption.

Gulping giants

Japan remains the leading consumer country of imported wines in Asia.

Japan alone accounted for 57.6 per cent of the total volume of wine imported throughout the region in 2006. Between 2002 and 2006, Japan’s imports decreased by 5.3 per cent, but Mr Beynat and Mrs Dubreui say theVinexpo/IWSR study predicts a turnaround in imports between 2006 and 2011 with 9.4 per cent growth over the period.

In 2006, wine consumption in China (including Hong-Kong) accounted for 62.7 per cent of all the wine drunk in Asia. This will increase by 69.2 per cent between 2006 and 2011 to reach 8.11 million hectolitres.

In the 2006-to-2011 period, China will progress from being the 10th to the 8th largest still wine consuming nation in the world, moving ahead of Russia and Romania.

France, the second largest wine exporting country in the world, is the main supplier of the Asian countries accounting for 39.6 per cent of all wines imported into the region in 2006, beating the US into second place in 2006 and ahead of Italy, Australia and Chile.

The big picture

World wine consumption increases regularly and 318.4 million more bottles are consumed every year.

World consumption of “grape-based” still and sparkling wines reached 230.12 million hectolitres in 2006, which is equivalent to 30.7 billion bottles drunk per year.

Between 2006 and 2011, wine consumption is expected to grow by 6.2 per cent to reach 244.52 million hectolitres. Over ten years, therefore, world consumption should increase by 10.8 per cent.

92.8 per cent of wines drunk in the world are still light wines. However, between 2002 and 2011, consumption of sparkling wines will grow twice as fast as that of still wines (2.3 per cent per year).

An interesting facet which underlines the increasing buying power of the average citizen is that worldwide wine turnover is growing twice as fast as consumption in terms of volume.

Sales reached $108.83 billion in 2006, up 9.7 per cent compared to 2002. The trend will continue with growth of 10.8 per cent between 2006 and 2011, representing an overall 21.5 per cent increase in ten years. And no surprises here-the United States will be the leading consumer nation of still wines by 2011.

American drinkers should be downing 27.97 million hectolitres of still wine by 2011, or 3.73 billion bottles.

The US is already the leading world market in terms of what wine drinkers spend, which exceeded the $20-billion mark for the first time in 2006.

France, which at present is the leading wine consuming nation in the world, will only be in third position in 5 years time with its consumption sinking below 27 million hectolitres. Italy, however will maintain its second place in the world wine consumption stakes.

China and Russia continue to return the highest growth figures in wine consumption.

The Chinese consumption figures registered a growth of 36.6 per cent between 2002 and 2006 to reach 4.79 million hectolitres with a further massive increase of 69.2 per cent in the period 2006 to 2011.

About VineExpo

Vinexpo Asia-Pacific 2008: Heading for the big show
Vinexpo heads to Hong Kong on 27, 28 and 29 May 2008 to hold its seventh exhibition outside France at the Hong Kong Convention and Exhibition Centre.

Heralding the event and on a promotional tour to India were Mrs. Dominique Hériard Dubreuil, Chairman, Vinexpo Asia-Pacific & Mr. Robert Beynat, Chief Executive, Vinexpo Asia Pacific. They were in New Delhi during mid-March, during which they also shared the latest trends in the market.

Vinexpo Asia-Pacific, the International Wine and Spirits Exhibition for Asia-Pacific, is seen as the benchmark event in the region.

Major wine and spirits companies worldwide will be there to offer an exclusive display of their products to professional visitors from the 18 Asia-Pacific countries.

Growing interest in the Asian markets is attracting wine and spirits companies from all over the world. Expectations are high, at par with the outlook for economic growth in the region. All studies show that potential growth in the wine market in the next five years is strongest in Asia with more than 9% annual growth forecast, compared to a world average of 1%.

The layout of the 7,000 sq. m of stands in Vinexpo Asia-Pacific is being finalised. The producing countries will be attending: France, Italy, Spain, US, South Africa, Germany, Chile, UK, Portugal, China, Argentina etc.

Henkell & Söhnlein Sektkellereien (Germany), Dynasty Fine Wines (China), Santa Rita (Chile), Marques de Caceres (Spain), Banfi Distribuzione (Italy), Santa Margherita (Italy), Baarsma Wine Group (Netherlands), Sogrape (Portugal) feature amongst the major international names that will be present.

France will be well represented. As in 2006, a 1,000-sq. m. French Pavilion run by Sopexa will host a number of French winegrowing companies. Beside this French area, big names which have already confirmed participation include: Baron Philippe de Rothschild, Lanson International, Castel Frères, Maison Louis Latour, Les Grands Chais de France, Jadot, Champagne Thienot, CVBG Dourthe Kressmann and Rémy Cointreau.

The Vinexpo Asia-Pacific “University” that is organised alongside the show is an added attraction.

Exhibitors and national and regional promotional organisations will be the prime organisers of events here, which include seminars and tasting sessions.