Indian Wine Market Summary - Update

by Alok Chandra  - Dated
September 2004

The consumption of wines in India recorded a spiffy 14% growth in 2003-04 to reach 490,000 9-litre cases against 430,000 cases the previous year. This is being driven by increasing disposable incomes in the ‘shining’ Indian economy, changing life styles, an increasing number of professionals coming back to work in India, and a growing awareness of the health benefits of wine – as well as the perception of wines as being up-market and sophisticated.

 It is expected that wine consumption in India will grow 10-fold to reach about 5 million cases in ten years – while that is still a far cry from China’s present 50-million case market, the Indian market nevertheless holds out enormous potential for both domestic producers as well as importers.

Customs duties reduced by 8 – 12% with the elimination of the 4% “special additional duty” from February 2004, and while still a very high 140% - 250%, have been partly offset by hotels starting to import duty free wines – the scheme has now been extended to all hotels, restaurants and clubs earning a certain level of foreign exchange.

The forward-looking ‘Grape & Wine policy’ of the Maharashtra government has been further liberalised with the elimination of both excise duties as well as sales tax on wines produced within the state, and we can expect prices to drop – and volumes to rise. The Karnataka government is also actively considering introducing similar policies – perhaps a precursor of “the shape of things to come”?

Wine is now de rigour at most society dinner parties, with women leading the charge as many are “ …tired of spending the evening with whisky-swilling men”.

One sign of the changes happening is the emergence of Wine Clubs in a number of cities – Delhi has two (the Delhi Wine Club and the Wine Society, Delhi); the Bangalore Wine Club has been around since 2001; there is the Chandigarh Wine Club & The Hyderabad Wine Club, and I have received inquiries from places like Pune and Vizag about how to start wine clubs.

The number of wines on offer to consumers has also undergone a sea-change: today there are over 200 wine labels available in Bombay retail shelves – up from a mere 30 numbers just two years back. Not only have the number of imported wines increased exponentially, the Indian producers, too, have introduced a number of new labels and wine styles: Indage’ s Ivy range has been complemented with bottled-in-India wines from all over the globe; Sula has wines ranging from Rs. 20/bottle upto Rs.500, as well as imported wines from Australia and South Africa; Grover Vineyards’ Sauvignon Blanc has just hit the shelves. In addition wines from two new Maharashtra-based wineries (Vinsura Vineyards and ND Wines) are now available widely.

Prices, too, have been raised, with wines ranging upto Rs 2000/bottle now available. However, the Rs. 500/bottle price remains a formidable bar, and volumes taper off sharply above that level.

	INDIAN WINE MARKET - VOLUMES 2003-04
		VOLUMES 2003-04 (000 cases)			RETAIL VALUE
	Segment	Domestic	Imports*	TOTAL	Rs. Mio	Rs/btl
	Sparkling wines	9	6	25	162	546
	Still wines - premium	147	62	209	925	369
	Still wines - cheap	254		254	335	110
	Fortified wines	1	2	3	10	114
	Total	421	69	490	1432	244

• Most of the sales of domestic cheap wines comes from Goa (nearly 15,00 cs/month)
  If this segment is excluded, the market grew 25% to 236,000 cases
  
   
• Indage is the clear market leader, followed by Grover and Sula; however, Sula’s volumes have grown by over 65% to 25,000 cases, and it may well take second spot next year.
  
   
• Bombay is the largest wine market, followed by Delhi, Bangalore and Goa, which between them account for nearly 75% of all imported and premium wines.
  
   
• Imported wines include about 18,000 cases of smuggled wines and “carry back” by travellers returning to India. French wines are still the largest imported, but wines from Australia and California are making strong inroads.
  
   
• The Imported wine category is fragmented, with over 1000 labels from numerous manufacturers on offer – principally to hotels. As a company E&J Gallo is the leader with over 3000 cases sold in 2003-04.
   

Wine Imports     No licence is required, and anyone can import wines into a Customs Bonded Warehouse; thereafter, goods can move either duty free (against a licence from hotels) or duty paid to licence holders after paying the relevant customs duties.     Import duties 03-04           Duties on wines at present are     CIF Value (US$/Case) <$25 $25 - $40 > $40     Basic Customs duty 100% 100% 100%     Countervailing Duty  75% 50% or $37/case 20% or $40/case     Minimum effective duty 250% 200% 140%     Onward Sales Since alcoholic beverages are a state subject, each of India’s 29 states and 6 union territories have their own rules & regulations and duties & taxes – it is tantamount to operating in 35 different countries!  Use of the mass media to promote alcoholic beverages is not permitted, but in-shop advertising or on-premise promotions are allowed in all states except Delhi.