Indian wine market upbeat

Indian wine industry has become increasingly bullish. Increase in wine consumption in the country is predictably driven by rise in purchasing power parity of middle-class, changing lifestyles, habits and attitudes of young adults and women.

Believe it or not, since 2001, Indian wine market has been drawing world attention. Considered as the fastest-growing wine market in the wider world, Indian wine industry has sparked enormous amount of interest among wine manufacturers around the world.

Sales of wine in India have literally pole-vaulted, from a mere 3, 40,000 cases in 2001-02 to about 1.5 million cases in March ’09- a remarkable growth of nearly 25 percent per annum. These statistics also include volumes of ‘cheap’ wines being brewed from table grapes (Golconda, Goan wines). So the actual increases of wines brewed from wine grapes is even more-their volumes grew six times, from 1,25,000 cases in 2002, to 7,75,000 cases last year.

However, India’s per capita wine consumption is still a paltry 9 ml, as opposed to 370 ml in China and 2.1 litres in Brazil. So, this merely indicates India’s growth potential in the coming years. According to expert estimates, total wine consumption in the country will grow “10 times in 10 years”. By 2015, it is estimated that the total wine sales in India will touch almost 40 millions. So, this will be a matter of Interest for Indian wine manufacturers, suppliers and exporters.

Increase in wine consumption in the country is predictably driven by different factors like, rise in purchasing power parity of middle-class, changing lifestyles, habits and attitudes (especially of young adults and women), and the rise in use of TV and internet. The growth is also stimulated by increase in availability of quality wines, both those manufactured in India and imported from abroad, large number of people from overseas coming to and preferring to stay back in India; and the supposed health benefits from wine.

Even government attitude towards the wine industry is changing. A National wine Board has been established. The Maharashtra Grape Processing Policy has helped in setting up of some 50 new wineries in that state, and even Karnataka wine policy will attempt to do the same.

A study by consultants Mckinsey & Co says that total number of households with income levels above Rs 5 lakh will be around 42.6 million in 2025. So these households will naturally add to the wine consumption in the country. And, arguably some of the 95 million households in the next income bracket will also manage to be wine consumers.

Of course, there will be many challenges Indian wine manufacturers and suppliers will have to confront with, from high prices due to high import tariffs and a slew of state level taxes, as well as high cost of manufacturing and marketing the stuff in the face of stiff competition from spirit and beer manufacturers.

But all this will change. Increased investment and production will bring down the cost, which in turn will lower the prices. This will further attract investment and boost sales.

Indeed, the Indian wine industry has come a long way.