Wine Industry in India: In High Spirits

CONSISTENT performance has infused immense optimism within the wine industry in India. This buoyancy is felt not only by the domestic companies, but also by the global wine manufacturers – propelling India as a potential business market. As the growth drivers for wine industry re-enforce themselves in the post-recession economy, India poses as an upcoming investment destination for wine manufacturers worldwide.

India is known for its strong agrarian economy. However, the grape production and processing business for wine production is still nascent in the country. With an estimated annual production of 1.6 million metric tonnes of grapes and an area under cultivation of about 60 thousand hectares - only around 1.2 per cent is processed into wine. Majority of the grape production and cultivation enters the wholesale fruit or resins markets, and the only a small percentage of the overall grape production and processing participates in winemaking.  Nonetheless, the ride towards growth has begun with the increase in demand for Indian wines in export markets, in addition to the growing cosmopolitan population in the metropolis cities of India. And the wine industry of India is prospecting a record growth year ahead.

Growth markets
The major growth driver for the industry is pegged to be the wide gap between the demand and supply of wines in India. Despite of a vast population of over 1.1 billion people, the country has one of the lowest wine-consuming populations in the world – estimated at around 9 million in 2008. Moreover, with one of the young demographic profile and rise of the cosmopolitan culture, analysts say the future will witness a significant rise in the consumer base of wines in India.

Piera Martellozzo, owner of the Italy-based wine company by the same name, says, "We are looking forward to introduce our brand of wines in India, as it is a huge market that holds immense business potential for the wine industry. The changing lifestyle and young population will be out target customers residing primarily in the cities and urban areas. We aim to expand our business through partnership with a distributor in India."

The growth potential of the wine markets is also attracting many Indian companies to venture into the business, and has witnessed a rise in the number of domestic players in the industry. A volume growth of around 70% in the first half of 2010 and target of Rs 100-crore revenue by the end of March this year, Sula Wines believes in offering a mix of domestically produced and imported wines in its portfolio. According to Rajeev Samant, founder & chief executive officer, Sula Wines, the wine market in India it is around Rs 350-400 crore. He mentions in the Financial Express newspaper, "We plan to expand our current facility, along with setting up more facilities. For that, we have a capital requirement of around Rs 25-30 crore."

Export potential
In country that is dominated by the beer and whisky, wines have not yet gained entry into the mainstream beverage market – price being a major hurdle. With aggressive marketing, variable pricing strategies and introduction of local variants, however, the wine industry is expecting to register a spin in the growth trajectory.   In addition, the backdrop of recession and low-spending regimes across many parts of the world has further strengthened India's position as a business market for global brands. This holds significance as the high-end premium range of wines is still dominated by imported brands owing to their brand awareness and high emphasis on quality and taste.

The types of wines popular in India include premium wines or still mainly into two major categories: white and redAir Jordan Shoes Men