India, a wine producer and consumer country

by Eve Resnick on February 17, 2009

in General

When the Western world is in financial trouble, eyes turn to other markets: India, China, Russia carry the hope of our sick economies for recovery. The wine business is no exception. Wine consumption is on the rise in India but it’s still very marginal compared to spirits and beer consumption. The yearly annual wine consumption is estimated at 10 millions liters – compared to 3,000 millions liters of spirits and 1,000 million liters of beer! The potential for the wine business is huge as long as the wine industry can convince the Indian consumer to trade beer and spirits for wine.

What could help the average Indian consumer to change habits? India produces wines from international grapes, such as Cabernet Sauvignon, Pinot Noir, Merlot, Shiraz and Zinfandel in red and Chardonnay, Chenin, Sauvignon, Clairette and Ugni in white. Chateau Indage, Sula, Grover, Vinsura and Vintage are the five top producers. Indage produced 3,600,000 l (40%); Sula, 2,700,000 25%); Grover, 1,250,000 15%); Vinsura, 250,000 and Vintage, 100,000. This shows Indians are familiar with our traditional grapes and wine styles.

On the other end, their wine and food traditions don’t play in favor of wine consumption. Indians drink tea with their meals. Wine is more the before dinner drink during the long pre-dinner meetings with friends and family. An other obstacle is the legal drinking age of 25. Last but not least, only the upper middle class can afford to drink wine because of its still high price for the average income. The middle class is estimated at 300 million individuals, but the upper middle class at a mere 30 million potential consumers. They are mostly located in three states: Maharastra, Kamataka and Delhi.

Imports are a very small part of the Indian market because of the high taxes and the little number of importers. Getting an import license costs the equivalent of about 8000 euros, which is a very high price for a local merchant. What are the market shares of the various importing countries?

- France: 40,5% (81,500 cases)
- Australia: 22,4% (45,000 cases)
- USA: 14,9% (30,000 cases)
- Italy: 8,2% (16,500 cases)
- Chili: 5,8% (11 750 cases)
- South Africa: 4,1% (8,250 cases)
- Germany and Argentina: 2,7% each (5,500 cases)
- Spain: 2% (4,000 cases)

What is the best strategy to approach the Indian market? First of all, there is no Indian market: each state is different and requires a specific approach. Second, there are two main doors: Mumbai, capital of the Maharashtra with a booming economy in spite of the terrorist threats and attacks and a good wine knowledge because the region includes 90% of the Indian vineyards and Bangalore, capital of the Karnataka, the Indian “Silicon Valley”, head quarters of the Grover Vineyards and full of young graduates back from Europe or the US with a thirst for Western lifestyle.

India is indeed one of the most promising market for imported wines but the “candidate” to this Eldorado has to be aware of the numerous traps: a family oriented type of business, very strong local cultures, a complex and subject to change system of distribution and high costs of imports in taxes. But the Indian consumers are curious of our wines and open to the adventure!

Comments on this entry are closed.

Previous post:

Next post: