1984 1994 2003 2004
G
(
G
G
E
DP (US $ billions) 206.5 322.6 600.7
Average annual growth) 1984-94 1994-04 2003 2004
DP 5.4 5.4 8.6 6.9
DP per capita 3.3 4.1 7 5.4
xports of goods and services 9 12.8 4.9 8
Table 1 Key Economic Long Term Trends
Exports have grown, especially exports of services, which grew by 105 % in 2004-05,
while economic growth in India is among the fastest in the world with an average rate of
5%.
(US $ millions ) 1984 1994 2003 2004
Total Exports (fob) 10,061 26,855 62,952 76,345
otal imports (cif) 15,715 35,904 79,658 99,836 T
Table 2 Imports exports India
More than coherently imports of foodstuffs and drinks are growing at an annual rate of
over 25% and the consumption of wines in India recorded 14% growth in 2003-04 to reach
490.000 9-litre cases, against 430.000 cases the previous year and 22% growth in 2005-
2006 to reach 650.000 cases.
The 650.000 case market totalling a sale of US $ 40 million represents less than 2% of the
total alcoholic market of 75 million cases ringing in the annual sale of US$ 4 Billion. The
average annual growth of 22% since the liberalization policy announced in 2001 is
expected to grow further to 30%. Figures presented by the Italian Trade Commissioner in
Mumbai, Mr. Vittorio Mecozzi, during the conference organized in Verona (Italy) at
Vinitaly 2006 by Confagricoltura (Italian Association of fruit growers and producers)
suggests that the consumption of 5.8 million litres in 2004-05 is expected to rise to 15
million litres by 2010-11.
Sign of the changes happening is the presence of Wine Clubs in many important cities: the
Delhi Wine Club and the Wine Society of Delhi, the Bangalore Wine Club which has been
founded since 2001, the Chandigarh Wine Club, The Hyderabad Wine Club.
Considering those very interesting data, this research paper is organized in order to review
the nascent Indian wine industry in terms of the area, production and marketing of wines in
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the country. After an overview on the Indian wine industry which will cover in detail the
history, the categories and the techniques of the Indian Wine, we will proceed trough an
accurate market analysis in order to understand the market main figures, the price
segmentation and retail price structure, the distribution channels, the market most influent
players, the market trends and the taxation and duty structure.
The second part of the work will study the new Indian consumer, taking in account
economical factors (an increasing disposable income of the youth, a more availability and
visibility of wines, the growing acceptance of the new culture in the metros, etc.) and also
social and religious factor: a majority of people don't consume alcohol at all and consider it
a taboo. India is primarily a whisky, vodka and rum drinking country.
The overall potential wine market is composed by 200 million people, supposedly
consisting of the burgeoning middle classes and of course the upper-middle and rich
classes which form the immediate potentials, but it might take years before the current
habits can be changed: the figure of 20-30 million as the potential market represents a
more realistic target audience.
In this chapter of the thesis we will underline the relation between the Indian consumer
with Italian goods in general, considering that Indians showed a special appreciation for
Italian food and for the country as tourist destination. A last consideration will be spent on
the quality-price ratio of the Indian consumers who are becoming more and more price
sensitive and attentive to fill the lack of knowledge of the previous years.
In the third chapter we will describe the present situation of Italian wine exports in India
and we will try to develop a marketing mix for a new Italian wine brand able to penetrate
successfully the Indian market, keeping in mind all the market indicators developed in the
previous chapters.
Looking at the interest shown by the audience in many wine events dedicated to the India
we can be very encouraging about the Indian market, and we can be sure of its importance
in the future marketing plans of wine exporters. Many new Italian wines are coming to
India soon and some of them may even want to have a bigger share of the pie and join
Indian wine producers in expanding their market share.
After a period of stagnant economic trends (2001-2005), when the Italian wine sector have
experienced a general crisis, which has still not completely succeeded in developing
powerful and clear-cut strategies with which to confront New World competitors in an
increasingly complex global scenario, the demand for Italian-made wine is up 5,4% in
value, due to an increase in exports to the EU (up 5%) and to the USA (up 4,2%), but with
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positive signals also in emerging countries such as China, where the value of exports more
than doubled (up 110%) and India where it more than tripled (up 238 %). Thus reported
Coldiretti, the largest European farmers' association, referring to Istat (Italian Statistics
Institute) figures, in underlining that wine is the main Italian food export, totalling €2.85
billion (about $3.69 billion)in 2004.
Secondly, Indian economic growth is driving development in demand for international
wines; international wines improved by 30% over the last decade (despite high costs
making wine a luxury product) and growth will continue at an annual rate of 22%. Made in
Italy also enjoys an excellent reputation in India but competitiveness of Italian wine must
be backed up not only by promotion but also international training processes so that local
contacts (such as chefs) learn more about the quality of Italian wines.
Indian wine market remains together with the Chinese one a real opportunity not to be
missed.
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1. The Indian wine market
Currently the Indian wine industry is growing at the rate of 25-30% per annumn, with few
good wine makers. The market for wine in India is predicted to grow at a CAGR
(Compound Annual Growth Rate) of 12% in volume between 2004 and 2009 (Source:
2004, Euromonitor International). A host of new wineries, new imported brands and the
easing of government rules and taxes are expected to be the catalysts for growth. As the
Indian economy continues to do well, with strong GDP growth predicted, the disposable
income of Indian consumers available for spending on luxuries is expected to increase.
Sales of wine in India in 2004 stood at over 4 million litres, dwarfed by sales of beer and
spirits. However, growth of wine has been unprecedented in a country which does not have
a culture of wine consumption. Volume sales of wine grew by 17.5% in 2004, with a
compound annual growth rate of close to 20% between 1999 and 2004.
Category 1997-02 2002-03 2003-04 2004-05
Premium Wines (still) 200% 43% 22% 30%
Sparkling wines 200% 17% 12% 10%
Sub Total 200% 38% 20% 27%
Cheap and fortified wines 120% 9% 3% 10%
TOTAL 147% 21% 11% 18%
Table 3 Volume growth (Source: Indian wine industry report, Centro Estero delle Camere di Commercio del Veneto,
Representative Desk in India, 2005)
Category 1997-02 2002-03 2003-04 2004-05
Premium Wines (still) 243% 43% 28% 24%
Sparkling wines 260% 17% 16% 11%
Sub Total 247% 36% 25% 21%
Cheap and fortified wines 142% 19% 3% 10%
TOTAL 211% 31% 20% 19%
Table 4 Revenue growth (Source: Indian wine industry report, Centro Estero delle Camere di Commercio del Veneto,
Representative Desk in India, 2005)
There are a number of reasons why wine, which was previously close to unknown in the
country, has seen substantial growth over the past few years. With the Indian economy
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doing well, the disposable income available to the middle and upper class has risen, and
indulgence in things previously considered luxurious is a popular way of spending it. The
number of Indian professionals who have worked in Western countries, and have
experienced the culture of consuming wine, is on the rise. Such people, apart from being
consumers of wine themselves, are spreading the word and encouraging the consumption
of wine. Wine makers are starting to present wine tasting sessions and wine festivals (an
example is the wine festival held in Amby valley, Maharashtra, by Champagne Indage in
March 2004).
Wine has become de rigueur at parties and social events, alongside spirits, which were
previously the only option. People have also moved on from asking just for red or white
wine to requesting specific brands. This interest is genuine, as is seen from the increasing
desire to learn about serving wine, and the number of wine clubs that have emerged in
places like Delhi, Chandigarh, Hyderabad and Bangalore.
Strenghtness of the wine marketing in the country and major growth drivers will be greater
product education, increasing brand and product awareness, media promotional campaigns,
the entry of more players, the growing availability of good quality wines, the build up of
consumer relationships, expansion in the production capacities of companies and
technology upgrading by companies.
At the other hand the lack of promotional activities for wine consumption in the country
and unfavourable rules for domestic marketing of wines except in few states, and also the
poor storage and transport facilities in spite of tropical climate are the main problems of
the Indian wine marketing. These and other factors contributed to India’s low wine
consumption which is hardly 0,07 L per capita (equivalent to a coffee spoon per capita),
while the world average consumption is 5 bottles of wine per year.
Certain promotional strategies, such as easing of tariff barriers for the wines and more
favourable policies, such as treating wine as a food item for taxation purposes, (which is
the case in the states of Andhra Pradesh and Tamil Nadu as of 2004), developing
awareness on health benefits of wine and to supply good quality wines in reasonable prices
in the domestic market are emphasized.
In 2005 the overall sales were around 650.000 cases a year. Table wines account for 88-90
percent of the market and expensive varieties of vintage wines account for the remaining
10-12%.
Approximately 38 wineries are presently operating in the country with a total production
of 6.2 million litres annually. Maharashtra is leading among the states with 36 wineries and
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5.4 million litres production. Apart from this, 72.000 wine cases are imported mainly by
ITDC, Sansula, Brindco, E. & J. Gallo and other private companies. At present (2006)
762.000 wine cases are sold every year, which includes 46.000 cases of sparkling wines.
Which is in contrast to the much higher figures of other drinks such as whisky, brandy and
rum sold in the country. Eighty percent of wine consumption in the country is confined in
major cities such as Mumbai (39%), Delhi (23%), Bangalore (9%) and Goa (9%).
There are three big companies presently making “Premium” wine: Indage, Sula and Grover
Vineyards, while others, such as Shaw Wallace, McDowells and the six Goa-based
companies, produce cheaper wines from table grapes and the bulk of the Goa output is
consumed within that state itself.
However, more and more wineries are being set up with the aim to produce mainly
“international style” wines, namely Vinsura.
While Indage is the market leader, Sula's volumes grew by over 65 per cent during the last
years. Already there are more than 30 wineries operational with over 100 Indian brands.
Australians being the best exporters are already present in the country with Howling
Wolves Wine Group (HWWG), Ironstone vineyards, Greenpoint wines. Others include
Terraza, Casa Lapostolle from South America along with old liquor majors in India like
Seagram's and UDV. Sopexa, a French marketing and promotion board has setup office in
India with a plan to increase French wine import in India by 50% in next two years.
In the next few years, there would be over 100 wineries of varying sizes operating in the
country, and with the government support in reduction of duties, the prices would reduce
leading to the growth in this industry. We believe that this will lead to consolidation in the
wine industry with few big players and few small players in the market.
1.1. The Indian wine industry
1.1.1. History of Indian Wine
The history of wine in India goes back to ancient times, although it's peak eras date to the
time of British presence. In India, generally, wine tended to be brought into the culture by
various waves of conquerors and sojourners; however, there are several references to an
indigenous production of wine in both North-western and Western India.
Wine has been made in India for as many as 5,000 years. It was the early European
travellers to the courts of the Mughal emperors Akbar, Jehangir and Shah Jehan in the
sixteenth and seventeenth centuries A.D. who reported tasting wines from the royal
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vineyards. Both red (Kandhari) and white wines (Bhokri, Fakdi, Sahebi etc.) were
produced.
Fig. 1 The Mughal Empire map (Source: Compare Infobase, 2004)
One of the names for wine in ancient India was Drakshasava. Artefacts from Harappan
civilisation indicate indigenous familiarity with wine. In the Vedic period, it is
occasionally argued, wine was known as Somarasa, associated with Indra, and poured as a
libation and drunk at religious festivals.
Kautilya's Arthashastra, which dates from somewhere between 321-150BC (that is, during
the Mauryan Empire, which was in the making during Alexander's conquests in north-
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