(Batch 2011-13)


Rajat Chaturvedi (33) Rohan Vaidya (62) Ritesh Naik (41) Akash Jain (49) Prateek Garg (47) Poonam (17) Swati Kumari (13)

Faculty Guide: Ankush Guha


The prospects of growth for wine in India are quite high. About 600 million Indian’s are currently below the legal drinking age and 100 million will come of that age over the next 3 to 4 years. So, the consumption of alcoholic beverages such as wine is expected to increase. In spite of India’s high import tariffs on wine, this country was one of the world’s fastest growing wine markets. However, states like Maharashtra, Karnataka and Himachal Pradesh have taken steps to encourage wine industry and given preferential treatments by liberalizing their excise regime and reducing excise duties. Eighty percent consumption of wine in India is confined to major cities such as Mumbai (39%), Delhi (23%), Bangalore (9%) and the Goa (9%). The Supply chain of the wine industry in India is fairly linear. Winemakers are the key to the supply chain and they record good profits. The key to success in the wine business is branding so, a substantial chunk of dollars are spent in selling and distribution. It is also critical to note that, promotion of alcoholic beverages is prohibited in India. So, winemakers use strategies such as surrogate marketing and creating economies of scale. We analyzed the current situation of Indian wine industry trends, supply chain models, also we simultaneously reviewed European wine industry, the difference between Indian and European logistics, recommended how can Indian wine industry compete with counterparts.. One of the most important challenge in organized retail in India is faced by poor supply chain and logistics management. The infrastructure in India in terms of road, rail, and air links are not sufficient. The wineries location must be taken into account while thinking about the wine supply chain. Wine is made of grapes and grapes can be grown in certain locations. Some of the most important factors that determine a wines location are soil, climate irrigation and geography. Various models are used in Europe for Wine logistics. According to one model Winemakers or wine co-ops grow grapes and are responsible for vinification and blending (and sometimes for bottling). Otherwise bottling, labeling and packaging operations are carried out by Logistics service providers. To devise a system in which vineyards are customer-driven and to carve out a crucial role for themselves, wine co-ops will have to merge so that they can develop the technical and human resources that are required to fulfill a partner’s role. their European


Deregulation has led to the growth of wide transport networks. Deregulation of shipments, optimal route Routing and plan scheduling, and the development of national services. The membership of eastern European countries in the European Union has resulted in a shift in the balance among local, regional and long-distance transports. Outsourcing of logistics activities is widespread in Europe and is gaining popularity. Many companies hire specialized logistics service providers to do the job. This trend has resulted in industrial companies outsourcing parts of the standard logistics services like shipping, transhipping and storage. Added to this development are increasing numbers of high-quality logistics services and contract logistics.



Of the total grapes produced in the country only around 1. overall experience enhancement and to achieve competitive strategic advantage in order to obtain sustainable growth rate.8 million metric tons. It has about 53 per cent of arable land (land available for cultivation of crops as compared to measly average of about 11 per cent for the rest of the world). WHY WINE? India in the last decade has become the second largest producer of fruits and vegetables in the world next only to china. at the same time there are a number of opportunities. especially with higher spending power that brings about a shift in 5 . Barcode system.S. and the area under cultivation to be about 80. Information technologies like Internet. India currently produces about 190 million tons of fruits and vegetables.5% is processed into wine.000 hectares. would be consumed fresh. on the other hand. But. Organization.A.INTRODUCTION Consumer are constantly demanding better product. consumed in the U. increased product variety and lower profit margin due to competition and commoditization of product and services. along with better overall services and customer support. The annual grape production in the country is currently estimated to be 1. is struggling with shorter product life cycle. Today. irrespective of variety. of wine. in some industries completion is shifting from competition between the organizations to competition between the supply-chain of that particular organization. ERP system are probably the most important enabler for current changes and trend in supply chain management. In taking a “supply chainwide” into their business strategies some organization are focusing on maximizing the profit of the supply chain as a whole as a way to maximize their own profit.000 ml. as compared to 9. at a lower price. Approximately 85% of the total production. In global world targeting local market is not enough for long term company survival. Per capita consumption in India is only 9 ml. Good supply chain management is becoming for resource optimization.

The wine industry is in its budding stage in the country and so far has not been able to establish any structure for the integrated development of the wine industry on its own. what is the future for industry. in which areas its required to improve itself and what are the barriers for the industry. their supply chain models. So considering in mind both the factors we choose to study wine industries of both the countries. RESEARCH METHODOLOGY The methodology we are using to analyze industries of India and Europe and develop a comparative study between them is SWOT (STRENGTH. GOALS FOR PROJECT The goals for the project is to study and analyze the market trend and the current situation of Indian wine industry. The Indian wine market is growing rapidly at 25-30% per annum for the last five years. OPPORTUNITIES. Belgium is known in the world for its RED WINE and France is known for its CHAMPAGNE. also rapid urbanization and growth in the retail sector are expected to sustain the domestic demand for wine. THREAT) Analysis. the success factors behind them. their supply chain models and then recommend them how they can reduce cost and make their global presence by exploiting the resources available and implementing new technologies. 6 . their problem areas and opportunities at the same time analyze European wine industries. WEEKNESS.consumption pattern. Europe is the biggest market of wine manufacturing in the world. After collecting the data of both the areas we will make a comparative study between them looking at the SWOT analysis of both India and Europe and their after recommendation will be made to Indian industries as in what they can do in order to wider their market share. With the help of SWOT we can analyze each and every aspects of that industry like what is their present situation.

Many major players often use imported vines for growing the perfect fruit. Recently. they also have fiscal powers to impose additional excise duties. As more and more Indians travel overseas for business and pleasure. wineries offer technical help and agricultural expertise to farmers. companies in the Indian Made Foreign Liquor (IMFL) space like Diageo. adopt new lifestyle patterns and yearn for the good things in life. Grover Vineyards and Sula Vineyards too have made smart strides in a short time span. Bangalore and Goa 9% respectively. contract farming for wine grapes is extensively practised. followed then by Delhi with 23%. "Wine is now always there at places where it hadn't been even offered before. and the rest of India accounting for the remaining 20% of the market. City dwellers still remain the major guzzlers. Here. like parties and weddings. All of the 28 states and seven union territories operate as individual power centers that formulate their policy independently. Mumbai is the leading wine city in terms of volume consumption with 39% of total wine consumed. 7 . Wines made in India are priced between Rs 450-700 and imported ones could cost upwards of Rs 2500. Wine distribution is largely dictated by the sales and excise policy of each state. domestic wine consumption too has correspondingly increased.INDIA’S OVERVIEW CURRENT SITUATION IN INDIA Drinking wine as a lifestyle choice is catching up very fast. While major producers own lands and thus grow their own grapes. United Breweries and Seagram’s too have ventured into making wine. The states are not only allowed autonomy in formulating policy for the sale of wine and alcohol. THE PLAYERS Champagne Indage has been the pioneer in making French style wine in India. Industry experts predict India to emerge as one of the largest wine producers in the world by 2058. prices notwithstanding.

or the quickness in responding to ever changing tastes of the customer. where competition is intense and stakes are high. The infrastructure in India in terms of road. 8 . Logistics and Supply Chain enables an organized retailer to move or store products more effectively. vehicles transferring products back and forth.the American retailer works almost entirely on crossdocking and is likely to demand higher service levels. In retail. the need for just-in-time services is increasing. Therefore warehousing plays a major role as an aspect of supply chain operations. including potential levies for delays in shipment. It is the supply chain that ensures to the customer in all the various offerings that a company decide for its customers. The success in this competitive and dynamic sector depends on achieving an efficient logistics and supply chain. the logistics market for organized retail is pegged at $50 million and is growing at 16%. which can be provided by professionals. Therefore. and air links are not sufficient. but also frees up storage space for more productive use. rail. as they combine the best systems and expertise to manage a ready flow of goods and services. Retail analysts say on-time order replenishments will become even more critical once the WalMart/ Bharti combine begins operations . In India. the margins in the retail sector can be improved by 3% 5% by just improving the supply chain and logistics management. In the organized retail market in India the role of supply chain is very important for the Indian customer demands at affordable prices a variety of product mix. The importance can be understood by the fact that the logistics management cost component in India is as high as 7% -10% against the global average of 4% 5% of the total retail price. service. customer satisfaction is paramount. supply chain will take on an increasingly important role. With the end consumer becoming more demanding and time conscious. One of the most important challenge in organized retail in India is faced by poor supply chain and logistics management. be it cost. with demand for endto-end logistics solutions far outstripping supply. Efficient logistics management not only prevents needless movement of goods.ROLE OF SUPPLY CHAIN IN INDIAN ORGANIZED RETAIL. With the expansion of retail.

Plans are for building new facilities in New Mangalore and Krishnaptnam. While India's rail network exceeds 63. rails. Foreign firms are now allowed to establish joint ventures with local manufacturers. ports and airports is the most vulnerable part of its supplychain presence. Imports of air conditioners and refrigerators continue in small quantities. SERVICE PROVIDERS FOR TRANSPORT LOGISTICS The three major international carriers have made large investments in India and play a vital role. the import of refrigerators was restricted. ROAD SYSTEM AND TRANSPORTATION India's infrastructure of roads. India's roads consist of 2. much of this network is questionable as to reliability for modern transportation needs.REFRIGERATION AND AIR CONDITIONING EQUIPMENT IN INDIA The Government of India (GOI) considered air conditioning and refrigeration products as luxury items about 10 years ago and assigned high duty rates to the products. UPS is investing in new UPS Stores in New Delhi. In both cases. Pune and Bangalore. Vishakhapatram. PORTS OF ENTRY India's major ports are Haldia.4 million kilometers of paved roads and more than a million kilometers of unpaved roadway. the best two-thirds are broad-gauge and old. Indian industry looks forward to technology collaborations with other countries including the U. Until recently. Jawaharlal Nehru Port Trust. Mumbai.S. New Mangalore. Mumbai. Sri Lanka ports are serving India now for large container ships. Indian exporters import these products for their own use rather than for resale. 9 .000 kilometers.

10 . Information transfer across the cold chain supply is crucial for ensuring the viability of the very process including logistics. the supply chain is determined by excise policies in individual states.375 million. Grants to establish new storage facilities to the tune of 25 per cent of capital expenditure. reduction in peak import duties on equipment imported for storage facilities and taxes on them. West Bengal. Andhra Pradesh. With almost 30 per cent of the total fruit and vegetables produced in India perishing due to lack of post-harvest handling facilities in the country. Improvement and development of the cold chain infrastructure is crucial for the Indian economy. Himachal Pradesh. which is equivalent to US$ 475 million. which amounts to almost $10-15 billion. Rajasthan. All supply to institutions and retailers is totally controlled by the prevalent excise policies in the individual states. Information from sensor-equipped RFID planted in the goods transported (bins or units included) during the entire cold-chain process needs to be assimilated real-time. Chandigarh. overcoming exceptions. and Uttarakhand Tamil Nadu. The distribution systems are different in various states like Maharashtra. 21. Goa. are some of the incentives provided.CHALLENGES IN INDIA In the case of liquor and wine companies. The Indian cold chains market is largely untapped and lined by several players in the unorganized sector which clues for immense investment and development opportunities. The total cold chain market in India is worth Rs. and addressing painpoints across the supply chain. The flow of information is essential for correcting processes. Transport permits to supply wines and liquor are valid for a limited time period only COLD CHAINS IN INDIA The cold chain industry is still at a nascent stage in India with few players operating in the space. Supply to retailers is not allowed in Tamil Nadu. and the current cold storage infrastructure and capacity are grossly inadequate. the economic justification for investments in this sector exists. Karnataka. Delhi.

as it is the thing which decides the whole price and the distribution of the product. The wine supply chain has always been complex and fragmented and with more distant suppliers and ever-more demanding customers.LOGISTICS IN SUPPLY-CHAIN OF WINE INDUSTRY In every sector supply chain is main concern. It is determined that the wine supply chain could be broken down into the following key areas:  Grape Grower  Wine Producer  Bulk Distributor  Transit Cellar  Filler / Packer  Finished Goods   Distributor Retail 11 . In today’s business scenario where distribution is complex and fragmented and it’s really difficult for the manufactures to source its products effectively. this brings challenges to the manufacturers to implement effective supply chain system.

12 .

Disciplined record keeping is a key success factor. he has to maintain its inventory as a lot. and type of product and from where it’s coming. type and manufacturer. It is essential that the grower keep records for each plot or block under his control. topography. and climate. he should maintain its records separately. This includes details about the location. it’s very important that grapes should reach to the producer at the right time. storage. It should be more specific to the product initials. as he has to supply product to its different location. batch/lot. The supply chain should consist all information like this. As we also cannot keep grapes for the long time as they are perishable in nature so it’s necessary to have a better supply chain from the field to the vinery/vine producer. So there is a chance of wastage if there is not a proper supply. He also have to maintain its inventory as he is a bulk distributor. Good supply chain also results in quality of vine. Diversity and quality of wine results not only from the type of grape used. WINE PRODUCER After growing. Supply chain here should be specific in nature as it should inform about the supplier. processing. as well as record keeping of appropriate information about what is received and what is dispatched. Vinery should get grapes at prescribed time so that it not affects the manufacturing cost. dispatch. Bulk distributor is one who should have proper supply chain basics. sampling and analysis of bulk wine. It’s save grapes from rotten. BULK DISTRIBUTOR The bulk distributor is responsible for receipt.GRAPE GROWER This is the initial stage of the vine producing. 13 . As many as 4000 varieties of Vitis Vinefera have been developed and are used in the production of wines. Which also results in reduces costs. but also from the distinctive qualities of soil. As the idle machine also increased the cost. As it delivers raw material for procuring at time to time.

Retails send the pallets and cartoons from the distributor to the retail stores. He also has to maintain proper supply to its retailers according to date and time. sampling. It is responsible for the receipt. and dispatch of finished goods. RETAIL Here the retailers received the pallets and cartoons from the distributors and sells it to its end customer. dispatch. as well as record keeping of appropriate information about what is received and what is dispatched. FILLERS/PACKER Fillers are the filling unit in vinery. He is also responsible for the inventory and re-labeling for the product. They separate vines from their transit cellar and distribution part. 14 . filling. storage. sampling and analysis of bulk wine. and from there it’s directly sells to its end customers. Here also they keep records of the different lot and batch and supply accordingly to its different distributors. The finished goods distributor receives pallets and cartons from the filler/packer. From this point finished goods direct source to its distribution area which are located in different areas. What differentiates the bulk distributor from the transit cellar is that the former has a commercial role (he sends invoices) whereas the latter has only a role of transit with no commercial and no invoicing goal. The finished goods distributor may also re-pack and re-label the products as per specific customer requirements.TRANSIT CELLAR The transit cellar is responsible for the receipt. Distributor sends it to the retailers in different locations. which are recorded. These trade items and logistic units are identified with lot numbers. The transit cellar can be part of the filler/packer company (geographically separate or not) or can be outsourced. storage. He also has to keep all the information about the sourced product. DISTRIBUTOR The finished goods come to the distributor for retailers. processing.

In spite of India’s high import tariffs on wine.CHAIN Imagine starting a winery for just Rs 2200. So.000. consumption of wine in India is projected to increase to 2 million cases by 2011 and 4 million cases by 2015. Yes. The size of the Indian wine market is small when compared to global consumption and annual per capita consumption of 70 litres in France and Italy. the consumption was about 9 millilitres annually.3 million liters or 1. At a per capita level. this country was one of the world’s fastest growing wine markets. Despite the recent setback. the world wine consumption was 2. About 600 million Indian’s are currently below the legal drinking age and 100 million will come of that age over the next 3 to 4 years. the Wine Industry of India is at its introduction stage of its life cycle and a small winery can be started in India with an investment of about Rs 2200.000 in a country where the wine industry is growing at a rate of 25% to 30%. However. Each of India’s 28 states and 7 union territories has its own rules and regulations for sale of alcohol. the wine consumption in India was only about 13. The prospects of growth for wine in India are quite high. 20 litres in Australia and 40 millilitres in China. In some states an imported wine may cost almost 4 to 5 times of its price. the level of tax burden for both local winemakers and importers of wine is high. and pricing of wine belongs to state governments.6 billion cases. growth was about 25% to 30% every year. Control over selling.FACTORS INFLUENCING WINE SUPPLY. In the same year. sales fell in the year 2009-2010 for the first time since 2001.5 million 9-litre cases at a value of Rs 4100 million. For the year 2008-2009. It is critical to note that. distribution. the consumption of alcoholic beverages such as wine is expected to increase. Until the year 2008-2009. Wine exporters blame the slump on the 26/11 Mumbai terror attacks two years ago that led to a dip in tourism in India. Required know-hows and machinery are available locally. 25 litres in the US. with over 50% of its 15 .

Karnataka and Himachal Pradesh have taken steps to encourage wine industry and given preferential treatments by liberalizing their excise regime and reducing excise duties. Bangalore (9%) and the Goa (9%). states like Maharashtra. A wine bottle that leaves France at three euros is sold in India at approximately 15 euros. Wine makers are the key to the supply chain and they record good profits.revenue shared between various levels of government. The key to success in the wine business is branding so. Delhi (23%). Eighty per cent consumption of wine in India is confined to major cities such as Mumbai (39%). However. a substantial chunk of amounts are spent in selling and distribution. It is also critical to note 16 . The Supply chain of the wine industry in India is fairly linear.

bottled) or bulk markets. production processes and commercial processes. it is that it is almost impossible to talk about “the” wine supply chain.000. the quality of grapes still plays a major role in the final quality of the product. PRODUCT BREADTH If one conclusion needs to be drawn from this thesis. we also have to make a difference between producing for the packaged (i. It is not difficult to understand why grape growers are most important strategic suppliers for wineries. Producing and selling a bottle of wine that will sell for a retail price of Rs 10. seem to be very sensitive about their relation with wineries. The relationship between wineries and grape growers has never been an easy one. winemakers use strategies such as surrogate marketing and creating economies of scale. Grape grower” that by nature are 'forced to make long term investments in their vineyards and whose production depends highly on natural factors as climate. Success in the wine business in India is conceivable if you do the hard yards of government regulations and have the right marketing mix.that. different markets and different logistics. Product breath seems to have an important impact on the grape procurement process. overall capital requirements. promotion of alcoholic beverages is prohibited in India. History is full with cases on forward integration from the side of 17 . So. GRAPE PROCUREMENT Wine still remains mainly an agricultural product Even though many new technologies have been introduce in the twentieth century (and some before) that enables wineries to better control the wine production process and develop better am more stable wines from lower quality supplies. From a supply chain perspective.e. target market. as they also involve different products.000 a bottle is different than doing the same for the bottle of wine that will sell at Rs 100.

production of large volume of table wine is more related to typical transaction cost relationship. transportation. supplying capital and training when necessary. and agreeing on a certain level of quality. only small "boutique wineries” that sell wines in upper price level described above seem to rely solely on their own production of grapes. the more they rely on self owned vineyards. must (already crushed grapes). for premium products. This happens not only because wineries are not only dealing with a premium product but also because less technology and chemicals are being used throughout the production process and therefore the quality of grapes has a deeper Influence on the quality of wine produced. The more premium the wine. to blend 18 . it is safe to say that the more premium their product. Having said this. like Robert Mondovi. or generic ( wine from wine brokers that brokers might even import from other countries. Large wineries rely mostly or "third-Party providers to manage capacity. how can the grape grower possibly predict how much of its production he will be able to sell to the Winery? Were a given lot of grapes mistreated during harvesting. wineries need to better control the grape growing process. Wineries that produce premium wines. and the quality of grapes does not play such a strategic role. the more carefully It will select the grapes. although capacity management issues remain crucial. the fact that the final decision relies on such subjective matters can easily generate a situation in which having an outside supplier is more complicated than producing the grapes in self-owned wine yards. or inside the winery? As one can then imagine. On the other side. Profits are the major issues for these organizations. A question then arises: who will pay for the unused grapes'? Furthermore. have been successful in developing long term relations with grape growers . These companies usually purchase grapes from a variety of providers. establishing long-term contracts as well as performing one-time transactions They buy grapes. A typical example of how complicated the relationship between wineries and grape growers is can be described as follows: the grape growers grows and harvests the grapes but It is the winery who gets to decide which grapes are Suited for production.grape growers creating co-operative wineries and backward consolidation from the side of wineries buying land from grape growers. As it plays a more strategic role in overall wine production process. Obviously.

A look at the balance sheets of public held wineries. in the US. Many new technologies have enabled wineries to raise the Quality of their wines while avoiding long ageing periods. France suggests inventories/sales ratio of an average of 230 days. vineries seem to have found different methods to overcome these problems COMMERCIAL PROCESSES Perhaps one of the most important aspects of product breath is the effect it has on the commercial and marketing processes of the wineries. If we consider the fact that they are prone to disease. Furthermore. Wines take up to 4 years of intensive care and human labor to produce substantial yields of grape juice to produce wine and they yield economically accepted volumes of juice for approximately for 25-30 years. and it years to replant the wine yards to accommodate the change in the market trends. but for premium wines the process remains essentiality the same and this step is hard to avoid. CAPITAL REQUIREMENT Wine production is in essence. we can see that the financial risks of these are not to be let unseen.them with their own. Depending of the type and quality of wine. as wineries need to produce during this period of time the wine they will be selling throughout the year. The two main reasons for this are the naturally ageing process of the wine. other wines can reach the markets as soon as 6 months after the crush. all these issues will obviously have an important impact on logistics relationships. and vineyard ownership. The fact that grapes are harvested during a short and specific period of time during the year also adds to this problem. the amount of juice that can be used from grapes to produce wine differs between with the quality and type of wine with a general rule that more premium the wine the larger the volume of grapes that needs to be used to produce the same quantity of wine. a financially intensive business. this process certainty affects working inventories. This means that a substantial amount of capital needs to be used to buy land for planting wines. Even though wineries do not need to hold the wine until it reaches its peak. While wines can take up to 14 years to reach its peak. wine needs ageing and this means inventory and working capital. production or to label it under a different brand . With such financial pressure on them. or how wine is sold: 19 . producers wines tend to own their wine yards. As we will see. In addition.

WINERY LOCATION The wineries location must be taken into account while thinking about the wine supply chain. wineries are competing in a global market against a huge amount of different brand labels. Some wineries pursue strategies to generate the brand awareness in order to be able to pull the product through the distribution chain. 20 .000 cases of table wine need a way to push their products through the chain (or get them to be pulled. the wineries need to work closely with other players in the chain in order to design the best fit for the market they are trying to reach. A prestigious brand is incompatible with low prices and mass distribution. Some of the most important factors that determine a wines location are soil. the better wine must be. others try to work closely with wholesalers in order to find the best way to push the product through the chain. wineries that produce 1.000.000 cases of premium wine a year need to get their label to be known to a select group of premium buyers around the world. On the other hand. In any case and any kind of product. Small wineries that typically produce between 5000 or 10. Wine is made of grapes and grapes can be grown in certain locations. It must deliver value over time to sustain its price and limited production”. grapes grow between 30 and 40 degrees in northern and southern hemisphere. lower prices are associated with lower quality. As economies of scale and target markets enable wineries to pursue different strategies. The following characteristic illustrates how some of these factors influence the supply chain: 1. Many people evaluate wines based on price: the higher the price. As a thumb rule. each of them with different characteristics. climate irrigation and geography. in an ideal situation) as fast and profitable as possible.“Price is closely related to image. Conversely.

Sates like Haryana. India is a federal nation. Mizoram. Wines typically need 500mm to 750 mm of rainfall in a year depending upon the average temperatures. The following apply to regulation in states: a) Differing methods of alcohol control in specific states Gujarat. The following key regulations apply to the wine industry in India: 1) State authority Control over selling. exporting wine to India can be a regulatory adventure. The ideal soil therefore has good drainage with access to retain water at some depth if irrigation is not an option. Each of India’s 28 states and 7 union territories has its own rules and regulations for alcohol control. and like the U. the central government has empowered states to generate revenue and control sales. but does not affect the quality of grapes.S. States 21 . distribution. Frost affects the quantity of grapes that ripe. its high import duties. the multitude of state taxes and complex state licensing and approval process. Wine functions are diminished above 24 degrees and may completely shut down above 32 degrees. There does not seem to be a maximum amount of water they can take as they can recover from floods fast. LEGAL ISSUES   Level of regulations is high Level of regulations is steady Given the traditionally closed nature of the Indian import market. 3. Tamil Nadu and Andhra Pradesh briefly instated prohibition. and pricing of wine belongs to state governments under Section 47 of the Directive Principles of the Indian Constitution. Nagaland and Manipur are states that enforce total prohibition of wine. Wines are dormant below 10 degrees and ripening occurs only above 17 degrees. 4.. 5. the existing market for imported spirits.2. Lakshadweep.

Brand registration fee and Brand Fee & apply for. there are restrictions on promotion of alcoholic beverages like wine and beer. transport and warehousing of wine. b) Possession of Wine Every state has its own law dealing with the amount of wine a family can store in their homes without acquiring an excise license. Permit Branch issues Import permits for import of liquor and Transport Permits for transportation of liquor from Bonded Warehouse to off and on site licensed consumption. The Licensees required for wine are L-2 (Retail Vend: 309). L-4 (Restaurant: 251). Kingfisher’s alcoholic beverages cannot be advertised however. L-5 (Hotel-Bar: 47) and L-19 (Club: 54) etc. The Transport Permit is the distribution authorization form that allows goods to be released from warehouse and delivered to designated customers like hotels or authorized retail Uttar Pradesh and Tamil Nadu control imports by refusing to issue an excise Transport Permit. which has now become the order of the day in India. L-3 (HotelRoom Service: 1). Registration of Brands. 2) Marketing Regulations In India. the Kingfisher brand is now promoted through the airlines and its various sporting activities. The applicant immediately on the approval of L-1 License has to deposit License Fee. The states of Punjab and Himachal Pradesh are more liberal in their rules and procedures but maintain high excise duties. c) Wholesale and Distribution License Each state has its own licensing system. 22 . creating a strong umbrella brand for various products is important. So. No state allows maintaining a wine cellar with more than 100 standard bottles of wine without a license. States like Kerala do not allow retail sales of imported wine. Import permits are issued to the L-1 licensees on demand which is duly recommended by the inspector posted at Bonded Ware House. ‘surrogate advertising’ or ‘brand extension’. For example. Approval of Bonded Warehouse. and Fixation of exdistillery price. There are several licenses for wine import. The industry calls this. Approval of Label.

23 . 5) Labelling Regulations Imported wine. often referred to as bottled in origin (BIO). The wine can be released from the bonded warehouse for distribution only after the importer/distributor meets all the mandatory requirements of the state where they plan to market and/or sell the product. are subject to the labelling provisions of the Standards and Weight and Measures (Packaged Commodities) Rule of 1997. In case of wine it should be in milliliters and liters. The labelling declaration on the wine bottle must include:    Name and address of the importer Generic and common name of the packaged commodity Net quantity in terms of standard units of weights and measures.3) Exemption of federal customs duties for specific entities In the year 2003. the Directorate General of Foreign Trade (DGFT) in India announced that Hotels (3 Star and above) and other service providers in the tourism sector could receive a dutyfree import entitlement equivalent to 5% of their average foreign exchange earnings for beverages and spirits including wine. 4) Storage regulations Imported wine must be stored at a government approved custom bonded warehouse.

 Lack of cold supply chain so it’s difficult to store  Less than 50 percent of the population is legally old enough to drink (25 yrs.  Growing tourism industry.  Poor awareness of wine and infrastructure. OPPORTUNITIES  100 million persons will be legally allowed to drink alcohol (25 yrs.  Growth in wine segment at 25-30% from past 5 years 24 .  Domestic market with increasing disposable income.INDIAN WINE MARKET ANALYSIS STRENGTH  Indian wine consumption has grown 30% annually over past 5 years  Good climate for grapes harvesting  Urbanization  Wine is becoming more acceptable to women and youth  Youth are craving an alternative to hard liquors and developing a more refined taste.  Supermarkets are emerging to support wine distribution infrastructure. WEAKNESS  Wine remains an elite taste. old). old) in the next 5 years.

25 .  Domestic wine production is coddled by state governments.  Indians still prefer whisky.THREATS  The Indian constitution discourages alcohol consumption.  Advertising for alcoholic beverages is banned.

26 . Thus far. EU wine imports slightly declined in MY 2009/2010 but are expected to increase in current marketing year. Romania. and compensate producers by offering them alternatives. and Spain represent about 80 percent of total production. Portugal. Canada. consumer. The following table shows production trends in the leading EU wine producing countries during recent years. Japan) and BRIC economies (such as Russia and China). cut surpluses. The grubbing-up scheme involves voluntary withdrawal from vine growing by decreasing subsidies over three years to reduce production of uncompetitive wines. Greece.7 percent in value) for the EU-27. Within the EU. and importer. exporter. down 3. France.EUROPEAN WINE INDUSTRY The European Union (EU) is the world‘s largest wine producer.5 percent from the previous marketing year. Romania. The European Union (EU) is the world leader in wine production.000 hectares have been taken out of production. Bulgaria. Total EU-27 MY 2010/11 wine production is still preliminarily estimated at 156 Mhl.6 percent of the total in volume and 30. and Spain were only partly offset by significantly higher production in Portugal. with almost half of the world‘s total vine-growing area and 60 percent of production wine volume. and Slovenia. The United States remains the leading export market (24. Italy. Wine is also an important sector in Austria. with additional reductions expected in 2011 – the third and final year of the scheme. and Hungary and small decreases in France. 175. EU-27 wine exports partially recovered in MY 2009/2010 and are expected to further increase in MY 2010/2011 thanks to growing demand both from developed countries (United States. Italy. and Hungary. EU vine-growing area has been declining for the past few years due to shrinking margins and the implementation of the new Common Market Organization grubbing-up scheme (see the Policy section for details). Other important EU producers include Germany. Sharp production decreases in Germany. Domestic EU wine consumption continues to decline due to the continued general economic crisis and is forecast to stagnate in MY 2010/2011.

substitution of other beverages. Another important factor is the anti-alcohol drinking campaigns. conducted in some countries. primarily France and Italy.CONSUMPTION Domestic EU wine consumption continues to decline. changing tastes) affect overall demand. Per capita wine consumption has been falling for decades. especially aimed at youth. which has made advertising wine virtually impossible. In addition. especially in southern European countries. which further dampened alcohol consumption. despite a slight economic recovery. 27 . where changing consumption habits (increased outdoor drinking. health concerns and concerns about drinking and driving have pushed local authorities to implement more stringent legislations.


they are the ones to decide which wines to market. Wine merchants transmit operational information (sales forecasts. labeling and packaging operations are carried out by Logistics service providers. To devise a system in which vineyards are customer-driven and to carve out a crucial role for themselves. starting downstream and moving backwards. a company’s main strength is its brand name. wine merchants will seek to take over production activities and drive this function from the downstream side. one that uses a standardized type of information. This piloting will be mainly achieved through partnerships and alliances. Every time a service provider receives an order from a distributor it will either send a further order on to the supplier or winemaker or else draw from its own stocks. In time. Information on orders circulates from one link in the chain to the next. Wine merchants sometimes determine grape-growing specifications in the branded wine supply chain. labeling. blending specifications. This means that the wine merchant is the strong link in this particular supply chain. This model is characterized by the strong value-added that derives from communications. although not always. Wine merchants work closely with consumers and are therefore very aware of market trends. As a result. One criterion of success is the ability to work within a highly integrated chain. In most wine merchants’ opinion. wine co-ops will have to be able to determine their own grape specifications and pricing schedules. Ginestet’s Managing Director says for example. If vineyards are to be efficiently managed from the downstream side. bottling. 29 . “Bordeaux’s brand name is its ace in the hole against New World wines”. This takes power away from winemakers and leads to lesser product diversity. and packaging) to service providers and winemakers. Otherwise bottling.Winemakers or wine co-ops grow grapes and are responsible for vinification and blending (and sometimes for bottling). wine co-ops will have to merge so that they can develop the technical and human resources that are required to fulfill a partner’s role. With branded wines it is possible to produce large volumes of wine of consistent quality. Winemakers no longer control the composition of their wines.

model 1). Products of this nature can be expected to undergo a number 30 . All flows are piloted on the basis of forecasts that are updated daily in such a way as to reflect actual consumption. This is a configuration where the wine merchant level has been eliminated. Major retailers are very involved in this kind of strategy. Store brands have risen sharply over the past decade and account for about 30% of all sales of wine in major retail outlets. vinification and blending. The major retailers are the ones steering the information flows. Labeling and packaging operations are carried out by the logistics service providers.f. due to the retail sector’s greater ability to exchange information in real-time. much as wine merchants do in the branded wine supply chain (c. Bottling.. This reinforces major retailers’ power over winemakers and causes an imbalance in their relationship.MODEL 2: STORE BRANDS In this supply chain. In the store brand supply chain however there is a higher degree of commercial integration. winemakers are in charge of grape-growing. This and the lean management of flows are what explain the chain’s flexibility. replacing wine merchants. Major retailers play a role in product design and communications. They source directly from winemakers and become the chain’s key link. The risk with this particular supply chain structure is that it is piloted by actors who are not wine sector specialists.

Communications highlighting all French wines 2. In terms of product promotion. However. 31 . The fourth schema is characterized by winemaker’s involvement in all of the chain’s value-added activities. Specific communications focusing on the country’s main winegrowing regions 3. In the export markets. promoting this category of wine. promotion is undertaken by Trade Association task forces and by ONIVINS. (French) nationwide communications are organized by Trade Associations and funded by membership fees. This schema characterizes the Grand’s Crus logistics chain by depicting the traditional breakdown of value-added in the Bordeaux wine region. and value-added operations are distributed unevenly. Lean workflows predominate in this model. which accounts for 95% of Grand Cru flows throughout this chain. runs the risk of losing market share to the major retailers. Today store brand wines amount to something like 100 million bottles of red and white Bordeaux wines per annum. the wine merchant level. with its highly dispersed supply structure. who have been increasingly positioning themselves in the market’s top-of-the-range segment.of changes in the years to come. Collective communications account for 48% of advertising expenditures. is no easy task. Winemakers are the key actors in this logistics chain. albeit with occasional help from logistics service providers. It remains to be seen whether collective campaigns have an efficient impact on consumers’ purchasing acts. Communications lying somewhere between brand advertising and generic publicity Looking to the future. one in which logistics performance is taken very seriously. In this chain it is difficult for the winemaker to get demand-related information. There are three types of collective communications: 1.

Furthermore. the winemaker is practically the only actor in the logistics chain. are in close touch with the end user. 32 . wine merchants no longer act as logistics partners in this model. This precludes any strong marketing action promoting the wines.MODEL 3: WINES MARKETTED DIRECTLY BY THE WINE MAKER This model enables a great deal of agility to changing market demand in as much as winemakers. this being their true profession. In this model. and therefore captures all of the value-added. The model’s drawback is that winemakers must possess a great deal of logistics maturity. An awareness of logistics is something new to winemakers whose core business is wine production. who are the main actors in this chain. Winemakers focus their efforts on vinification. They increasingly turn to outside service providers for other operations. given the multitude of activities they undertake.

35% of the wine was drunk locally and quickly. constant environment. and Japan is typically stable during the ocean voyage but wide temperature fluctuations appeared both before and after. In the USA. More than 29. on both domestic and international shipments. 47% of the wine. or 6 billion bottles were exported from the world’s wine producing countries.42% reached below 0°C. FedEx and UPS are not fully organized to provide temperature-controlled chains for wine. few air shipment channels are organized to maintain a cold chain during offloading. the use of reefer containers varies widely: Approximately 50% of shipments from Bordeaux to Japan use reefers. While the hold of the airplane is fine. (Source JF Hillebrand) More importantly. wine traveled mostly from Bordeaux and Burgundy to the UK and Europe. transport and storage conditions can ruin wine before it ever reaches the consumer. While less frequent. Historically. Despite the great care winemakers devote to every step in the vineyards and winery. Cases shipped to Hong Kong recently via airfreight reached 35° Celsius. wines can also be damaged when exposed to temperatures below freezing.” According to eProvenance temperature measurements from 2007 to 2011. UK. the percent of wine cases exceeding 30 degrees Celsius during shipment was 10. customs. and 3.COLD STORAGE IN EUROPE Fine wine does not take kindly to overheating or freezing. Changes in the Structure of the Wine Market The evolution of a global wine market is relatively recent. the reefer container covers only a portion of the wine’s journey from producer to consumer. In 2009. 18% of the wine. the world’s vineyards produced 36 billion bottles of wine. yet is too often shipped around the world with less care than cartons of lettuce. 33 . Air shipments are not necessarily better.” another reefer container and reefer truck. 17. Very few efforts have been made to assure that the world’s fine wine is delivered in the best conditions possible to the final consumer. the hold of the airplane). representing $23 billion dollars of wine. whereas they are used for only 5% of shipments from Bordeaux to China. wine can be “cooked. China.6 percent. One innovation was “Mise en bouteille au château. The cold chain assures that proper temperatures are maintained at every step of the journey and each participant in the distribution chain has a responsibility to uphold. Over the last 200 years. there have been few changes in the way wine is shipped to market. or 17 billion bottles were stored and transported within domestic markets.g. Such services are provided for pharmaceuticals and temperature control may be provided for portions of the wine’s journey (e. using the “cold chain” practices common in the food and pharmaceutical industry. (Source: Australian Wine & Brandy Corporation) What is happening to these wines in transit? When exposed to temperatures above 30⁰ Celsius for too long.7% of wines were exposed to temperatures over 25°C. and local transport. The topic of temperature conditions has always been elusive – the dark secret that everyone knew was lurking but no one wanted to discuss or address. Wine needs a cool.12% of wine cases reached temperatures below 5 degrees Celsius as per eProvenance 2007 to 2011 measurements.The temperature of fine wine sent from France to the US. However. resulting in tartaric precipitations and even frozen bottles that can break.

The number of long-distance transports has grown considerably. EUROPEAN INFRASTRUCTURE Deregulation has led to the growth of wide transport networks. the largest growth in transport volume has been achieved by freight transports on roads and rails. negatively affecting the value of the brand. clarity. closely followed by sea freight. and no one has responsibility for the entire process. aromas and taste. demonstrated that wine can be damaged by excessive heat before any signs of visible deterioration (leakage.What problems result from these temperature fluctuations? Unfortunately. ultimately we are all responsible for what happens to fine wine on its journey to the consumer. While there is no systematic measuring or monitoring system in place across the distribution channel. Deregulation of shipments. but the industry cannot manage what it does not measure. regional and long-distance transports.” Consumers view it as bad wine. As much as $2. In recent years. multi-step distribution chain. The damage is not obvious. The membership of eastern European countries in the European Union has resulted in a shift in the balance among local. Many players in this distribution system work on thin margins. Who is responsible for this situation? The wine industry involves a complex.2 billion in wine experiences improper temperature conditions during transport and storage. Independent research carried out by ETS Laboratories in St Helena in 2008 (financed by eProvenance). Damage often remains undiscovered until years later. Some industry participants have stated they would rather not have the storage and shipping information. fearing economic consequences. corks pushing) can be discerned. and often a “cooked wine” is not differentiated from a “corked wine. and simply do not re-purchase it. optimal route Routing and plan scheduling. and is discernible only by tasting or chemical testing. and the development of national services. and tend to avoid the “extra” expense of climate control. the sturdiness of the glass wine bottle disguises the fragility of the organic contents. decreasing the wine’s ability to age over time. 34 . Exposure to temperatures exceeding 30°C for duration of 18 hours or more can significantly damage the wine’s color. A decrease in free sulfur dioxide also occurs.

Added to this development are increasing numbers of high-quality logistics services and contract logistics. closest to the main French wine producers (Champagne and Burgundy). transhipping and storage. 35 .Logistics requirements and service areas Outsourcing of logistics activities is widespread in Europe and is gaining popularity. followed by Great Britain. Palermo. Cherbourg Germany: Bremen. the first consumption area in Europe. Marseilles. Leading port in Europe for the import-export of wine and spirits with a traffic more than 620 million bottles. Maersk. TNT and Kühne & Nagel and Kerry. Logistics centres in Europe The largest logistics markets in Europe are Germany and France. Italy and Spain. Genoa. Trieste Netherlands: Rotterdam LE Havre is the major port in the world-wide transit of wine in Europe. The largest logistics service providers in Europe include DHL. This trend has resulted in industrial companies outsourcing parts of the standard logistics services like shipping. 9 river hubs are set up in the “Paris area”. Major Ports of entry Belgium: Antwerp France: Le Havre. Many companies hire specialized logistics service providers to do the job. Hamburg Italy: Naples. Schenker.

Technologies to improve health of grapevine root stocks and grape yield. plantings and irrigation. Also there is need of investing in current supply chain infrastructure of the country 36 . This is possible only by close co-ordination of govt. and private companies. wine consultancy services. where there is lots of scope for improvement in Indian wine industry. input management. Though India has a lot to learn about wine making from its European counterparts.RECOMMENDATIONS Technology plays a key role in the development of new grape varieties. its capability in the following technical areas have been rapidly increasing:        Viticulture services: vineyard establishment. quality assurance and traceability systems. canopy management. wine education Another area which needs to be improved is of cold supply chain. Energy efficient air conditioning-systems and insulation products Irrigation and waste water management Vineyard and winery equipment Winery design Oenology services: wine making.

org/america/ http://en.asp 37 .org/wiki/European_Union_wine_regulations http://winebloggersconference.europeanwineresource.

Sign up to vote on this title
UsefulNot useful