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An Analysis on

Wine Industry in India

PRESENTED BY:

GAGAN GUPTA
(PGMP+MBA)
Synopsis
• Wine consumption --Preferences
• Government Support
• The Market
• The essentials/Major aspects
• Problems faced
Introduction
□ The People of India
–Annual Per Capita Income Rising
–Large Population Gives a Market Base
□ Government Backed Industry
–Wine Declared as “Small Scale”
□ Grape is grown over 60,000 ha - production of 1.6 MT
□ Wine Industry Potential
–Market Currently in Infancy Stage
–Wines Beginning to Catch On Locally and Globally
The People
Indian Economy 2005 2006 2007 2008 2009

Population (millions) 1,095.4 1,110.4 1,125.4 1,140.2 1,155.0

Household consumption (US$ billion) 2028 2210 2419 2651 2910

Growth: 9% 9.4 9.5 9.7 9.1

□ The rising middle class within India is bringing with it a higher


rate of consumption
□ Wine consumption is also increasing at a rate of 0.5ml per year/
per person
Government Support
• Wine Declared as a “Small Scale” Industry
– Manufacturers exempted from excise duties
• 38 Wineries Currently in Operation
– 36 located within Maharashtra
– 5.4mn liters produced annually within Maharashtra
– India totals 762,000 cases sold per year

State Bank of India, for the first time in the country, has taken the initiative
for helping the grape growers via project UPTECH
Government Support

• The concessions/incentives/subsidies
grants etc. are extended to “Wine
Industry” at par with Food Processing
industries

– project subsidy of Rs.50


lakhs/wine unit
– Rs.10 lakhs per year towards
procurement of grapes
– grant of Rs.4 crores / wine park
The Market
• Wine expanded phenomenally by around 18% in 2008
• Total Indian Consumption has risen to 650,000 cases (2008-
2009)
– 6-7ml annual per capital consumption

• Target Market
– Middle class ages 25-39
– Current biggest wine consumers
• Trendy upper class
Marketing
• Open Markets
– Maharashtra, Jammu Kashmir, Goa, Assam, Meghalaya,
Tripura, and Arunachal Pradesh.
• Auction Markets
– Rajasthan, Madhya Pradesh, Bihar, Haryana and
Chandigarh
• Government Markets
– The governments of the respective states act as the
wholesalers
– TASMAC in Tamil Nadu, BEVCO in Kerala, APBC in Andhra
Pradesh and The DSIDC in Delhi
Consumer Preferences
Wine Consumption

Red 45%

White 40%

Sparkling 13%

Rosé 2%

□ Traditional Red and White wines account for 85% of


Indian wine consumption
The Current Scenario in
Southern Regions
Indigenous Wineries
• Chateau Indage
– 18 types of wine
• Chardonnay, Cabernet Sauvignon, Ugni Blanc,
Pinot Noir, Gamay, Riesling, Muscat of Alexandria
Sauvignon Blanc, Chenin Blanc, Zinfandel,
Viognier, Shiraz, Malbec and Grenache

• Grover Vineyards
– Nine varieties
• Zinfandel ,Chardonnay, Pinot Noir,
Sauvignon Blanc, Chenin Blanc,Viognier, Shiraz,
Viognier and Semillon

• Sula winery
• Sula Brut, Sula Seco and Sauvignon Blanc
Maharashtra wine Grape policies
• Declaration as a Preferential Area
• Declaration as a Small Scale Industry
• Concessions in Excise Duty
• Concessions in Sales Tax
• Wine Sales License
• Wine Sales License Fee
• Simplification in the system of License
• Establishment of Wine Institute
• Single Window System
• Establishment of Grapes Board
• Facilities of Food Processing Industries
Wine Parks
• To encourage value addition on grapes

• Grape Board
– for quality control, certification and export promotion.

• Wine Institute
– long-term growth strategy.

• MIDC has set up Wine Parks with International comparable


infrastructure
– at Vinchur, near Nashik & Palus, near Sangli
Karnataka
• The Government intends to

– Establish two Wine Parks.

– Capital Investment Subsidy

– Subsidy for Grape Processing

– Incentives for marketing and distribution of wines


Andhra Pradesh
• Government of Andhra Pradesh has issued G.O.framing new
rules on Winery projects.

• Very low fee of Rs. 2000 per annum is fixed as license fee to
encourage this industry.

• Government may call for applications for grant of letters of


intent in the near future.
Winery Project in Tamil Nadu
• Tamil Nadu produces 90,000 tonnes of Muscat Grapes and
10,000 tonnes of Thomson Seedless Grapes.

• Government of Tamil Nadu has issued a Notification on Tamil


Nadu Wine Manufacture Rules 2006 for regulating
manufacture of wine.

• Government of Tamil Nadu has approved the proposal of


TIDCO for establishing a Winery

.
Major aspects
• The primary factors acting as constrain for this
industry in India.

• At the very outset we have four major issues


to note:
1. Legal aspect,
2. Global aspect,
3. Social aspect and
4. Promotional aspect.
Problems Faced..
• Wine drinking has not caught on
– quality wines are priced relatively high.
– Since the volumes are low, production costs are high, as
are taxes.

• Real challenge -to develop a domestic market


• Huge prohibiting factor - 300 per cent duty slab
• To distribute finished goods
Various taxes and duties applicable to the wine
industry
• Excise Duty • Raw Material Excise
• Additional Duty • Availability Fee
• Brand/Label Fee
• Markets & Regulations
• Transportation Fee
• Centre for Civil Society • Import Pass Fee
• Distillery/Brewery License Fee • Export Pass Fee
• Bottling fee • Vend Fee
• Litterage fee • Sales Tax/Surcharge
• License Fee
• Assessment Fee
• Toll Tax
• Franchise Fee • Excise Duty
• Permit Fee • Additional Duty
• Various taxes and duties • Gallon age Fee
applicable to the wine industry
Standards
• Ethyl alcohol -prescribed in 4 of IS 3752:1988
– Enforced by State Excise Authority
• Food additives - PFA /CODEX /JECFA
• Flavor -PFA/FEMA GRAS
• Carbonation -Grade 2 of IS 307:1996
• Packing
– glass bottles -IS 1662:1974
– plastic bottles made of PET -IS 14537:1998
• Sampling - IS 3753:1984
Conclusion
• Presently Indian wine industry is in a nascent stage, though it has
kick started only from Maharashtra much remains to be seen at
the national level.
• Indians will have to descriminate wines with other alcoholic
liqours.
• The wine in fact is a social and health drink,
– its consumption has to be promoted through various media campaigns
and wine festivals.

We hope, subsequently there exists a huge scope for expansion


in area and production of wine grapes in our country.
References

1. Multiple aspects of Indian Wine Industry


− Karnika Seth
2. Present Scenario of wine industry in India
− G.S.Karibasappa , P.G.Adsule , S.D.Sawant and K.Banerjee N.R.C. for grapes,
Manjri Farm, Pune – 412 307.
3. Wine project APICTO
4. Winery Project TIDCO
5. Maharashtra’s grape policy 2001
6. Karnataka Grape Processing and Wine Policy – 2007
7. D’Essenceconsulting – WineReport
8. Wine Industry in Maharashtra
− Sudipto Mitra