Market Overview
The Indian wine market is estimated to US$ 150 million and growing at a Compound Annual Growth Rate (CAGR) of 20-25 per cent. The Indian wine market classified into domestic and imported wine which account for 70 per cent and 30 per cent, respectively. The sector has witnessed significant consolidation within the last decade wherein larger wineries business houses acquired small players in different states to optimise the taxation and overcome differential taxation policy among states. The small players have also started supplying raw material grapes to the larger wineries to make more commercially viable & support the marketing and branding of their products.
Category of Wines
There are three types of wine available in the country: (a) Premium Wines (Still wines), (b) Sparkling Wines and (c) Fortified wines. The Indian wines are mostly available in the following three categories:
- Domestic Indian Wine: This is the wine, which is produced from Indian grapes and bottled in India by the domestic wineries.
- Foreign Bulk Wine Bottled in India: A few large domestic producers import bulk wine and bottle it in India.
- Foreign Wine Bottled in origin: More than 200 brands are currently available in this category and they are imported by Domestic players, Importers and Foreign players.
Production
India with diverse climate allows growing the variety of grape for wine such as Anabeshahi, Arkavati and Arkashyam and importing the grapes such as Syrah, Cabernet Sauvignon, Merlot, Chardonnay, Sauvignon Blanc, Zinfandel, Shiraz, and Chenin Blanc.
Indian wine production estimated to 17.6 million litters with an area of 6,000 acres which is growing at a rate of five per cent. The Indian wine production mostly concentrated in Maharashtra (mostly in Nashik and Sangli) with more than 85 per cent, Karnataka (mostly in Nandi Hills and Bangalore) with 10 per cent and other states represent 5 per cent of output combined.
Marketing
The advertisement of all alcoholic drinks is not allowed in India since 2000. The companies do marketing through events, trade shows, festivals, other products such as mineral water and social media. Wine Tourism is also one of the areas developed by companies to sell directly to their customers at the wineries.
Consumption
The major cities having the wine consumption in India is Mumbai (32%), Delhi (25%) Bangalore (20%), Pune (5%) and Hyderabad (3%) which mainly covers the Red Wine (49%), White Wine (13%), Fortified Wine (35%) and Sparkling Wine (3%).
Major Indian Wine Companies
Most of the wineries are in Nashik in the state of Maharashtra in the south west of India. At present, India has about 60 wineries with an estimated investment of about USD 60 million. The following three wine companies are the major wine producing companies in India:
- Sula Wineyards, Mumbai: This was the first marketing-savvy wine company. Sula is also the only Indian wine company to be present in all price and product segments.
- Fratelli Wines, Mumbai: Fratelli Wines is a producer in Akluj the Maharastra region of India. Wines are based on familiar French grape varieties plus Sangiovese.
- Charosa Vineyards Reserve, Tempranillo, Nashik, India: These wines are made uniquely with open tank fermenters with super specialty equipments.
Following are other top wine companies in India:
Chateau Indage Limited, Pune: This is the largest, both by volume as well as valuation. They are the pioneers of the wine industry in India with their wineries at Narayangaon (on the Pune – Nashik road), Indage launched the sparkling wine Marquise de Pompadour in 1986, Riviera soon after, and Chantilli in 1989. They were also the first to make ‘Bottled in India’ wines which has since been discontinued.
Grover Zamp Vineyards Limited, Bangalore: This was set-up near Bangalore in 1989 after the promoters tested soil and climatic conditions in various locations – including their native Maharashtra – and settled on the area north of Bangalore as being ideal. Their first wines were launched in 1992, and the company has remained remarkably focused on delivering good value wine.
Krsma Estates, Hampi Hill India: KRSMA Estates’ vineyard is located on the slopes of Hampi Hills at an altitude of 590 meters above sea level. Hampi Hills, hitherto unknown for its wines or even as a wine producing region, is unique in many aspects. The terroir consists of iron-rich schist type soils, receives minimal rainfall and is cool during nights, especially at the time of ripening.
Other important Wineries in India:
- SDU Winery ;Deva; Cabernet Sauvignon, Nandi Valley, India
- Grover Zampa Vineyards Art Collection Sauvignon Blanc, Nandi Hills, India
- Krsma Estates Sauvignon Blanc, Hampi Hills, India
- Sula Wineyards, Samara White, Nashik India
Government Initiatives
The Indian Government has taken the following initiatives to promotes the wine business in India:
- The National Wine Board promotes farmers of grapes, apples, plums, apricots, manufacturers of raisins, juice and wine and encourage contract farming and promote grape, apple, plum, apricot processing, and wine industry.
- The Agricultural and Processed Food Products Export Development Authority promote “Wines of India” across the globe, especially France, Italy, Germany, USA, UK, and Singapore, apart from other regions. Several wine clubs, wine tourism and magazine have been formed in various cities of India.
- The Government of Maharashtra announced a visionary Grape Policy; it incorporates incentives such as the reduction in excise duty on wines, regulation for quality control, certification, and export promotion. The Wine Institute is set up to ensure International quality and provide trained manpower. The government set up Agri Export Zone for the grapes in Nashik, Pune, Sangli and Solapur.
- The Government of Karnataka Government identified the areas that are suitable for growing of grape varieties required to produce good quality wines. The region suitable for cultivating wine grapes in Bengaluru, Kolar, Ramanagar, Chikkaballapur and Tumkur districts has been declared as "Nandi Valley", similarly, the region comprising Bijapur, Bagalkot, Belgaum, Gulbarga, Koppal, Raichur, Gadag, Bellary and Bidar districts has been declared as "Krishna Valley" and Mysore, Mandya and Chamarajnagar districts has been declared as "Cauvery Valley".
The Government of Karnataka covers the scheme as below:
- Declaring Wineries as Horticulture and Food Processing Industries
- Simplification of rules while issuing License and permit to the Wineries.
- Allowing the sale of wines in the premises of wineries to promote "wine – tourism"
- Capital Investment Subsidy.
- Subsidy for Grape Processing
- Training will be rendered to the wine grape growers through seminars, workshops, study tours, export – consultations, demonstrations, etc.
- Incentive for marketing and distribution of wines
- Concession in Excise Duty
- The Label registration Fee is waived off for all the brands of wines, and this will not be reviewed for the next 5 years.
- Setting up of Grape Processing Industries Board
Key Regulation
1. License to Manufacture Wine in India
The Constitution of India has provided the power to State Government to levy or collect duties of excise and make the rules on import, purchase, sale, or manufacturing alcoholic liquor including wine in their respective state. The purchase, sale, import, export, bottling or manufacturing of wine prohibited in the state of Gujarat, Bihar, Nagaland, Mizoram, and Union Territory Lakshadweep.
2. License or Registration under Food Safety and Standard Act 2006 (FSSAI) regulation
The company involved in importing, bottling, and marketing of Wine in India require to obtain the license under the Food Safety and Standard Act 2006. The license issued under the regulation is valid for a period of 1 to 5 years as selected by food business operator, from the date of issuance of license after paying the applicable fees for the period.
3. Bureau of Indian Standards
The applicant is required to submit the BIS Certification application with required documents and requisite fee. After applying, a preliminary factory evaluation is carried out by a BIS officer. Then samples are tested in the factory and drawn for independent testing. BIS certification is provided if the sample is acceptable. BIS Certification is expected to be granted within 4 months of submission of application.
In the simplified procedure, the applicant submits a test report of the sample from a BIS approved lab along with application for BIS Certification. If the test report is satisfactory, then a verification of the factory premises is carried out by a BIS Officer. BIS Certification is granted if the verification of BIS Officer is satisfactory. Under this method, license is expected to be granted within 30 days of submission of BIS Certification application with the required documents and test report.
BIS Standards – IS 7058: 2005 for Wine- This standard prescribes the requirements and the methods of sampling and test for table wines. The specified standards contain provisions which through reference in this text, constitute provision of this standard. At the time of publication, the editions indicated were valid. All standards are subject to revision and parties to agreements based on this standard are encouraged to investigate the possibility of applying the most recent editions of the standards.
4. Sample & Quality Check Regulations
The Food Safety and Standards Authority issued the Food Safety and Standards (Laboratory and Sample Analysis) Regulations, 2011 for sampling and quality check of the specified goods. The sample of any imported article will be sent by the Authorized Officer for analysis. The Food Analyst of any of the notified laboratories or any other laboratories notified by the Food Authority from time to time having jurisdiction over the area in which the sample was taken.
5. Packaging and Labelling Regulations
The Packaged Commodities Rules are applicable to alcoholic beverages which covers as below
- Any alcoholic beverage when labelled as "matured”, shall be matured for a period of not less than one year in oak or other suitable wood vats or barrels or with wooden chips.
- Where an age claim is made in conjunction with the word “aged”, the age must refer to the youngest spirit in the blend.
- The bulk containers shall have no upper limit for alcohol content and shall meet the safety parameters of the product standards. Such products shall also carry a label declaring, “For Manufacturer of Alcoholic Beverages only.
- Declaration of alcohol content: Alcohol content shall be expressed as per cent. abv or as proof.
- Labelling of standard drink: One standard drink is the amount of beverage that contains in it 12.7 ml of abv as measured at 200C. The label may include a statement of the approximate number of standard drinks in the package.
- Geographical indicators or names may be used on the label solely for the products originating from that geographical region.
- There shall be a statutory warning “CONSUMPTION OF ALCOHOL IS INJURIOUS TO HEALTH” and “BE SAFE-DONT DRINK AND DRIVE”.
6. Foreign Direct Investment Policy
Foreign Direct Investment (FDI) up to 100% is allowed under the automatic route for brewing and distillation of liquor subject to the license by the appropriate authority.
7. Taxes & Duties
The Central government levies following Custom Duties and Social Welfare Surcharge on import of Wine into India and Central Sales Tax on inter-state sale of Wines.
The State government levies the duties such as Excise Duty, Value Added Tax, Transport Fee, Import Fee, Export Fee, Toll Tax, Label Fee etc on import, purchase, sale, or manufacturing in relation to alcoholic liquor including wine in their respective state.
Conclusion
With the increased incentives and reduced regulations, India is now seen as a potential market by global wine companies. More uniformity of laws, new regulatory policies, tax incentives and the spending power of its expanding affluent middle class widely recognizing wine as a lifestyle drink, Indian wine market is likely to spread and find an increased acceptability in India.
