
The Indian Wine Market is in its early stages of growth. The country has been stated as a potential emerging wine market for domestic wine production as well as imported wines. However, Wines in India are highly price sensitive products and hence affect the consumer’s purchasing behaviour.
Wine consumption in India can be divided among the different socio- economic classes, such as upper class, upper middle class and middle class. Due to various reasons, less than 1% of the population of upper/middle classes are possible imported wine consumers. Foreigners in India and Indians who have travelled in wine consuming countries abroad form a significant group of wine consumers. Labels with the words Champagne, Bordeaux and Burgundies are recognized by wine drinkers as regions in France which produce higher quality, expensive wines. However, due to the lack of availability and knowledge about these wines, consumers are unaware of the Chateaux names or their Growth Classifications viz. 1st, 2nd growths in Bordeaux. In cheaper markets; Spanish, Italian, Australian, Argentinean, Chilean and South African wines seem to have found their place. These International wines are priced half or twice as much as the domestic wines. Indians have a sweet tooth and prefer slightly sweet to lusciously sweet wines as they go well with the spicy and aromatic Indian food. Men seem more fascinated by red wines while women are comfortable with whites and roses.
The biggest consumption of wine (up to 80%) is confined to the major cities, of which the largest are Mumbai (39%), Delhi (23%), Bangalore (9%) and the foreign tourist dominated market of Goa (9%). Majority of affordable quality wines are found in restaurants and cafes in the cities and some rare wine shops. Recently, wines have been allowed to be sold as beverages in selective supermarkets. The supermarkets such as Westside Gourmet, Reliance, Big bazaar, Dolce Vita and many more try to have a respectable mix of domestic and imported wines. Majority of the imported wines found in Restaurants or wine shops tend to be big international companies such as Gallo, Yellow Tail, Oxford Landing, Wolf Bass, Moet & Chandon, Frexienet and many more. Importers struggle to find a market for smaller wineries producing quality wines and a range of grape varieties. The concept of online shopping for wines has not quite been accepted yet, however, online wine companies such as Winekart.com and Brindco seem to be doing well in getting more and more customers interested.
Advertising Wines via use of Television, mass media, street billboard or newspapers is inadmissible. Creating awareness requires various creative strategies which need to be lucratively targeted towards the upper/middle classes. Financial as well as marketing support is required from the International Wine companies, who would be interested in a durable position in the Indian Wine Market, for educating the consumers as well as the agent/distributors and funding promotional activities.
The Wine producing regions in India are the states of Maharashtra, Goa, Karnataka and Himachal Pradesh. Maharashtra produces more than 90% of all the wine made in India. The major grape growing regions in Maharashtra are Nashik, Sangli, Pune and Satara with a total of 64 wineries in the state. Karnataka is home to the leading domestic brand Grover Vineyards. Most of the domestic wine is consumed in India; however, small quantities are imported to UK, France, USA, Canada, Singapore and a few other Asian Markets.

Producing wine in India can be very expensive. Not only is the agricultural land pricey, the wine making machinery and equipment has to be imported from Europe and the import duties on these machineries are very steep. French and American barrels have to be imported since there is no wine industry specific cooperage. Sometimes basic wine making chemicals and micro organisms (yeast, malo bacteria) strains also need to be bought from foreign lands. All this makes domestic wines to be highly priced once they reach the market and hence has an acute contest with the cheaper imported labels.
Duties/ Taxes and Market Sector for Imported Wines
There are 27 states and 7 Union territories in India and states such as Gujarat allow no sale of alcohol at all; while Tamil Nadu and Andhra Pradesh allow no sale of imported liquor to protect their domestic market. Only States such as Punjab, Haryana, New Delhi, Maharashtra, Goa, Chandigarh, Uttar Pradesh, Madhya Pradesh, Jharkhand, Himachal Pradesh and Kerala are allowed sales of imported wines in Retail Sector.
Tax structure and duties imposed on Wines play a major negative role in advancement of the Indian Wine Industry. Buying and selling of imported wines is a complex and expensive procedure. The Government of India (central government) charges import levy and the State government charges additional taxes. These State taxes vary for every state and hence the permits and paperwork, labelling laws, registration fees etc. Furthermore, these taxes/laws are subject to fluctuation regularly. This limits the sales of wines between different states, restricting the availability of miscellaneous labels.
Hospitality sector of 5star Hotels and sumptuous restaurants buy 60% of the imported Wines. These 4 and 5 star hotels have the advantage of buying imported wines without paying taxes on their duty free licence. Importing wine directly from the Wine producers/wineries is logistically obscure and thus, these Hotels source their wines from importers and distributors. This makes it impossible to find a diverse range of wines from smaller producers and from different parts of the world even in the best of the Hotels. Retail sector accounts sales of 35-40% of imported wines which include wine shops and supermarkets. The sales of imported wines in India are controlled by individual state laws and regulations.

Reducing basic import duty (150%) would be extremely beneficial for the imported wines market in India. There is a considerable market for cheaper wines from the world and this would also provide a big boost in wine education and appreciation within the consumers. Domestic wines struggle to find their place in the highly price sensitive Indian market and have to constantly compete with the International labels. Domestic producers also have to pay the state taxes and adhere to the erratic regulation and registration fees limiting their exposure to the various states and hence also competing against other domestic producers. Putatively speaking, domestic producers would agree that they would suffer badly from any reduction in import taxes. Reformation of state laws and taxes would be beneficial and hassle free for sales of domestic as well as imported wines.
The biggest challenges faced by the Indian Wine industry are the complex tax structure, state-run variable laws and regulations and prices of domestic wines leading to competition. Indian Winemaker Kailash Gurnani from York Winery in Nashik says “Lack of knowledge of wine to the Indian consumer, affordability of wine, overhead costs in the distribution and retail channel due to demand of high schemes, different alcohol norms in different states, lack of support from restaurant and retail owners to push wine; are the major obstacles faced by the Indian Wine Industry”. Solution to these issues will improve the wine availability and diversity which will in turn open a bigger market to the wine consumers and help increase their knowledge and interest in the Wine World.
About the author:
Dimple Athavia is from Mumbai, India. She is a traveling winemaker who studied Bsc (Hons) Viticulture & Oenology at the University of Brighton, Plumpton College UK.
She has completed wine making vintages in France, Cyprus, UK and New Zealand. As well as working in production and business areas for 3 wineries in India, namely: Viz. Sula, Grovers and Vallonne. She is about to begin studying Msc in International Retail Management at the University of Brighton, and has plans to work in the Wine Business in Singapore.
