Indian Wine Industry

Contents
Overview 3

Market scenario 4

Consumption Pattern 5

Classification of wines 6

Indian Wine Opportunities 7

Health Benefits of Wine 7-8

Growth Prospects 9

Our Advisory Services & Outlook 11- 12

Overview
Wine market generated total revenues of $3
billion in 2008;

Wine market is expected to reach $661.9mm
in value and 32.8mm liters in terms of volume
by 2012, posting a growth of 32.2% and 32.1%
respectively over 2007
.
Per capita consumption of wine in the
country was estimated at around 9 Milliliters in
2008.

Potential for wine sales in India is considered
to be very large.




Indians consumed more than 300 million cases of beer,
90 million cases of whisky, and other spirits in 2007-08

Market is approximately 5 million litres in volume terms
and Rs. 500 crore in value terms.

Wines sales in 2007-08 were 8,20,000 cases. France
accounts for almost half of Indias wine imports and
Italian 30%.

Lastly in India the cost for opening and setting up a
wine plant with capacity of around a lakh litres comes
only to somewhere between the Rs. 10 - 15 million
mark. As a result many entrepreneurs, Indian and
foreign, are jumping on the Indian wine bandwagon.

Fact Sheet of Indian Wine Industry
Market Scenario

The size of the wine market is of
1.5 million cases. Though the per
capita consumption is 9 ml, the
industry is growing at 25 to 30
per cent and the future seems
bright at present.

Approximately 38 wineries are presently operating in the country with a total production
of 6.2 million liters annually.
Maharashtra is leading among the states with 36 wineries and 5.4 million liter production.
At present 7,62,000 wine cases are sold every year, which includes 46,000 cases of
sparkling wines.
Contributions made by major wineries such as, Champagne Indage (CI), Grover
Vineyards and Sula Vineyards for indigenous production of quality wines in the country are
highlighted.

Sl.No Segment
Domestic production
(000 cases*)
Imports
(000 cases)
Total
(000 cases)
Retail Value
(Rs. Million)
2003 2004 2003 2004 2003 2004 2003 2004
1. Sparkling wines 35 35 5 11 40 46 258 297
2. Still wines -premium 117 143 53 63 170 206 779 944
3. Still wines -cheap 234 240 -- --- 234 240 281 288
4. Fortified wines/Others 4 5 1 1 5 6 13 16
Total 390 423 59 75 449 498 1331 1545

Segment wise Indian wine market during 2003 and 2004
*Note; A case is a unit of 9-liter capacity or equivalent to 12 bottles
Market Segmentation
Consumption
The per capita consumption in India is only 0.07 litre/person/year as against 60-70
litres in France and Italy, 25 litres in US and 20 litres in Australia and even China
has 0.4 litre.

Domestic wine market will grow around 25% per annum to touch around 9 million
litres by 2010 from current estimated level of over 5 million bottles a year.
The biggest consumption up
to 80% is however confined to
major cities like Mumbai (39%),
Delhi (23%), Bangalore (9%)
and the foreign tourist
dominated state of Goa (9%),
where as Rest of India has only
20% consumption.
Major Wine markets of the World
France 5.6 Billion ltrs
Italy 5.3
Spain 3.5
US 2.2
Argentina 1.4
Germany 1.0
South Africa 770 Million ltrs
Australia 750 M Ltrs
China 690
Gallo (MNC) 675
Portugal 611

Out of worlds total
annual production of 32
billion litres, the following are
among the top countries and
MNCs have their major share in
the world wine market.
Around 63% of the volume sales of wine are through off-trade channel in five-star
hotels, pubs and bar-restaurants. Now even the emerging tier II cities working
professionals and younger generation are also consuming wines a lot.
Classification of Wines
Wine is classified in three major categories:
Table wines: Table wines, also called still or natural wines, are consumed mostly with
food; they tend to compliment the meal.
o By Color
! Red Wine
! White Wine
! Rose (pink) Wine
o By Character
! Dry White and red
! Sweet White and red
These wines shall be the products obtained from the alcoholic
fermentation of grape juice/must. Their color shall be colorless to golden
pale.
Sparkling wines: Sparkling wines, for example champagne is distinguishable by its
effervescence and is drunk for the most part on festive occasions such as weddings,
birthdays, and during the holidays.

Fortified wines: Fortified wines, such as sherry or vermouth, are most commonly drunk
before or after meals and it is also frequently used in cooking.


Indian Wine Opportunities
The main factors attributable to this fast growth can be
enumerated as below:

Increasing social acceptance of drinking of alcoholic
beverages.
Increasing awareness of wine as a separate drink other than
spirits.
Increasing spend on corporate and personal entertainment.
Indian women increasingly become independent, financially
& otherwise, & begin asserting their spending power, wine
drinking is becoming the rage.
Increasing health consciousness.
Increasing awareness in Govt. Authorities to encourage wine
drinking compared to spirits.
Increasing awareness and knowledge about wines from
different regions of the world.
Increasing tendency to try newer products / brands.
Increasing awareness in Govt. to encourage wine drinking
over spirits.
Health Benefits of Wine- Cheers to your Health
A new study offers more evidence that moderate wine
consumption is associated with a significant reduction in all-
cause mortality, cardiovascular disease and
cancer among men.
Check out some of the most recent studies that
boast the health benefits of wine:
Overall Health Benefits:
Anti-aging effects in red grape skins (Harvard
Medical School in Boston, 2004)
Lung Health Benefits:
Improved lung function from antioxidants in white wine (American Thoracic
Society, 2002)
Heart Health Benefits:
Coronary heart disease reduced (University of California, Davis, 1995)
Healthier blood vessels in elderly (University of Ferrara in Italy, 2004)
Ulcer Prevention:
Ulcer-causing bacteria reduced (American Journal of Gastroenterology, 2003)
Cancer Prevention:
Cancer cells killed by protein in red grape skins (University of Virginia Health
System, 2004)
Stroke Prevention:
Arteries kept clean by polyphenols in red grape skins (William Harvey Research
Institute, 2002)
Womens Health Benefits:
Decreased ovarian cancer risk (The Queensland Institute of Medical Research in
Australia, 2004)
Stronger bones (Twin Research and Genetic Epidemiology Unit, St. Thomas
Hospital in London, 2004)
Lower risk of stroke (Centers for Disease Control and Prevention, 2001)
Mens Health Benefits:
Lower risk of heart attack for men with high blood pressure (Worcester Medical
Center in Massachusetts, 2004)
Prospects for Indian Wine Market
At the moment India produces only 8.35 million bottles per year. There is a huge potential in
Indian market itself. For export market, the increasing popularity of Indian cuisine is an
automatic opening. With more and more professionals visiting India on regular basis, and the
fact that Indian wine exports are going up every year, word is getting spread very fast creating
awareness of Indian wines in International market. What the country needs now is set of rules
and norms to monitor quality compliance so that credibility of Indian wines as a product or
brand is established.
Domestic demand weakness, rising excise rates and dwindling tourist numbers all combined to
lead to Indian wine
sales declining by 60%
in the nine months
through to June 2009.
Through to 2014, we
expect Indian wine
sales in local currency
terms to increase by
77.9%, surpassing our
growth forecast of
62.3%, in rupee terms,
for the wider alcoholic
drinks industry (see
chart).
India 5yr Alcoholic Drink Sales Growth Forecasts (%) by Category
Source: BMI
Value sales of wine are also forecast to surpass volume sales growth (59.1% to 2014) as
consumers gradually trade up to more expensive wine variants in line with increased
familiarity with the drink. As ever, the main driver of this growth will be India's ongoing
economic development, which will lead to rising disposable incomes, middle class growth
acceleration and faster urbanisation.
Our Advisory for Indian Wine Industry


" Wine consumption in India is
expected to triple within the next
three years. Lifestyles in urban areas
and some semi-urban pockets are
developing. By 2011, Asia will
account for 4.8% of world wine
consumption.

" Market is expected to reach
$661.9mm in value and 32.8mm liters
in terms of volume by 2012, posting a
growth of 32.2% and 32.1%
respectively over 2007


" The sales of wine through on-trade
channels are expected to be
marginally faster than off-trade sales.
On-trade volume sales are expected
to be driven by the establishment of
exclusive wine shops while off-trade
sales will be driven by non-specialist
stores like supermarkets

$164
$220
$299
$398
$519
$662
0
100
200
300
400
500
600
700
2007 2008 2009 2010 2011 2012
S
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V
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(
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)
Still light grape wine Sparkling wine
Fortified wine and vermouth Non grape wine
C
A
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R
: 3
2
.2
%
$164
$220
$299
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100
200
300
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600
700
2007 2008 2009 2010 2011 2012
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Still light grape wine Sparkling wine
Fortified wine and vermouth Non grape wine
C
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%
Forecast Sales of Wine (2007-2012)
The Indian wine industry is currently on an
upswing. Production and consumption are
expected to increase by 25% to 30% over the
next 5 years. Being in the early stages of market
growth, the industry enjoys protection from the
state as it stands low in cost competitiveness
when compared with the global benchmarks
Outlook
REEAP can bring to your company experts with a broad range of skills and business
acumen. We work as multi-disciplined teams to provide strategic and management
consulting Services.
Development of business strategies,
Reviews of processes and technology,
Systems implementation (including vintage costing),
Performance measurement and managing through change.
Source: Euromonitor, Rabobank research dated
February 2008, press
Sub Sector
Total Value
($ mm)
Total Volume
(Liters mm)
CAGR
(2007-2012)
Still light grape wine 571.6 30.5 34.7
Still Red Wine 271.9 15.4 35.0
Still White Wine 299.7 15.1 34.5
Still Rose Wine _ _ _
Sparkling wine 81.2 1.1 21.1
Champagne 61.5 0.3 21.4
Other sparking wine 19.7 0.8 20.0
Fortified wine & vermouth 9.1 1.2 19.6
Port / Oporto 9.1 1.2 19.6
Sherry _ _ _
Vermouth _ _ _
Nongrape wine _ _ _
Total 661.9 32.8 32.2

" Organic wine is unlikely to take a significant place
in the market, given the total absence of organic
wine till 2007. Moreover, no major domestic
vineyards are involved in organic farming and the
high prices of organic wine further discourages its
demand

" With the entry of new players such as Seagram
and United Spirits in 2007, and a number of other
players such as Diageo said to be keen to enter
the market, competition is expected to intensify.





The industry is expected to evolve further
with intensifying competition, and more
investments in wineries, bottling facilities,
their distribution, promotions and
advertising. Such investments will result in
the expansion phase in the lifecycle of the
industry, leaving the emerging phase
Forecast Sales of Wine by Sub Sector (2012)
" Indian companies like Champagne Indage and
United Spirits through acquisition of foreign companies are trying to set up production
facilities in countries like Australia, Argentina, France, Italy and South Africa, where
domestic consumption is strong

" Support measures from the government in policy and infrastructure provision will be an
incentive for more investments particularly from liquor players who have established
distribution networks

Currently the wine market is expanding with new entrants and increasing awareness among
consumers. The highly concentrated industry dynamics are set to change with the entry of
several spirits majors and foreign entities. More fragmentation is expected in the industry
with several competitive groupings comprising many players entering the market.
Source: Euromonitor, Rabobank
research dated February 2008, press

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