Could Indian Wine Be Toast of the World?
Wines from India are now among the best in the world. People were more open to trying new wines of all sorts and price points while quarantined at home or while binging on home-cooked meals as a form of entertainment during the pandemic-induced shut down, which contributed to the resurgence of India’s viticultural industry. Wine sales have surged as a result of new brand innovations aimed at appealing to customers. As statewide alcohol restrictions have been loosened, the industry too has got a new occasion to rejoice. What remains to be seen is a marked increase and acceptance of Indian wines for their quality, taste and brand value. Let’s explore this facet of the Indian wine industry.
The global wine market is projected to grow at a compound annual growth rate (CAGR) of 3.18 per cent to reach $146.820 billion by 2027, from $117.936 billion in 2020, according to the November 2022 report from Knowledge Sourcing Intelligence.
The report noted that with rapid urbanisation and modernisation, the disposable income of families is increasing. With increased disposable income, they tend to upgrade their living standard and make a shift toward attaining luxuries. Moreover, wine intake at business meetings tends to become normal and is also considered a status symbol. Along with it, wine also helps in reducing heart diseases, combating inflammation, and promoting gut bacteria. As per OIV (the International Organisation of Vine and Wine) records, the world’s wine consumption in 2020 was 234 million hectolitres (Mhl). USA, France, Germany, UK, and Italy are the five biggest wine-consuming countries across the globe.
Millennials and Gen Z are currently under the influence of clubs, cafes, and nightlife culture. Increased digitalisation and social media influence have made café culture a new normal. This is acting as a driving factor for the demand for alcoholic or non-alcoholic beverages in general. Along with it, after the COVID-19 pandemic, countries are taking up initiatives to reboot the tourism sector. This also has led to the expansion of the tourism industry, which further has encouraged the hotels to demand premium quality alcoholic beverages such as wine.
The market players are regularly analysing the market trends and working on research and development to take up fruitful investment projects and make innovative product launches such as working on newer flavours and methods that will be helping in enhancing their product offerings.
Shift in cultural norms
A growing segment of the population, particularly the younger generation, is drinking more wine as a result of shifting cultural norms and the rise of a more urban consumer mentality. There has been a rise in both wine consumption and production as a result of this. There has also been a dramatic expansion of vineyards, which has resulted in more wine being produced. With its ability to satisfy one’s thirst, rose wine is quickly becoming a summertime staple, leading to a rise in rose wine manufacturing. Therefore, the expansion of the rose wine market is expected to be driven by the rise in wine production over the forecast period, the report adds further.
According to the official data presented by the government, India has exported 2.47 lakh metric tonnes of alcoholic products to the world for the worth of $322.12 million during 2020-21. The major export destinations of Indian alcoholic products in 2020- 21 were United Arab Emirates, Ghana, Singapore, Congo, and Cameroon, etc. Maharashtra has become an important state for wine manufacturing as there are more than 35 wineries in the state. Around 1,500 acres are used for grape cultivation for wine production in Maharashtra. To promote wine manufacturing, the state government has declared the wine-making business a small-scale industry and has also offered excise concessions.
The demand of India’s alcoholic beverages products like beer made from malt, wine, white wine, brandy, whiskies, rum, gin, etc. has increased manifold in the global market. The Agricultural and Processed Food Products Export Development Authority (APEDA) has conducted several workshops and wine tasting events at various international trade fairs for creating awareness about the potential of Indian wines. Indian Wine industry has grown at compound annual growth rate of 14 per cent during 2010 to 2017 making it the fastest growing industry under alcoholic beverage in the country.
Commenting further on this latest trend, Dr Neeraj Agarwal, Director & COO, Resvera Winery stated, “Initiation and development of Indian wine industry is just three decade old and this development is with the individual efforts of few entrants namely, Chateau Indage, Sula Vineyards in Maharashtra and Grover vineyards in Bengaluru . We are making wines in subtropical climates compared to well established wine countries making wine for centuries and that too in temperate climatic conditions. Now, Indian wines have reached a certain level of quality. But this needs to be introduced in western countries for acceptance, requiring efforts in that direction.”
Currently, top Indian wine exporters that contribute to international wine market are Resvera Wines, Sula Vineyards, Good Drop Wine Cellars, Hill Zill Wines, KLC Wines, Soma Vine Village, Grover Zampa Vineyard, Plateaux Vintners, ASAV Vineyards and Fratelli Vineyards. The major export destinations of Indian alcoholic products in 2020-21 were United Arab Emirates, Ghana, Singapore, Congo, and Cameroon, etc.
Centre’s boost to exports
The governments of Maharashtra and Karnataka, anticipating increased production in the years ahead, have taken a number of measures to bolster the wine industry. Excise taxes on in-state wines are being lowered or even eliminated, distribution limits are being loosened, and financial incentives are being offered to encourage the establishment of vineyards and wineries. Additionally, these states have implemented significant excise taxes on both domestic wines and wines from outside the jurisdiction. The state government of Maharashtra has relaxed rules and procedures for setting up vineyards and wine shops.
The state government has also encouraged investment in the wine business by establishing wine industrial parks. Excise duty exemptions granted to Maharashtra wineries in 2001 for wines manufactured from state-grown grapes expired in December 2021. Those in the local business community are keeping their fingers crossed for a favourable extension. Currently, wineries in Maharashtra pay a value added tax (VAT) of 20 per cent to the state government, with roughly 16 per cent of that revenue returned to the businesses.
Karnataka, like Maharashtra, offers financial incentives to encourage the cultivation of grapes; in this case, a subsidy of Rs 50,000 per hectare for newly planted vineyards. Market promotion events like wine festivals and tasting classes are just some of the many things the Karnataka Wine Board (KWB) organises regularly, in the state’s smaller cities. The Government of Karnataka has approved a certification programme that KWB has launched.
Further making suggestions to the government, Dr Agarwal stated, “Government of India should allow soft publicity of wines. Also, interstate barriers must be abolished and label registration fee and license fee should be reduced in all states. This will ensure ease of doing business, to develop the domestic market first which has huge potential to grow. In turn, it will help improve the rural economy by way of generation of jobs in rural areas and growth of wine tourism in rural areas. As wineries are dependent on grapes and fruits, available in rural areas, wineries must be established there, further developing the rural economy.”
To further ramp up the Indian wine exports, the Food Safety and Standards Authority of India (FSSAI) has started affixing labels on the beverage bottles, declaring the standards and specifications of the products in a globally compliant manner. The move could not only catalyse formalisation of the sector but could dramatically increase Indian wines’ access to various export markets. The standards put out by the FSSAI are in consonance with the global best practices prescribed by the Paris-based Organisation of Vine and Wine (OIV), which consists of 46 wine-producer countries, including India.
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Wines from India are now among the