An Analysis On Indian Wine Industry

An Analysis on Wine industry in India A Presentation by S.Siyamalan S.R.Swaminathan Tamil Nadu Agricultural University

Synopsis • Wine consumption -Preferences • Government Support • The Market • Scenario in southern regions • 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 Source : FAO, 2005 Globally

The People 2

2

0 0 5

Indian Economy

2

0 0 6

0 0 7

Source: Yura Beverages

2

2

0 0 8

2

0 0 9

0 1 0

Population (millions)

1,095. 4

1,110. 4

1,125. 4

1,140. 2

1,155. 0

1,169. 7

Household consumption (US$ billion)

2028

2210

2419

2651

2910

3176

Growth: 9.1

9%

9.4

9.5

9.7

□ 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 Contd.. • The concessions/incentives/subsidi es 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

The Market Source: Food Press Release

• Wine expanded phenomenally by around 18% in 2007 • Total Indian Consumption has risen to 650,000 cases (2007-2008) – 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 Source: Food Press Release

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

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 • One Window System • Establishment of Grapes Board

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 • 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 TIDCO’s Initiative TIDCO proposes to establish wine making units in association with private sector. The prospective entrepreneurs may like to contact Thiru B. Ramakrishnan, General Manager, TIDCO for further details at Cell

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. 2. 3. 4.

Legal aspect, Global aspect, Social aspect and 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 Additional Duty Markets & Regulations Centre for Civil Society Distillery/Brewery License Fee Bottling fee Litterage fee Assessment Fee Franchise Fee Permit Fee Various taxes and duties applicable to the wine

• • • • • • • • • • • • •

Raw Material Excise Availability Fee Brand/Label Fee Transportation Fee Import Pass Fee Export Pass Fee Vend Fee Sales Tax/Surcharge License Fee Toll Tax Excise Duty Additional Duty Gallon age Fee

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. •

3. 4. 5. 6. 7. 8.

Multiple aspects of Indian Wine Industry − Karnika Seth 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. Wine project APICTO Winery Project TIDCO Maharashtra’s grape policy 2001 Karnataka Grape Processing and Wine Policy – 2007 D’Essenceconsulting – WineReport Wine Industry in Maharashtra − Sudipto Mitra