An Analysis on Wine industry in India

A Presentation byS.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 Globally

Source : FAO, 2005

The PeopleIndian Economy

2005

2006

2007

2008

2009

2010

Population (millions)1,095.

41,110.

41,125.

41,140.

21,155.

01,169.

7

Household consumption (US$ billion)

2028 2210 2419 2651 2910 3176

□ 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

Growth: 9% 9.4 9.5 9.7 9.1

Source: Yura Beverages Inc

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/subsidies 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 park

The Market

• 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

Source: Food Press Release

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

Wine Consumption

Red 45%

White 40%

Sparkling 13%

Rosé 2%

□Traditional Red and White wines account for 85% of Indian wine consumption

Source: Food Press Release

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 AlexandriaSauvignon 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 • Sula Brut, Sula Seco and Sauvignon Blanc

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• Facilities of Food Processing Industries

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 InitiativeTIDCO 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 No. 9444448994.

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. Legal aspect, 2. Global aspect, 3. Social aspect and 4. 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 industry

• 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. Multiple aspects of Indian Wine Industry − Karnika Seth

2. 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 – 412 307.3. Wine project APICTO4. Winery Project TIDCO5. Maharashtra’s grape policy 20016. Karnataka Grape Processing and Wine Policy – 20077. D’Essenceconsulting – WineReport8. Wine Industry in Maharashtra

− Sudipto Mitra