The Hindu Business Line : Wine's fine

DESPITE wine accounting for less than one per cent of the total spirits market in India, foreign as well as domestic wine companies are upbeat about the potential the Indian market holds.

"It is the market of the future," exclaims Paola Bassi, Export Manager of Masi Agricola, one of Italy's largest wine-making companies, which is trying to expand its brand network in India. Agrees Jean-Francois Balusseau, Regional Director (SE Asia & India), Sopexa (the French council for food and wine). "Despite the prohibitively high duties in India, sales of imported wines have grown from about 20,000 cases about seven years ago to about 1.2 lakh cases now."

Interestingly, the efforts of foreign wine makers to create awareness have rubbed off positively on domestic wine makers, including the likes of Sula Vineyards, Grover Wines, Chateau Indage and ND Wines, among others. While estimates vary, the locally-produced wine market is estimated between 3.8 lakh and 4.6 lakh cases per year and growing at a healthy rate of over 20 per cent per year.

The sales, in fact, have been so good that local players are now planning to expand capacities in a big way not only to cater to domestic demand but to exports as well. Sula Vineyards, for instance, is planning to expand its capacity from 1.7 lakh litres to 6.7 lakh litres by the end of the month. "We have been growing at upwards of 100 per cent and are targeting to sell 40,000 cases of wine in the current fiscal. Till now, we have been selling just about everything we produce," says Adrian Pinto, General Manager-National (Sales and Marketing), Sula.

Similarly, a relatively recent entrant in the domestic wine market, ND Wines, is increasing the availability of its wines across the country. "We are at present selling about one lakh bottles per year," says a company official.

United Breweries too is reported to have aggressive plans for its wine business. The company at present sells wine under the Bosca brand. Retail sales too have increased, led by domestic wine. In fact, about 60 per cent of domestic wine sold is through retail sales and the rest via institutions. In the case of imported wines, more than 99 per cent of the sales occur through institutions. However, Monish Bali, Director of Mount Shivalik Industries, which is importing the Blue Nun range of wines into India, points out that most of the locally-made wine sales in the market are driven by price alone. "The majority of such wine sold is below the Rs 150 price point," he says.

Not that anyone is complaining. "The main focus of the wine companies at present is not on brand building but on making the category grow," says Ashwin Deo, Managing Director of Moet-Hennessy India. With duties on imported wine upwards of 150 per cent, plus State levies and other local taxes, the price of such wines is still too high to induce trials.

In fact, a recent survey shows that the price of a bottle of French wine in Mumbai is 20 times more than the actual price it is exported at.

In addition to this, most of the sales of imported wines occur through hotels and restaurants, which anyway have huge mark-ups. So there are consumers paying a premium for a cheap quality wine at the 5-star hotels, which does little to induce growth in the category.

"The situation has improved over the past few months though," points out Rajiv Singhal from Ritu Overseas, a Delhi-based wine import and distribution firm.

In addition, though awareness about the category remains low, companies are doing their bit to change that and induce trials.

Moet-Hennessy, which set up operations in India in 2001, has been following a three-pronged approach. The company, apart from conducting appreciation programmes and training sessions for the trade, has also associated itself with fashion in India and has been working with designer Suneet Verma. Says Deo, "Our endeavour is towards getting more consumers. To make the product more accessible, we had started a programme whereby wine would be served to consumers by the glass."

Meanwhile, though wine drinking remains more of an urban phenomena, the trend is catching on faster among the young (the 25-45 years age group) and women.

"In fact, we have found that across Asia it has been the `women' that have been driving growth for the category. A similar thing is happening in India as well," says David Dean, Marketing Manager, Australian Wine Export Council. Agrees Shivalik's Bali, "We have recently introduced a rose wine and a wine cooler under the Blue Nun brand, both of which are targeted at women. We are seeing growing demand coming from this segment, with wine drinking seen as being more acceptable than, say, whisky."

Nevertheless, though sales of wines may not be skyrocketing yet, wine makers are of the view that the stage is set for growth in India.

"The potential is tremendous provided the duties come down to more realistic levels," says Sopexa's Balusseau.

While the sales are growing due to higher awareness, it is the affordability factor which will eventually decide the growth curve for the price-conscious Indian market.

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