While there is considerable audience for wine in India, it still is limited to a niche. Other liquors like beer, whiskey, vodka, etc., are more common amongst Indian consumers.
However, this trend is changing. Based on various trade sources and available sales data, it is estimated that India’s national wine consumption is over 30 million litres per year. Most of this takes place in urban cities like Mumbai, New Delhi, Bangalore, Pune and Hyderabad. At present, consumers are mostly inclined towards red wines followed by fortified, white and sparkling wines.
Experts believe the driving factor behind the uncorking wine in India is the rapid urbanisation, pop culture, widespread availability made possible by premium private players in the market. Supreme domestic players like Sula and Zampa Grover continue to dominate and attract the Indian consumer due to their quality and pricing.
CHANGING PERCEPTIONS
Trends like wine tasting have contributed to a shift in audience perception and boost in wine consumption. In previous decades, wine was believed to be a feminine indulgence. However, millennials have increasingly shunned this notion. More consumers are keen to explore the quality, depth, texture and several other nuances of wine.
However, if we read between the lines, there is a set of reasons that pose challenges to selling premium wine in India. Some of these include the following:
TAXATION
Recently, the GST council has decided to continue with the status quo on states taxing extra-neutral alcohol (ENA), which is used for manufacturing alcoholic liquor for human consumption. This essentially means that for the time being, ENA would not be brought into the ambit of GST. So, states will continue to levy Value Added Tax (VAT) and sales tax on ENA, which only ends up increasing the final price of the wine bottle.
INTERSTATE POLICIES
In many regions across the country, wine production, procurement, consumption or sale is banned. In states like Gujarat, Bihar, Tripura, Lakshadweep, Mizoram, and Nagaland, consumption and trading of liquor is banned. The same is partially banned across some regions like a few districts of Manipur. This is a major deterrent for the wine industry.
Moreover, the legal drinking age in India varies across different states and UTs. New Delhi recently decreased the legal age for alcohol consumption from the erstwhile 25 to 21. This also deters many youngsters from trying out wine, which is a well-accepted beverage in many other countries.
LACK OF AWARENESS
While upscale consumers in India have developed a taste for wines, a larger chunk of the Indian population prefers the locally sourced alcohol from particular regions in India. Take the case of Kerala, where toddy is more common than wine.
By consumption units, Uttar Pradesh is considered to be on top of the country’s charts. However, this includes a majority consumption of locally manufactured alcohol, and sometimes spurious liquor that results in casualties. Wine is far from reaching the narrow or lower tiers and strata of Indian society despite economically viable varieties being available in the market.
CURRENCY FLUCTUATION
The global and domestic currency fluctuation impacts the import and export cost of alcohol across the country. Foreign exchange due to the dollar prices fluctuation, results in constantly changing prices of imported wines in India. This can often discourage many people from trying out French, Italian or Australian wines.
THE PANDEMIC
COVID-19 spared no industry. One of the major drivers of wine consumption, the hospitality industry faced irrevocable damage during the pandemic. with many of them downing their shutters or operating for limited hours or under duress, local wineries saw a huge decline from the hotel industry.
All these are key hurdles that the fledging wine business in the country is battling with in an emerging market like India. Nonetheless, many brands and wineries continue to strive to distribute the finest of alcoholic beverages to the Indian consumer. It is time for them to collectively strategise and partner with selected quality suppliers from across the globe who have something unique to offer to the Indian market. This will give the entire industry a much-needed fillip, not to mention a great experience to consumers.
