India consumes over two billion cases of whisky every year, making it the largest spirits market in the world. A distant number two would be beer, followed by vodka and gin. While beer consumption has seen consistent growth over the past decade with volumes crossing 350 million cases (according to a Technopak report), beverages such as gin are getting a fair share of consumer attention too, especially with the emergence of homegrown brands such as Stranger & Sons, Tamras, Hapusa and Greater Than. Though the over ₹250,000 crore Indian alcoholic beverage market is the third-largest after China and Russia, India never had a portfolio of beverages (barring Amrut Whisky) that it could boast about. After all, 68% of Indians consume IMFL brands (Indian manufactured foreign liquor). This narrative, however, is beginning to change with companies such as Diageo, launching the country’s maiden handcrafted whisky, Godawan and the gin start-ups also launching handcrafted gins in which the botanicals are also locally sourced.
However, the category which is quietly surging ahead is the ₹2,000-odd crore wine industry. Most upwardly mobile Indians are crazy about doing wine holidays and wine tasting at California’s Napa Valley or Bordeaux in France, but 95% of the wines consumed in India are made in India (Sula Vineyards, Grover Zampa, Fratelli and Krsma are the prominent Indian brands). India produces 40 million cases of wine every year and the per capita consumption of wine is barely one bottle a year, vis-à-vis two in China and 50 in Italy or US. There are just 10 million wine drinkers (around 0.8% of the population), but wine consumption is growing by 18% according to the Technopak Report, vis-à-vis IMFL, which is growing by 10.8%. “Wine is being perceived as healthier in comparison to whisky and is hence becoming popular. It is highly aspirational too,” points out wine expert and columnist, Ruma Singh.
The alcohol content in wine is also lower (around 11%-14%) compared to 40% in whisky and 35% in gin. “Wine is a natural fermentation process, unlike spirits which are distilled and need chemicals. This is also working in favour of wine,” says Ravi Viswanathan, chairman, Grover Zampa, who expects India to be the biggest wine market in the world within the next two decades. “Wine consumption is spreading to tier 2-3 India too,” he adds.
The lower alcohol content in wine has also brought a fair bit of diversity into the category. According to Rajeev Samant, founder and CEO, Sula Vineyards, 35%-40% of Indian wine consumers are women, while in the case of spirits or even beer it is only 5%. "Women consumers are a large part of the story. Over the last decade, more and more women are enjoying wine and it is being socially accepted."
Indian Wine Market
Though the Indian wine story is largely a 'made in India' narrative, these wines don't follow indigenous fermentation methods. Though the grapes are grown locally, they are popular international varieties such as shiraz, sauvignon blanc and merlot. Most of the Indian brands at the time of launch had international wine experts to advise them and all of them started off as passion projects.
In the late eighties and early nineties, wine (both Indian and international brands) was available only in five-star hotels which had access to duty-free licences. “Five-star hotels were our main buyers, you hardly had wine selection in retail stores,” remembers Samant of Sula Vineyards. It was only in the early 2000s when the Government allowed the import of wine at a duty of 150%, and that was when standalone restaurants were also given wine licences. The turning point for the Indian winemakers came about in 2001 when the Governments of Maharashtra and Karnataka (the two States which have a climate conducive to growing grapes) slashed excise duty on wine. “They understood that it could be a boon for grape growers. This move allowed the wine to be profitable, allowed money to be ploughed back into the market to boost consumption and wine consumption tripled,” explains Samant.
Like all alcoholic beverages, wines are also subject to taxation as high as 60%-70% (barring Karnataka and Maharashtra), which has been a hindrance for most of the wineries to scale up. Meanwhile, the discerning Indian consumer who had started travelling extensively started asking for the best quality wines and this says Manu Chandra, Chef-Partner, Single Thread Company (a Bengaluru-based bespoke catering company) forced the Indian wineries to up their ante. “Wine imports became a lot more aggressive and a lot of new labels started coming in. The idea of drinking good quality wine from different parts of the world became popular. Also, when Pernod Ricard launched Jacobs Creek, Indians got to drink a good global wine at Indian prices. This is when Indian brands felt the need to come with better quality wines.”
Premiumisation
The inflow of imported wines also ushered in an era of premiumisation. “Sula Vineyards, which produces 12.1 million bottles a year and has the largest market share (around 68%) of wines, has 15 premium wines out of its portfolio of 38, while Fratelli has 10 premium wines and all five wines of Krsma are premium,” says wine expert, Singh.
The premium wines which are priced upwards of ₹850 are known to be growing anywhere between 45% to 130%. “Imported wines cost three times more than Indian wines but the quality is similar. The best of Indian wines trade at ₹3,000 – ₹4,000 per bottle and it can be compared even with the premium imported wines priced at ₹30,000,” claims Grover Zampa’s Viswanathan.
In fact, Uma Chigurupati, co-founder, Krsma Estates, says she wants to put India on the international wine map, therefore prefers to be present only in premium wines. “We launched simultaneously in Bangalore and Manhattan. We want to present the perfect Indian wine with an international presentation. Therefore, we use the most expensive bottles, we get our labels printed in Australia, and the art on the bottles is from Portugal. We are also the first ones to introduce magnums, 1500 litre bottles of wine.”
Though Indian wines are available in upmarket restaurants in the US and UK, Samant of Sula says exports constitute just 5%. “Over 95% of sales are in India, and that is likely to continue for the next decade as India is the fastest-growing wine market in the world. Therefore, it makes sense to focus on the Indian market.” After all, India according to the World Economic Forum is likely to have the third largest number of high-income households after China and the US by 2030. Around 140 million households would move to the middle class and another 20 million would move to the high-income category. This would mean higher discretionary spending which will positively impact wine consumption.
The wine brands on their part are not just expanding their premium portfolio, they are also doing their bit to take wine consumption beyond the metros to tier 1-2-3 markets. Sula recently launched wine in cans with an alcohol content of just 8% at ₹180 for a 330ml can. Grover Zampa is also planning to launch low-alcoholic wines next year. “We are getting equipment to make non-alcoholic wines too. Indians are discovering wine, so a portfolio that can adapt to everyone’s taste is important,” explains Viswanathan.
