Winemakers head for India, by Euromonitor International
India's rocketing middle-class population is discovering a taste for wine, which is causing a stir amongst global winemakers.
Wine in India remains a miniscule market, but its rapid growth has attracted the attention of alcoholic drinks companies worldwide. Reports have linked Diageo with a number of domestic wine companies, including Sula Vineyards and Seagram India, a wholly owned subsidiary of Pernod Ricard, recently launched its first Indian wine brand, Nine Hills. Such moves are hardly a shock, as the market has grown in volume by 126% since 2001 and Euromonitor International forecasts that the market will expand by 97% in the next five years.
Wine gains acceptance
The huge and growing population of under 30-year-olds, estimated at almost 650 million, is driving an attitudinal shift in alcohol consumption in India. More and more young people and women are taking to consuming alcohol, including wine, on a regular basis and rising disposable incomes mean that a greater part of the population can afford such products.
Governmental measures, aimed at weaning the population off stronger and more harmful drinks like spirits, have also aided the growth of the wine industry. Many state governments have reduced duties on wine, eased restrictions on distribution allowing wine to be sold in supermarkets, and have provided incentives for wineries to establish new facilities.
Barriers not sufficient to deter interest
Impediments remain for international winemakers, not least the high import duties of up to 260% currently levied on wine. Last month, however, the EU took India to the World Trade Organisation, prompting Indian ministers to voice their intention to settle the dispute amicably, suggesting that a move to lower import taxes is in the offing.
Companies seeking to enter the Indian wine market should equally be aware of the regional nature of Indian wine consumption. Major cities like Mumbai, Dehli and Bangalore should be the primary targets, as they account for almost 80% of the country's total wine consumption. The soaring popularity of imported brands, which sell at much higher prices than domestic varieties, offer international companies great opportunities for strong value growth.
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