Is India the next big wine market?

Wine might not be the first thing to come to mind when you think about Indian food and beverages, but the world’s second-most populous nation is today experiencing something of a wine boom. While admittedly from a low level, consumption is growing at a rate of as much as 15% per year, as it becomes the drink of choice for many urban youth. Indian wine, meanwhile, is growing in quality and volume, with domestic winemakers exporting abroad and winning international awards.

Read about India’s potential to emerge as one of the world’s biggest wine regions.

The Indian state of Maharashtra is popularly known around the world as the home of Mumbai, India’s financial capital. But this coastal state is also home to Nashik, a sleepy town touted as the country’s wine capital. Nashik contributes to a whopping 80% of the wine produced in India and is home to 40 of the 96 wineries that have cropped up around this huge country.

India’s wine production is concentrated to two main winegrowing regions – Nashik and Nandi Hills, in the state of Karnataka. These geographic restrictions for viticulture in the country are is primarily because most of India’s geography and climate are not conducive for growing grapes.

Among the Nashik vineyards, Sula Vineyards is the oldest and most popular. It’s the largest producer of wine in India, and is the clear market leader, controlling around 60% of the domestic wine sales in the country. The sprawling property of Sula Vineyards hosts one of the country’s biggest wine festivals ‘Sula Fest’, and is one of the most well-known and visited vineyards in the country. This year marked the 10th anniversary of the festival, and for the hordes of Indians that visited the site over the past decade, it’s more often than not where they tasted their first glass of wine.

A tablespoon of wine

Currently consumption of wine in India is still extremely low, especially compared to other alcoholic spirits such as whiskey. According to India Wine Insider 2017, about 2 to 3 million consumers drank a total of 36 million litres in 2016. In a recent television interview with business channel ET NOW, Rajeev Samant, CEO & Founder of Sula Vineyards, put this consumption level into perspective. “Even now, [wine consumption in India] is less than a tablespoon per person per year… as opposed to France, where it is 40 litres per person per year.” In the US, wine consumption in 2016 stood at 11 litres per person per year, and in the UK, 19 litres.

The Indian wine market is growing at a consistent rate, and faster than that for beer and spirits. Between 2015 and 2016, wine sales were up 15%, beer 9%, and spirits 4%.

The reason for India’s growing interest in wine is twofold: firstly, wine is becoming the drink of choice for a large portion of the country’s urban youth. Holland says: “Wine is slowly becoming a drink Indians relate to, and it’s fast becoming the beverage of the youth, as well as among the women who experience fewer cultural inhibitions when consuming wine.

Secondly, hotels, restaurants and the wine trade are collectively making a concerted effort in popularising wine through wine dinners and education programs, helping consumers familiarize themselves with the different styles, regions and grape varieties.

Sumedh Singh Mandla, CEO, Grover Zampa Vineyards explains: “Education and exposure to wine are very important to us, and help us grow the overall industry. So we do invest a lot of time and resources to educate not only the consumer, but also the food and beverage trade and other partners who are involved in the segmentation of the business. Advertising [of alcohol] is not allowed in India, and as a result we have to go through surrogate forms of advertising – such as tours and events – to tell people about wine, and work to increase consumption. So that makes the process much longer.” Most of these vineyards’ marketing budgets are concentrated on these hands-on experiences to help grow the market, and help the beverage become more mainstream.

Indian wine gets competitive

As of now, most Indian wine drinkers pick their wines based on three factors: colour, price and country of origin. Most consumers are yet to understand the difference between grape varieties and often assume that an international wine will be better than an Indian one. With limited knowledge and education, most Indians go with the perception that anything international will be of a superior standard, and tend to prefer entry-level foreign wines, as opposed to better-quality Indian counterparts.

Holland says: “It is no longer as easy to tell an Indian wine apart from a South African wine or a Chilean wine or even an entry level French wine. Of course, the challenge that remains is consumers assume that French wine is always top quality, which may not always be the case. A well-made Indian or a Chilean wine can be just as good.

Hedge adds that there has been a vast improvement in the quality of Indian wine over the last decade or so. “Eight years ago, I would have said that Indian wine was mediocre at best and accounted for an alarming amount of very average wine in the bottle. Leapfrog to today, and you will find a vast improvement across the board, from viticulture to production techniques, culminating in wine comparable to the better imported benchmarks currently being enjoyed across the country.”

In fact, today some of the top players in India’s wine market are not only making wine that’s a quality product in India, they are winning at international wine competitions as well.

“We have made some good progress in the last five to ten years as far the quality of wine is concerned. So whether it’s the white, red or sparkling sector, we have achieved a quality where we can compete with international wines. This is reflected in the fact that in the last three years, Grover Zampa has won close to 80 international awards, and we have also grown our business from the domestic market to 30 international destinations,” says Mandla.

However, Indian wines need more representation from multiple wineries to be taken more seriously abroad. “When people talk about a country or region, they talk about a cross section of producers, and if we look at the export market there are only about two or three wineries that are exporting currently. If we can get to a stage where there are 10 to 20 good Indian producers representing us, it will help elevate the Indian wine industry perception,” he adds.

A long history of wine

Wine was first introduced to the country during the Indus Valley Civilization (3300-1700 BC), when Persian traders introduced wine-making techniques to the region. Similarly, port wine made its entry into India in the 16th Century, when the Portuguese colonists introduced it to the local inhabitants of Goa.

Wine in India had a second coming of sorts around the late 1980s, when the first of the main wine producers of today set up the country’s foundation vineyards. But these were just fleeting affairs, and India’s real relationship with wine has only really developed over the last two decades, with wine slowly becoming a part of pop culture. As a result, India’s real relationship with wine is just getting underway. Sonal Holland, India’s first Master of Wine says: “Wine is a drink [Indians] are still flirting with and perceptions about wine are yet to firm up among a vast population of Indian consumers.”  

The most pressing challenge faced by wines in India is the various government laws that change from state to state regarding alcohol permissions and sales. These varying legalities pose as a massive deterrent for wines spreading to different areas in the country. “When I’m a producer and I am selling in India, it’s almost like I’m selling to 29 different countries, because each state has a different policy and every year they come up with a new policy. Based on that we devise our strategy and pricing for the market,” explains Mandla. “The second thing is distribution. Because of these various routes to the market, a lot of challenges come into play as we have to plan differently for each state” he adds.  

An opportunity for carton packages?

An interesting finding in the India Wine Insider Survey 2017 was that over 50% of wine drinkers prefer to consume wine by the glass. Hence, creating smaller pack sizes could be an opportunity for winemakers to reach out to a larger audience of Indian consumers.

Indian wine has a long way to go before it controls sizeable market share in the liquor market, but Holland remains optimistic about the potential of Indian wine. “I would not say we are there yet, because we have a lot of progress to make, but for a 10-15-year progress [Indian wines] are not doing too badly. They are fast gaining acceptance on wine lists internationally, and winning medals at blind tastings, all of which is very encouraging.”

While there are still many obstacles as the industry strives for broader acceptance of wine among consumers, progress the last two decades has been remarkably fast. Craig Wedge, Brand Director, Fratelli Wines, expects the number of consumers to grow to 26 million people, and believes that domestic production by 2018 can reach 35 million litres of wine.

In this potential mega-market, the opportunities for both local producers and foreign brands are tantalizing. The Times of India reported recently that the Indian wine market is expected to double in size every five years. Christian Barre, CEO of Pernod Ricard Winemakers, was quoted as saying: “We need to stop looking for immediate gains and wait for the market to emerge and mature. The actual numbers of cases sold in India may not be anywhere close to the US and European markets, but its potential to emerge as one of the biggest wine regions is what’s attracting global winemakers to make a beeline here.”