India's wine market poised for a heady mix

While generations of tipplers have been advised against mixing drinks, alcoholic beverage makers are doing it without trepidation.

With the wine market in India poised for heady growth, liquor companies are ready to uncork their best wines.

Currently, the Indian wine market is estimated at 1.2 million cases (one case has 12 bottles of 750 ml each), with imported wines accounting for a mere 200,000 cases.

According to a report by consultancy firm KPMG and Federation of Indian Chambers of Commerce & Industry, the Rs 265 crore (Rs 2.65 billion) market has grown at over 25 per cent per annum over the last three years.

The industry is estimated to report a 60 per cent compounded annual growth rate in the five years to 2010. After that, the growth is expected to slow down, but not to below 24 per cent.

The per capita consumption of wine in India is only 9 ml, compared with 400 ml in China. Since the two countries are often placed in the same economic bracket, this is being interpreted as a huge latent demand in India.

Diageo, known for its premium scotch brands in India such as Johnnie Walker and premium vodka brand Smirnoff plans to soon serve an array of domestic and international wines.

"We plan to launch our premium wines starting with Justerini & Brooks in April followed by Sterling Vineyards for the Indian market," Asif Adil, MD, Diageo India told Business Standard.

Diageo has already introduced three of its international wine brands, B&G, Blossom Hill and Piat d'Or, in the domestic market last year.

The company also plans to market its first domestic wine Nilaya, launched in November 2007, this year.

Last year, the company had signed third-party manufacturing agreements with Renaissance Winery and Mountain View Wineries in Nashik, Maharashtra, for developing its Indian brands.

On the other hand UB Group, which lords it over 45 per cent of the country's beer market, has announced plans to retail high-end bottled wines.

The company has already started introducing some wines from Bouvet Ladubay, a premium French winery, which the company acquired last year.

The company has positioned its Indian made wine Zinzi in the value-for-money category within a price band between Rs 275 and Rs 300. While its other Indian-made wine Four Seasons will be available in the premium Indian wine category with prices starting from Rs 375.

Wine firm Sula is not only aiming at increasing its market share but also looking at new marketing initiatives. Dia-Sula's first wine for women is one such example.

Sula is expecting 30 per cent of its total sales to come from Dia. The other part of the strategy is to be present across the price spectrum with the most expensive (Dindori, at Rs 700 a bottle) and the cheapest wine (to be made from table grapes) available in the country.

Says Rajiv Samant, "We hope to add 800 acres to our vineyards this year through contract farming, mainly in Nasik."

Retailing

After receiving the go-ahead from the government for wine retailing, wine makers have grabbed the opportunity to sell their wares through formats such as Reliance Fresh and Shoprite Hyper stores.

Like Maharashtra, Haryana too is working on a new excise policy to liberalise the retailing of wine and beer. This would permit large department and other selected retail outlets to sell wine and beer from April. Currently, only licensed liquor shops can sell alcoholic beverages.

Wine major Chateau Indage is also undertaking a big retail expansion in the country with plans to open more than 1,000 outlets and sell more than 4,500,000 litres in the current fiscal.

"Nilaya has received a very good response from the consumers. I was pleased to spot people picking it up from retail outlets like Shoprite," Adil added.

In short a rapid expansion of organised retail in India offers bright prospects to both domestic and international wine merchants.