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Chapter Iii Wine Industry in Nashik District

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Chapter Iii Wine Industry in Nashik District CHAPTER III WINE INDUSTRY IN NASHIK DISTRICT - AN OVERVIEW CHAPTER THREE WINE INDUSTRY IN NASHIK DISTRICT - AN OVERVIEW 3.1 Present Scenario of the Wine Industry in Nashik District India forms a part of the BRIC (Brazil, Russia, India and China) countries characterised by emerging economies with a fast expanding consumer base. The teaming middle class population residing in the Indian cities form the high growth consumer segment aspiring for affluent standard of living with strong propensity towards consumer splurges on food and beverage delicacies like wine. Truong (2012) noted that the global wine industry is being increasingly influenced by the emergence of the two super economies - China and India and their developing taste for wine. Figure 3.1 shows the major players of the global wine industry. India closely follows the New World norms of winemaking laying emphasis on varietal wines and blended wines. In India commercial winemaking commenced in 1984 when Chateau Indage established its winery at Narayangaon, Maharashtra. The contributions made by the Indian winemaking majors like Chateau Indage, Grover Vineyards and Sula Vineyards enabled the domestic wine industry to take long strides. Source: Truong, 2012 Fig. 3.1 Major players of the global wine industry 73 3.1.1 Wine Market Dynamics and Consumer Trends Jacob (2008) reported that gradually Indians are developing a taste for wine and there has been a steady rise in the consumption of domestically produced wines. The fast expanding consumer base, rising levels of disposable incomes, the desire for the new upper class to experiment with new tastes and more luxury lifestyles, frequent travels abroad, international research on health benefits of wine - all have given the necessary fillip to the indigenous wine industry apart from the fact that good quality wines are now available in the market (Truong, 2012; Karibasappa et al., 2011). Wine drinking culture is significantly rising among the young urban Indian women who would rather choose wine to spirits. Sula Winery offers wines with lower alcohol content specifically for the female consumers who contribute to one - third of the company's sales (Samant, 2013). A rise in women employment, overseas trips for business or leisure, changing lifestyle patterns, overall affluence levels - all have contributed to this trend. Further the urban retail landscape, dominated by supermarkets and other organised shopping outlets, facilitates wine purchase by female consumers who find it inappropriate to purchase from local liquor stores (Berry, 2010). The survey results further confirmed that wine consumption is heavily- weighted towards the women consumers who preferred wine to other alcoholic beverages. Wine still carries an elitist tag as a result the young Indian women perceived wine as a sophisticated alternative to the hard liquors. Cheng et al., (2010) pointed out that in India the social stigma towards alcohol consumption is routed towards hard liquor category like whisky and rum. Wine being mildly fermented, is considered by many a social non - alcoholic beverage. Growth opportunities for the industry are significantly bright in the emerging markets of Mumbai, Delhi, Bangalore, Goa, Pune, Kolkata, Chennai, Hyderabad and Chandigarh where consumers have ready access to wine through pubs, bars and restaurants. Berry (2010) reported that the organised retailing in wine is increasing as many supermarkets, hypermarkets, convenient stores, wine shops have began to stock wine in states like Maharashtra, Karnataka, Punjab, Haryana and West Bengal. Promotional strategies are being undertaken by both on-trade and off-trade channels to boost market penetration of wine. On-trade channels particularly the high end hotels and restaurants often endorse wine through food and wine pairings while off-trade channels opt for promotional price discounts (buy one get one free) and sampling. 74 Gore (2008) studied the Indian wine consumption pattern and stated that Indian potation is inclined towards still wines, specifically table wines and less towards sparkling wines. Sales are higher for reds and slightly sweeter wines are preferred by the majority of the Indian population. The Indian classes are oriented towards dry wines presented in classic style of full sized bottles with real cork while the growing consumer segment opt for smaller screw capped bottles of sweeter wines. The survey results indicated that red wines are the most preferred choice as it pairs excellently with Indian cuisine. The growing consumer base comprising of young urban professionals with international orientation is the prime driving force behind the domestic wine market boom. However risks loom large in the form of a protectionist regime of alcohol control and taxation, an underdeveloped supply and distribution channel that puts the product integrity at stake, and most importantly, a sizeable Indian population that perceives alcohol consumption a taboo (Gore, 2008). The varying state policies, complex excise duties, licensing requirements and distribution procedures hinder interstate wine trade (Tate, 2015). Poor warehousing and inadequate transport facilities are the major hindrances to wine marketing in our country. Other constraints are stiff competition from whisky, enduring preferences towards hard liquor and lack of promotional activities for wine as advertising wine or any other alcoholic beverage is prohibited in India (Tate, 2015; Karibasappa et al. 2011). 3.1.2 Export Market for Indian Wines Wine is regarded as one of the most popular beverages worldwide and in several countries it forms an integral part of culture and lifestyle. The global wine market is dominated by French, Italian, Spanish and American wines. However Indian wines are slowly creating a niche in the international front as Indian cuisine and Indian wine pairing are gaining popularity. Indian wines are exported to Malaysia, UAE, Japan, Bhutan, Germany, US, UK, Sri Lanka, Maldives and New Zealand (Fig. 3.2). At present, Indian wines feature in numerous wine shows and wine tasting sessions apart from their availability in several Indian restaurants around the globe that match Indian food and wine in the menu list (APEDA, 2012). In 2013, India exported 1.8 million litres of wine with export sales rising to 41.82% year-on-year to touch USD 6.88 million. The two major wine producing states of Maharashtra and Karnataka contributed to this wine boom (Tate, 2015). 75 During the survey it was found that the country's winemaking giant Sula exports wine to 23 countries worldwide. Vallonne Vineyards, another premium Indian brand has markets in UK and US and soon making its way to Japan, Hong Kong and China. A few other wineries located in the study area like York, Grover Zampa and Chateau d'Ori were trying to reach out for the global market for their wines. A SWOT analysis of Indian wine in the global export market is presented in the table 3.1. Table 3. 1 SWOT Analysis of Indian wines in the global export market Strength Weakness • New exotic wine • Lack of expertise in winemaking • Low production cost • Unenthusiastic perception about • Pairs well with Indian food Indian brand • Non availability of skilled winemakers Opportunity Threat • Winning consumer loyalty would • Substitutes may be available in establish an overseas market supermarkets • Target the non residential Indians • Strong taste of Indian wine community • Lack of the finer aspects of wine • Tie up with international players Source: Author, 2015 250 200 h 150 © 100 © 50 .11 0 j 1 III. Ji, 1 1. ill ll. w <& / -vvvtpv **/s? V f <f Countries 12010 "2011 -2012 2013 Source: USDA Foreign Agricultural Service, GAIN Report, 2014 Fig. 3.2 India Wine Export, 2010 - 2013 ('000 Litres) 76 3.1.3 Key Statistics on Production and Consumption of Wine in India Broadly alcoholic beverages may be categorised into five types - Indian Made Foreign Liquor (IMFL), beer, wine, country liquor and toddy. IMFL includes whisky. rum. vodka and other spirits while country liquor may be regarded as the indigenous equivalent of IMFL that is available mostly with flavoured alcohol. Toddy is the mildly fermented juice of palm which is considered as the Indian equivalent of beer (Bhat et al., 2010).Wine production in India has a tiny base with approximately 12,77,000 case production that stands in contrast to the alcoholic beverage industry's production of 480 million cases. As evident from the statistics, the total volume of Indian wine production is miniscule relative to the various alcoholic beverages. Sood (2012) reported that the country is teeming with 200 million consumers of hard liquor and has the largest whiskey market in the world. The general consumer tastes are bent towards liquor with higher percentage of alcohol, placing wine at a disadvantage. Wine consumers mostly belong to the estimated 20 million upper income group (2% of the population) with higher disposable incomes, wider exposure to western food and lifestyle through global travel and willingness for consumer splurges on new food and beverages. Additionally favourable demographic factors like young population are also propelling the long term growth of the wine industry - it is estimated that in the coming five years about 100 million consumers will attain the legal drinking age of 25 years in most Indian states. Again, the recent awareness on health benefits of wine is also gearing the shift from beverages with higher alcohol content to wine. In the opinion of Bhat et al., (2010), the indigenous wine industry has a promising future buoyed by a robust annual growth rate of 13% and an expanding consumer class with greater discretionary spending potential. Sood (2012) further reported that after a decade of steady growth between 2000 and 2010, domestic wine production declined 15% in 2011 when the figures dropped from 13 million litres in 2010 to 11 million litres in 2011. The situation began to improve in 2013 when 11.5 million litres of wine was produced. Tate (2015) reported that in 2014, the country's wine production peaked at 17 million litres of which the combined production value of the states of Maharashtra and Karnataka were 14.2 million litres or 1.58 million cases.
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