New Delhi - With its fast-growing economy and expanding
middle-class, India is a new market for both wine consumption and
production, but the local industry is still taking baby steps.
India is a country where abstinence from alcohol is rooted in
religion and politics. The constitution even endorses principles of
prohibition espoused by Mahatma Gandhi.
But sociocultural changes brought on with the opening of the
economy have seen some segments of this essentially conservative
society shed their prejudices against alcohol consumption.
Sales of whiskey and beer have shot up in recent years, and now
urbanized Indians are showing marked preference for wine.
'The drinking culture is changing. Wine is now regarded a status
drink, the younger lot, particularly women find it fashionable to
drink wine,' said Delhi-based business executive Vishal Rastogi.
'Many health-conscious people like me have switched from hard
liquor to wine,' said Rastogi, 35.
Wine clubs are opening in cities such as Delhi, Hyderabad and
Bangalore.
From a non-existent market over a decade ago, wine production and
consumption is growing 25 per cent annually and expected to maintain
that momentum for the next five years.
The wine industry is relatively small but holds enormous potential
given the low per-capita consumption, high growth in disposable
incomes and urbanization.
Every year 1.6 million cases are sold, of which some 20 per cent
are imported, mainly from Europe.
Over 50 local wineries have been set up in recent years, most in
and around Nashik in western state of Maharashtra, the principal wine
district. Other vineyards are located in Bangalore and the highland
state of Himachal Pradesh.
Realizing that support is crucial for the nascent industry, the
government is providing financial concessions and facilities such as
wine parks to give a boost to the sector.
Maharashtra is waving excise taxes for vintners and offering
subsidies for grape farmers.
Local wineries benefit from import duties on foreign wine of up to
160 per cent, prompting protests from the EU against discriminatory
taxation.
Another key government initiative is the establishment of the
Indian Grape Processing Board, tasked with setting quality standards,
preparing a national strategic plan for the industry and promoting
it internationally.
Although local winemakers justify protectionism in the context of
highly subsidized European wines, they complain of varying excise
fees across states and complex licensing processes.
'The government is helping sustain the growth momentum. We are
focusing on quality and are working to resolve problems faced by
producers,' board vice chairman K Rajeswara Rao said.
'What is needed are policies that generate more competition,
lowering the cost of market entry in every state and applying the
minimum possible taxes on wines,' industry expert Alok Chandra wrote
recently, citing the success in Maharashtra.
Currently, the industry is in a rough patch owing to global
recession, a drop in tourist traffic following the Mumbai attacks and
tax issues. A global glut of wine and domestic overproduction by
grape farmers led to unsold stocks.
One of the country's largest wineries, Chateau Indage, has been in
dire financial straits, mainly due to its acquisitions of wineries in
Australia and South Africa.
A court recently gave the company a temporary reprieve from
liquidation, allowing it some time to sort out debt of about 100
million dollars.
In a first-ever foray overseas, eight Indian companies exhibited
their wines at the London International Wine Fair last month. India
is also slated to become the first Asian country to join the elite
Paris-based Organization of Vine and Wine.
The United Breweries conglomerate recently announced plans to
export wine to Britain, and Italian winemakers have signed a joint
venture with a local company.
'India's wine market is not mature yet but the industry is on an
aggressive growth path, as most of the winemakers are relatively
young,' Ankush Mittal, an entrepreneur in his early 20s, who plans to
launch a wine brand soon.
'There are serious players now, so one can expect genuine quality
wine from India.'
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