Reasons for the Growth of Wine Companies in India

It has been witnessed that the wine industry is growing at a steady annual rate of 30% and it is expected that it will be the most upcoming segment in the history of Indian food industry. India’s mounting wine industry is at the core of a dynamic evolution. In previous years, the total wine production in India hit the highest record with 17 million liters. With a rapid growth in this segment, many wine companies in India are getting streamlined for expanding domestic wine consumer market and supporting the growth of the industry sector. The Wine industry in India has the potential to lead the race of global market competitor. In the present scenario, the India Government, in aggregation with recently formed IGPB (Indian Grape Processing Board), is directed towards finalizing the management of Indian wine standards associated with the International Organization of Vine and Wine (OIV) guidelines. Thus, the government is all set to be a promoter for state reform with the good news of setting new standards for investors, entrepreneurs, and traders who have eagerly anticipated for the growth of the industry over the past decades.

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With the introduction of more Wine companies in India, the majority of alcohol consumers moved over the wine consumption resulted in the steadiest growth of the industry. However, wine is a preferable drink largely for the upper-income earner groups who have a high volume of their disposable income. And that is the reason why the majority of wine consumers belong to the urban states of India like Maharashtra, Delhi, Karnataka, and Goa accounting for estimated 75% of the total wine consumption in the country.

One of the most encouraging aspects for wine companies in India is the relaxed levy excise duties on alcohol by the Indian State Government to determine their prices and therefore, every state has different licensing, registration, and taxation procedure in terms of registering, manufacturing, labeling, and sales of wine. And as a result, foreign investment in the Indian wine industry is stained by exertion in navigating the fragmented market.

Upsurge of Wine Companies in India

Wine is an alcoholic drink that is being consumed since the ancient times but was never has been the part of Indian culture. The Indian population is looking forward to quickly adopt the western culture. And when it comes to knowing about the Wine companies in India, it is analyzed that the industry is growing at steady rate. And today, wine has become the style statement for the people living in an urban society. They feel that the celebration would be incomplete without opening a bottle of wine. There are some major factors that played a vital role in increasing the wine consumption in India:

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  • Changing demography
  • Rise in incomes of young Indian population
  • Exposure to western culture
  • Rise in visit of foreign tourists
  • Relaxing Government regulations and policies

India’s domestic wine industry has taken a sight of their emerging wine consumption population mainly due to all of the international travel and satellite TV, as the Indian community has started paying attention to the variety of wines that are out there in the market. Secondly, the import duties charged on the wine could be around 250% of the wine’s market value. These factors acted as a strong motivator for the rise and development of Wine companies in India. On an average, the overall consumption of wine, beer, and liquor are rising at a rate of 30% every year.

Use of Oak –

Using oak barrels for storing and aging of wine is as old as winemaking. The real benefit that comes from using an oak barrel is that it accurately adds character to a wine, specifically aromas, and flavors. Furthermore, the complexity of controlled micro-oxidation is added through the barrel wood oak. Oak is a vital and often overlooked component in the world of producing a quality wine. Each factor from the size, type, age, grain, and treatment of an oak barrel significantly impacts the taste and aroma of the finished wine.

Growth of Wine Companies in India in Recent Years

The Indian wine market is emerging at around 25 percent every year. India’s domestic wine industry has taken notice of their increasing wine consuming population because the Indian population is getting influenced by an international variety of wines advertised on an internet and television. The import duty charged for exporting a wine is 250% more than the actual market value of a wine which strongly motivated the entrepreneurs to develop Wine Companies in India. An overall sale and consumption of wine, beer, and other alcoholic beverages are increasing at a rate of 30% each year. It is good news that still India has the lowest per capita consumption of wine only about 19ml.

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For setting a vineyard to produce fine wines, Wine Companies in India requires a capital amount of around 4-8 Crores for 1, 00,000 liters wine including the cost of land, machinery, infrastructure, and plantation. Investment necessities for economic ‘fortified wines’ would possibly be a third of that – approximately between Rs 1.25 crore and Rs 2.5 crore per 100 KL.

Investment in the Wine Companies in India was earlier influenced by the passion or misguidance in the returns available. But today company like Four Season Vineyards is leading the wine market and is making profitable money by serving quality-based wines, while other wine companies are still struggling for marking their presence in the market. With more than 50% of the wineries has been shut or lying dormant. New vineyards would comprehend a variety of business models from big mechanized vineyards and industrial-scale vineyards manufacturing decent-quality but low-cost wines to boutique wineries generating small quantities of world-class wines. However, to appeal investment the wine industry must have the vision to become largely profitable, along with positive cash flows over time. This, in turn, means that costs of manufacturing need to decrease including high-label registration fees and non-sensical inter-state fees with the quality improvement.