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Jan, 06 2014

Get high on wine business

The Indian wine industry is growing at the rate of 13 per cent annually, faster than any other alcoholic beverage. It is offering huge rewarding business opportunities. Here is an overview of the industry and emerging opportunities to enter into this lucr

India’s wine industry is growing faster than ever before. In 90's, the fad for taking wine was not the same as now. Number of wineries is popping up across the country. Many of them are small scale and face challenge in getting their wines available to the market.  However to overpower this challenge, they are following new business models like franchise, retail, dealership and distributors etc. to strike the market and leverage new opportunities. Sula Vineyards, Grover Vineyards, Chateau d'Ori, Elite Vintage Winery and Mercury Winery are a few key players who are establishing their vineyards and serving Indian wine to customers in India and overseas. Besides, there are market players like Brindco, Kristal Spirits, Global Tax Free Traders, Mohan Brothers and FineWinesnMore etc. who distribute wine from suppliers all over the world.

Dynamic Market

According to a report by London-based market researcher, the IWSR, the Indian wine market is at 1.2 million cases plus another 200,000 imported cases (a case has 12 bottles of 750 ml each). The consumption of wine is increasing regularly and poised to grow three fold. The report estimates the consumption could touch 2.4 million cases by 2020.  Cecilia Oldne- Global Brand Ambassador of Sula Vineyards says, “Wine is consumed by less than 1 per cent of the total population. With current average per capita wine consumption in India at just 10ml per annum it has great potential for future growth. The industry has witnessed an approximate 15 per cent growth in consumption of wine in India over the past few years.” The influx of new wineries is a good indication of the growth of Indian wine industry. Param J Singh, CEO of Sikand Group says, “The taste of wine is developing very fast with the influence of the western culture on the Indian young generation. The awareness about the fact that wine is good for health is on the rise.  Whereas love for quality wine and interest to taste something unique keeps many other coming into the wine shops.” Sula Vineyards has shown a positive growth rate of 30 per cent per year with the delivery of quality wines to the Indian consumer. Oldne adds, “As the consumer's expectations grow, so does our passion and commitment to the consistency and quality in our wines.” She adds, “Consistency in quality, knowledge and motivated staff and a good distribution network are a few key factors contributing to the growth of this industry.”

Dealers & distributors drive the overall growth

The growing demand of high quality wine is making wine dealership business highly lucrative option. Industry leaders believe, the most interesting part of being in this business is that we have an opportunity to know all about the world famous wine brands and how they are manufactured. When we think of expansion of our business, we start looking outside the region for new customers and prefer a dealer or distributor to deliver our wine at customer's doorstep. For example, Sula Vineyards has launched its first winery in 2000 and today, its wines are available nationwide through its distributor's network and has also exported to other countries across the world. Oldne says, “We partnered with distributors across the world and in India to ensure Sula's delivery direct to the customer's door.” The company also imports world's best wines under its import arm - Sula Selections and serves Indian customers through its channel partners. York Winery is a comparatively new winery and currently available in Mumbai, Pune, Nasik & Bangalore. Ravi Gurnani, Director of York Winery Pvt. Ltd says, “Soon our wine will be available in Delhi as well. We are also planning to strengthen our presence across India through potential dealers and distributors.” Another market player, Mercury Winery Pvt Ltd is relatively a small winery but has strong network for the delivery of its famous brand ARYAA. Viral Pancholia, CEO of Mercury Winery Pvt Ltd says, “Wine had always been a passion for me and it makes me go an extra mile. Currently we are selling in Maharashtra and have clients across India. Besides we have expanded our sales across 10 international countries from US to far east.” He adds, “We are planning to expand our brand ARYAA and would prefer dealers to promote it across India.” Other key players including Grover Vineyards, Chateau Indage and many more are also planning to support their delivery system by adding more dealers and distributors in their network.

 

Challenges

Although India has suitable climate to grow quality grapes and develop good wines but the challenges like tight regulations and limited market access prevents many entrants (including dealers and distributors) to enter into it. Gurnani says, “Challenges lie within our Govt. policies which are not very progressive and supporting to the business. The regulations vary state wise and are very complicated to understand, which makes scaling up a challenge to the companies like us.” Besides, the Indian wine distribution system is not encouraging. Gurnani adds, “Wine production is intense in the Nasik region, so reaching to the markets like Delhi and Bangalore is far. Due to transit conditions, the wines' shelf life is reduced. So the consumer does not always get the wine in the best conditions.”  Further challenges of the industry are ban on advertising alcohol, multiple tax authorities and lack of adequate infrastructure. High taxes, and varying inter-state rules and regulations are logistic frightening for wine dealers and distributors. Besides, India is not a wine drinking nation and most of the population has no clue about what a quality wine is.”

 

Conclusion

India doesn't have much awareness about quality wines. Gurnani advises to start joint effort to make the consumer aware about quality wines and how wines are supposed to be consumed.  Oldne adds, “We have played a major role in creating a market for wine where none existed before. Our initial focus was on educating the urban population in Tier -I cities such as Mumbai, Delhi and, Bangalore, we are now focusing our efforts to Tier-II cities in India to inculcate wine culture across the country.” Whereas Pancholia is planning to go ahead with wine tourism and educating how wines are to be enjoyed.

 

Nasik- 'Wine Capital of India'

Nasik is a hub of vineyards. It has become the 'wine capital of India with the presence of maximum number of vineyards. The region has a pleasant climate and Asia's first wine technology college Gargi Agriculture Research and Training institute. The region is on its way to becoming a talent hub with Vasantdada Sugar Institute (VSI) in Pune which is focusing on courses in wine making and providing talent to the industry.

 

Indian Wine Clubs

For developing wine consumers network, a number of wine clubs and societies are rapidly increasing in India. The Delhi Wine Club is the oldest one founded in 2002. It organises different programmes for its member to share their knowledge about wine industry.  Other key clubs include the Mumbai-based Wine Society of India and the Nagpur Wine Lovers Club (NWLC).

As an Owner

When you are ready for expansion and are looking for distributors, you need to think about your business and its long-term vision. As a brand owner, you need to be very clear about the factors like goal behind the dealership, preferred location, and with whom you want to do business. Once you are clear about all these things, you need to work on the production and quality part to keep delivery of your quality wine regular to all distributors. Besides, as an owner you also need to look into the matter that which one of your product is more famous among the customers and in which cities and locations. The brand which is more in demand must be produced more and make it available to your distributors.

As a dealer

As a dealer, be sure that the brand owner should provide you enough stock to continue delivering to customers. Sometimes smaller wineries find it difficult to deliver the products to distributors because of logistic issues. So go ahead with those wineries that would be able to continue delivery of the wine.

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