Indian market sends mixed message

3rd March, 2014 by Gabriel Stone

A report that India’s domestic wine market is growing at 30% a year has been tempered by a warning that many of the country’s producers are facing bankruptcy.

IndiaAccording to a paper released last week by the Associated Chambers of Commerce and Industry of India (ASSOCHAM), the country’s domestic wine market is expected to grow from its current estimated level of 21 million litres to reach 28m litres by 2015.

Wine: Bearing Fruit in India attributed the rise to a number of factors, including “greater exposure to Western culture”, “rising disposable incomes” and a “teeming population” of around 800m people under the age of 25, who are expected to drive a shift towards wine.

The report also noted the boost generated by many state governments in reducing duty on wine, relaxing distribution restrictions to allow wine onto supermarket shelves and providing incentives for wineries to build new facilities.

However, this positive outlook was called into question by an article published yesterday in the Times of India, which claimed: “of the 75 wineries in Maharashtra, 50 are on the brink of closure”.

Noting that Maharashtra accounts for the vast majority of India’s 93 wineries, the article included comment from Shivaji Aher, president of the All India Wine Producers’ Association, who blamed this decline primarily on “a lack of funds for marketing.”

However, while the ASSOCHAM report included a recommendation for the government to support India’s wine industry with, among other things, “better methods of sales promotion,” its main message to producers was that “growers should concentrate on producing less, but higher quality grapes.”

Introducing the paper, ASSOCHAM secretary general Mr DS Rawat noted that India’s wine market growth is “faster than that for any other alcoholic beverage.”

He observed that demand remains focused on major cities, with Mumbai, New Delhi, Bangalore, Chennai, Kolkata, Pune, Goa and Punjab together accounting for “almost 85%” of India’s total wine consumption. Around 63% of wine sales come from the on-trade sector, primarily five star hotels, pubs and bar-restaurants.

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