Bangalore: Indian wine market is warming up to international labels but issues like rigid legislations, high label and brand registration costs, lack of wine conservation methods and awareness about wine and international brands were making it difficult to uncork this market to its fullest.
Though the young domestic wine market is still to take off compared to international mature wine markets, the consumers slowly and gradually had begun displaying interest in international brands and are ready to experiment, according to Arun Kumar, Aspiri Spirits, leading importers and distributors of premium wines and spirits in India.
“Earlier wine, just meant choosing between red and white wine. The association was limited to very few brands. A bottle of wine was just an option during a party, in case anyone felt like having it. But now the scenario has changed and consumers have a portfolio to choose from. There is an educated choice,” he said.
“International brand awareness has made its way into the Indian consumer market, going by increased brand recall. Consumers now walk into a store and demand for wine by its label,” he said.
“Today India is one of the fastest growing market and we are keen in establishing our presence here,” said Jake Jacob, Regional Director-Asia-Pacific and UAE, Gerard Bertrand Wine, renowned wine group from Languedoc Rousseau region of France.
“We get around four queries per day by international brands wanting to get into Indian market,” says Arun, whose company has 150 international brands in its portfolio.
The work done by domestic wine market players had helped in expanding the market. Entry of new consumer segment-- women and youth-- had provided additional impetus.
Wine consumption was also picking up in cities not earlier associated with the drink. “We now are seeing sales in places like Chandigarh and Uttaranchal”, said Arun. There is also momentum in places like Rajasthan where renowned international chain of hotels and heritage properties had a presence.
Delhi, Bangalore, Mumbai were the markets that were taking up to wines and international brands as well. While in Mumbai retail and on-premise sales were 50-50%, in Delhi, on-premise leaned to 70-80%. In Bangalore, it was 60% retail sale, said Arun.
However, despite the quite and steady momentum taken up by wine market, internatonal players were still straddled by issues like prohibitive excise and custom duties and state-levied taxes that varied from place to place, he said.
Registration of label cost in some states was prohibitive and was thwarting growth of the market. In Meghalaya, it was whopping Rs50,000 annually, Arun said. In Mumbai and Bangalore it was around Rs10,00 while in Pondicherry it was Rs15,000 and in Delhi it was Rs 5,000 plus, he said.
The high excise and custom duty was one of the biggest challenge faced by international brands keen in entering in the Indian market. The varying state taxes did not help in easing the situation, said Jake.
Another greatest challenge is transportation and storage of wine. “Wines that were transported or stored well could not only destroy its taste but also do away the image of the international brand,” Arun said.
The common flaw was to treat wine as any other spirit or beer, he said. A certain temperature level and storage requirement were must for it to retain its original taste
However, in India, the lack of storage facility was a huge issue. “Many of those dealing with sale of wine did not have wine chillers”. Investment in wine preservation was a low key priority area in India.
Wine players have begun organising events connected with disseminating knowledge about wine, food that pair with wine and by holding wine tasting sessions or short courses in wine making and processing to expand the market, said Jake.
“Training restaurant and hotel staff about wines was also imperative. A trained staff, well-versed with the origin and history of a brand and one who could add some inputs when asked about their opinion on a wine could help in getting a customer to try a brand,” said Jake.
Some of the states had also begun getting proactive which was definitely going to add cheer to the wine market, opined Arun. Punjab had done away with wine label registration cost while Chandigarh had put in place a policy that lets retailers avail of low concession fee if they provide airconditioned rooms, tasting area among other amenities.
“These initiatives are bound to be conducive to retail and for a walk through experience. They encourage retail players,” he said.
Karnataka was another state which had done much to boost the wine market including announcing wine taverns to promote wine consumption and brand awareness. “Karnataka has in a way set the bench mark which others were modelling on,” he said, referring to its policies and transparency Bangalore has one of the best retail experience for wine and the state boasts of an effective distribution system, he said.
However, some of the states with an eye at protecting domestic grape growers and wine companies, had made the entry of international brands whoppingly expensive, he said.
But the international brand players were optimistic. “We think many of them would rationalise the costs seeking the revenues it brings to the state government”, he said.
While currently, it was the old wine growing markets like Spain, Italy, France and Portugal that had their presence with French leading, slowly there has been a growing interest of wine from new wine growing countries like Chile, Argentina, Australia, said Arun.
Traditional players like France continue to dominate the market. Italy has become very aggressive with its embassies and trade groups promoting wine growers. Australia has also turned marketing aggressive.
The interest in new wine growing countries was because these wines were more easy to taste and palatable. With Indian consumers just experimenting, these wines were easy, however as the consumers mature they would opt for more full bodied wines of the old wine growing countries. The new wines were also ready to have rather than the old ones which needed cellar storage facilities for months or years.
With the market warming up, it might soon be time for international brands to toast to some good times.