Indian Retail Wine Industry: Opportunity for Growth and Development

This paper studies the factors favouring the growth of the Indian retail wine Industry in Mumbai. With the rapid increase in wine consumption amongst the 20-30 year-olds due to high disposable incomes and enhanced lifestyles, wine is seen to be gradually moving away from the category of ‘alcohol’ and thereby gaining social acceptance. Also wine is considered trendy among today's Indian women. More women are adopting wine as a social drink. Thus Indian retail wine market is experiencing the emergence of women wine consumers. This segment constitutes a major part of sales of standalone wine retail outlets. The concluding part of the paper views women wine consumers as a growing opportunity for wine retailers.

“Wine is bottled poetry” - R.L. Stevenson

Women are a much more interesting consumer segment for wineries. Therefore, according to their personality, they have been segmented into six types of wine consumers: curious, traditional, light, enthusiast, young and indifferent. Until recently, it was said that white wines are ideal for women or that they only drink whites. On the contrary, today, many of them prefer reds, including full-bodied and well-structured wines displaying aromas such as chocolate, vanilla and leather. Definitely, there are several kinds of consumers and each of them has their own taste and well-defined motivations. Therefore, a research was conducted to know the different types of women wine drinkers found in the market.

The Indian retail sector is opening up for the wine industry with the availability of wine in supermarkets like Hyper city and Food Bazaar. Since the liberalization of beer and wine licenses in Maharashtra, Haiko was the first supermarket that opted to retail wines and beers. Globus Wines, a part of Globus Vision Group, has taken over Haiko Supermarket’s liquor category, and has entered into an agreement with Hiranandani Constructions, a leading developer in India, to set up exclusive high-end wine stores across India. Wine companies in the country are opting for the direct retail route by opening wine shops and bars across the country. The aim is not only to draw the regular consumer but also convert the not-so-regular drinker into a connoisseur.

SWOT Analysis

Wine has been, for quite some time, a drink much favoured by a section of the upper crust of India's population. Countries abroad have specialised in growing grapes for producing certain types of wine. And now India too, has joined the bandwagon. It is developing a strong wine industry through international partnerships. With this the reach is also expanding - an increasing number of people are getting interested.

The changing drinking habits of the people of India have changed the fortune of Indian wine market, witnessing a tremendous growth. Favorable and promotional government policies, higher disposable incomes and growth in foreign tourists are some of the reasons for such growth. Present consumption of wine in India is very low with the average per capita consumption at 4.6 ml. However, considering the fact that about a decade earlier markets for wines did not exist at all, the present developments are positive. Wine market in India has been growing at around 30% annually over the last ten years and is expected to have apositive growth in future.

While all this is encouraging, we find that there are issues to be addressed. The rapid entry of foreign players into the field indicates a threat to existing Indian players. The varying taxation structures across states in India, poor quality of wine, and the high custom duties may be a deterrent for entrepreneurs. The chart below shows a SWOT analysis of the industry.

• Strengths:

1. Nascent Stage, few players;
2. Growth rate per annum 30%;
3. Increasing urban population;
4. Good climate for growing wine grapes.

• Weakness:

1. Poor quality of wine;
2. Poor awareness on wine;
3. Stringent and regressive;
4. Government rules with varying;
5. Taxation across states;
6. High custom duties and levies for foreign players.

• Opportunities:

1. Large domestic market with increasing disposable income;
2. Changing lifestyles and new trends;
3. Export potential to rest of the world;
4. Growing tourism in India;
5. Emergence of women wine consumer segment.

• Threats:

1. New players entering market at fastpace;
2. Foreign players entering with tie ups with better quality;
3. Growth prospects of Indian wine Industry.

Understanding Indian Wine Consumer

The prospects of growth for wine in India are quite high. About 600 million Indian’s are currently below the legal drinking age and 100 million will come of that age over the next 3 to 4 years. So, the consumption of alcoholic beverages such as wine is expected to increase. In spite of India’s high import tariffs on wine, this country was one of the world’s fastest growing wine markets. Until the year 2008-2009, growth was about 25% to 30% every year. However, sales fell in the year 2009-2010 for the first time since 2001. Wine exporters blame the slump on the 26/11 Mumbai terror attacks two years ago that led to a dip in tourism in India. Despite the recent setback, consumption of wine in India is projected to increase to 2 million cases by 2011 and 4 million cases by 2015. However, states like Maharashtra, Karnataka and Himachal Pradesh have taken steps to encourage wine industry and given preferential treatments by liberalizing their excise regime and reducing excise duties According to the Nielsen Syndicated Wine Study 2010, Indian wine industry has been witnessing phenomenal growth in recent years and the proliferation of brands has only led to an evolution in consumer taste.

“Wine holds a distinct position in the Indian consumers’ mind. It is seen as a sophisticated, stylish drink as compared to other alcoholic beverages, like Whiskey, Scotch and Rum that are considered men’s drink or Gin, which is considered a woman’s drink. Lately with more international players entering the market, the Indian consumer has only progressed in their indulgence of wine,” said Arti Verma, associate director, The Nielsen Company. Below we will analyse wine consumer segmentation in India. 

• Segment 1 – Conservative, Wine Knowledgeable Wine Drinkers

These consumers are generally well educated, knowledgeable and predominantly male, whose buying habits are reasonably predictable from year to year. They are the consumers who may previously have been stereotyped as “connoisseurs”.

• Segment 2 – Image Oriented, Knowledge Seeking Wine Consumers

These are likely to be tertiary educated, professional consumers whose purchases are dictated by opinion leaders. They have some wine knowledge and are actively seeking to increase that knowledge. They are concerned with the image associated with drinking wine.

• Segment 3 – Basic Wine Drinker

This consumer is not concerned with any of the “airs and graces” associated with drinking wine. They drink wine because they enjoy it and they are likely to make their wine purchases from a number of safe brands that have previously met their needs.

• Segment 4 – Experimenter, Highly Knowledgeable Wine Drinker

These consumers have become somewhat “bored” with what they perceive as the run of the mill wines on offer and are seeking new and different wines to excite their palates. They are very wine knowledgeable and seek out other people with knowledge to assist in their quest for different wines and as a result, they tend to experiment when purchasing wine.

• Segment 5 – Enjoyment Oriented, Social Wine Drinkers – (Women Wine Consumer)

These consumers are predominantly female and enjoy a glass of wine with their friends on a weekend. Their purchasing behaviour can be spontaneous and the packaging and labelling of the wine plays a part in their decisions, indicating that they might be attracted to the so-called “concept” brand category on the market.

Indian Women as a consumer perceives wine as a low alcohol, stylish and sopshicated drink. Indian women consumed 28.7 percent more wine over the last five years, while men drank 17.3 percent more. Red wine accounts for 51% of all wine consumption in India, but more than two out of three women prefer red over other wines because they see red wine as an antioxidant that has several health benefits. Women are drinking more wine because they consider it a ‘sophisticated drink’ that ‘raises their stature in social gatherings. Increased financial independence of middle class women is also driving demand. They prefer to visit exclusive wine retail outlets than a conventional wine shop.

Booming metropolitan areas with large middle class communities provided the perfect areas for greater wine consumption. The Indian Wine Market Outlook to 2015-, Surging Demand by Women published by the private AM Mindpower Solutions, estimates that demand will increase to 6.88 million cases annually by 2015. On-trade businesses such as hotels, bars, pubs and restaurants account to about 70% of the sales in the domestic market of India. The remaining 30% of the sales come from retail outlets such as specialist retailers, foreign embassies, supermarkets and hypermarkets.

Conclusion

Today wine has gained social acceptance in India. As a result consumption is no more taboo for women. Women wine consumers prefer to purchase wine of their own than just trying the wine purchased by men. Today`s women wine consumer is well aware of wine. She knows the difference between Sauvignon Blanc and Cabernet Sauvignon. She knows how to read wine labels. She knows various Indian and Imported brands. Conventional wine shops do not have a rack system where consumers can handle various wine bottles to read labels and understand. Also conventional wine shops have majorly male purchasers. Sophisticated women do not find an ease to buy in these shops. This need is identified and fulfilled by exclusive wine retail outlets.

These outlets offers rack system facility with a good ambience. Women consumers love to spend their time in such outlets before purchase decision. These outlets offer free wine tasting and education program exclusively for women. Thus women wine consumers is a growing opportunity for Indian wine retailers.

References

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