Indian population is 1.1 billion, second only to China with a huge middle class of 250 million people. But they consume only 7 million liters of wine including 1.5 mill liters of foreign wines last year. Less than a million people drink wine. Due to the religious reasons or social customs and mores, drinking alcohol can be considered a taboo and a majority do not do. On the other hand, Indian people drink 120 million cases of whisky, vodka and other hard liquor and 105 mill cases of beer every year. Add 200 million cases of country liquor and a sizeable number that is unaccounted for, 500 milion cases of liquor are annually consumed.
The custom duties on wine imports continue to be as high at 150%. At mid-2013, in an effort to enter a free trade agreement (FTA) with the European Union, India offered to drastically cut Customs duties on wines and spirits to 40% from the current 150%. The EU wanted a reduction to 30% and the Indian wine makers sector was very much against allowing in imports at a much cheaper price. As a result, no agreement was reached and high import tariffs remain.
The government is aware that the hotels have kept the significant portion of the duty benefits themselves with the mark ups of 500-600% quite common for wines they sell. Yet due to strong lobby it continues to look in the other direction. Indian Government wants to reduce the duties somewhat. But the states who are independent in their policy making due to our constitution do not tow the line. Under Section 47 of the Constitution, States are encouraged to enforce Prohibition. Wine is considered at par with liquor in most of the policies and many people lump wine with hard liquor.
Finally, there are thousands of ´Wine Shops´ in India selling only beer and liquor, shops that do not sell wine at all. Recently the Supreme Court has decided that 42% of the wine shops has to leave or to close from April 1st, 2017, when they are located at 500 meters from a national road or an Indian highway. Around 26800 wine shops are concerned on a total of 64000 authorized wine shops. For 2017, this decision should have a negative impact on the total sales in India by Diageo and Pernod Ricard. In front of that, the biggest wine & spirits superstore ever seen in India and named “Tonique” has opened the doors in January in the Jubilee Hills at Hyderabad in the Telangana state. Tonique is organized in two levels in 1400 m2. It forecasts to welcome 1500 visitors/day especially women. A tasting room should be early open in collaboration with a worldwide sommelier team.
Different wine investment funds such as Cult wines think that the next big growth story will be India. Not only does fine wine match their tastes for tangible assets, but the increase in wealthy Indians is strong. Bloomberg’s June 2014 article suggests that current conditions could support the prediction, stating that “About 86 percent of Indians’ household assets are in real estate and tangible investments such as gold, the highest rate among 16 countries tracked, Zurich-based Credit Suisse said in an October 2013 report” and that “Ultra-high-networth individuals in India, defined as having assets of more than $30 million excluding primary residence, are estimated to grow 98 percent through 2023 from last year’s 1,576, compared with 28 percent growth globally“.
WTBA Consulting proposes to help the wineries to develop their international markets and to reach breakthrough results. Our clients are French and Italian wine producers, public bodies and cooperatives.