The Indian Stock Markets are now "Drunk now by the Inflation-Liquor" and hence thought of Presenting the Following:

Indian Wine Market – An Overview:

The Indian alcoholic beverages market is gradually opening up as quantitative restrictions are being lifted, import duties are being lowered and domestic regulations are being simplified. These developments are attracting the attention of foreign players, who are faced with a slowdown in developed markets. According to some recent reports, by 2005, the total supply of liquor in the world will be close to 282 million hl. But consumption will be only about 198 million hl. In such a scenario, India would be an attractive market for foreign players. An estimated 10 million people consume alcohol in India, out of a population of about 1.2 billion. The liquor industry in India is highly government regulated in terms of constraints on manufacturing, storage as well as distribution. The industry faces threat of prohibition in several states, high taxes, restrictions on advertising, restrictions on inter-state movement, etc. However, the deep-rooted social conditioning against alcohol consumption is gradually starting to change. Consumer attitudes are relaxing as people are exposed to the Western lifestyle through the media and overseas travel. The per capital consumption of liquor in India averages 0.2 litres per annum. It has remained constant throughout the 1990s, while the consumption of beer has risen steadily since 1988 to about 0.8 litres per person per annum. Alcohol is a broad term that covers three categories: spirits, beer and wine. Spirits include whisky, rum, vodka, brandy and gin. India imports around 3 million liters of spirit and 7500 cases of wine from Europe. French wines are still the largest imported, but wines from Australia and California are making strong inroads. The wine market is growing at 25-30 per cent a year, nearly three times as fast as beer, whisky or rum, which together makes up 45 per cent of the total. Exports currently make up about 10-15 per cent of total output. The perception of wines as being up-market and sophisticated is helping in bringing about this change. One sign of the changes happening is the emergence of Wine Clubs in a number of cities. The per capita consumption in India is only 0.07 liter/person/year. Up to 80% of wine is consumed in the major Indian cities. The consumption pattern is, Mumbai (39%), Delhi (23%), Bangalore (9%) and the foreign tourist dominated state of Goa (9%), where as Rest of India has only 20% consumption. Not only has the number of imported wines increased exponentially, the Indian producers, too, have introduced a number of new labels and wine styles. Approximately 38 wineries are presently operating in the country with a total production of 6.2 million liters annually. Maharashtra is leading among the states with 36 wineries and 5.4 million liter production. Apart from this, 72,000 wine cases are imported mainly by ITDC, Sansula, Brindco, E & J Gallo and other private companies. Wine Production In India: India has about 123,000 acres of vineyards, but only one per cent of this acreage is used for wine. Only three wine companies are currently producing wines in India namely:

• Chateau Indage Limited, Pune
• Grover Vineyards Limited, Bangalore
• Sula Wineyards, Nasik.

The overall production of these units is approximately 150,000 cases (Each case is of 12 bottles). In addition, they also import about 20,000 cases of wines in bulk and bottle them in their plants. About 100,000 cases of inferior quality wine is produced by small local winemakers which is called 'pot wine'. Domestic Consumption Of Wines: The overall consumption of wines in India is about 400,000 cases a year of which 85 per cent are table wines and the remaining are the expensive varieties. Out of the 400,000 cases, about 50,000 cases are imported from various sources. The trend in consumption of wines is steadily increasing. Today, the consumption per head is roughly 0.0030 litre per annum. The day it becomes one litre, the market will become over a billion litres or over 111 million cases. Eighty percent of wine consumption in the country is confined in major cities such as Mumbai (39%), Delhi (23%), Bangalore (9%) and Goa (9%). There is growing awareness about the wine as a product in the domestic market. Both the Indian wine market and the indigenous wine industry are in their nascent stages, but growing by leaps and bounds. Fifteen years ago there was no locally made wine that was drinkable. Now there are three significant wine makers, all family-owned businesses, the Chougules, the Grovers and the Samants. There is also great interest in wine makers from France, Italy, Australia, South Africa, America, and Chile to enter the Indian market. Opportunities For Imported Wines in India:

• Booming Economy: Sensex touched 11,000 pts. Increase of 3,500 pts. during last 2 years.
• Italian Cuisine No. 3 in popularity.
• Wine consumption growing at 30% every year. 2006-07 expected at 40% growth.
• More people shifting from Spirits to Wines. Spirits growth only by 10%.
• Ladies & youth: big factors.
• Current market: 74 million people.
• Expected to grow to 100 million people in next 5 yrs
• India's wine market at 5 million euros, makes up less than 1 % of India's 1.3 billion euros alcobev market.
• Duty Free Licenses to Hotels & restaurants
• Up market bars, eateries & Retail Shops; in past stocked few brands have started keeping up to 200 wines on the list.
• Wine consumption in India will grow 10-fold in 10 years
• Wine growth 3 times faster than spirits & Beers
• India consumes about 8 million bottles of wine every year. Of these, 1.2 million are imported.
• With 8 million bottles sold a year, its annual consumption is .008 bottles a head against a world average of 5 bottles.
• As for importing, India currently brings in 1,25,000 wine cases a year -accounting for a mere 4.5 milliliters of per capita consumption of the billion-plus population.

The Government of Maharashtra has nominated Maharashtra Industrial Development Corporation (MIDC) as a nodal agency for establishment of grape wine parks in the state and would coordinate efforts of various organizations from central and state agencies and the stake holders such as farmers, processors, service providers etc. Under this policy two wine parks have been established by MIDC, one Godawari Wine Park at Vinchur, Nashik District and Krishna Wine Park at Palus, Sangli district. In addition a Grape Processing and Research Institute (GPRI) at Palus under the Bharati Vidyapeeth Deemed University has also been established. SUPPLY CHAIN: For imported wine segment the distribution involves importers, distributors & retailers. The enclosed distribution chain will put more light on the levels and cost implications at various stages: Movement of stocks and process involved: Step 1: WineryStep

2: Customs bonded warehouseStep

2: Distributors / WholesalersStep

3: Retailers/Hotels/Restaurants Poor storage and transport facilities inspite of tropical climate are the main problems of wine marketing in the country. Other constraints are the lack of promotional activities for wine consumption in the country and unfavorable rules for domestic marketing of wines except in few states. These and other factors contributed to India’s low wine consumption. Certain promotional strategies, such as easing of tariff barriers for the wines, developing awareness on health benefits of wine and to supply good quality wines in reasonable prices in the domestic market are emphasized. Conclusion: Impediments remain for international winemakers, not least the high import duties of up to 260% currently levied on wine. Companies seeking to enter the Indian wine market should equally be aware of the regional nature of Indian wine consumption. Major cities like Mumbai, Delhi and Bangalore should be the primary targets, as they account for almost 80% of the country's total wine consumption. The soaring popularity of imported brands which, sell at much higher prices than domestic varieties, offer international companies great opportunities for strong value growth. [With Inputs from Internet]