India's Wine Industry Shows Robust Growth: Express Hospitality
In well-researched article on our wine industry, Savio Rodriguez of Express Hospitality , India's premier industry magazine, has made several important points:
Within the next five years, the domestic wine industry will be worth Rs 20 billion (US$ 445 million), with the production rising from the present level of 6,00,000 cases to 2.8 million cases.
The industry is not very capital-intensive. It requires around Rs 10-15 million to set up a plant with a capacity of 1,00,000 litres. Grapes, bottles, and corks account for about 20% of the total costs. The percentage is higher than international norms. The industry is also under pressure because of high marketing costs and low volumes.
Sula Vineyards recently clinched a Rs 15-crore deal with private equity fund Gem India Advisors for a minority stake in the company. Singapore-based Arisaig Partners' private equity fund recently picked up a 10% stake in Champagne Indage. This is the company's second equity dilution after the Anil Dhirubhai Ambani Enterprises picked up nearly 9% in the company in 2005.
Industry analysts say that the FDI in this industry should grow from US $3.5 million in 2005 to over US $100 million in the next 10 years as multinational beverage companies, taking a leaf out of Pernod Ricard, evince interest in investing in what is fast becoming the low-cost wine producer of the world.
India exports about one million bottles a year. Kapil Grover, Managing Director, Grover Vineyards, reports that his companies exports will show a 15% growth in this financial year (2006-07) from their current level of 2,40,000 to 3,00,000 bottles.
Industry statistics point out that there are more than 35 wineries in Maharashtra alone, most of which came up over just the last couple of years. Further, over 1,500 acres are under cultivation for wine production in the state (mostly in Nashik). The land under vineyards is likely to grow to 15,000 acres.
This growth is driven by the policies of the Maharashtra Government; it has declared the wine-making business as a small-scale industry and has exempted wine manufacturers from excise duty to promote the industry.
With states like Karnataka, Andhra Pradesh, Punjab, Uttaranchal and Himachal Pradesh beginning to follow the Maharashtra model of 'liberalising' rules regarding production and marketing of wine, the number of Indian wineries is expected to surge from 25 to nearly 100.
Unlike in China , Indians are drinking mainly their own homegrown wines. Only about 20% of wines sold in India are imported mainly from France, Italy, South Africa and Australia .
