Almost 40% of all wine sold in India is low-end or fortified Indian wine which is still sold through such shops under the licensing constraints and individual shop-ownership basis. Over a half of the balance and premium wines are sold through hotels. Around 70% of the entry level imported wines are sold through retail while in case of premium labels the ratio is reversed.
Due to licensing constraints, wine retail continued to be a fragmented industry till about five years ago. Licenses were issued by the State government against auctions or tenders, based on the assessed need. Government agencies are at times given preference or even monopolize in some states. In Delhi, for instance retail was allowed only through state government agencies- DSIDC, DTDC, DCCWS and DCS are 4 such agencies which have now over a third of the 434 shops in Delhi under the Delhi government. These were not specialists in marketing liquor or wine but were given an opportunity for added source of income. DSIDC with a cluster of around 20 shops selling wines, is a retail leader in Delhi.
The private trade was opened up less than a decade ago, initially allowing only Indian wines and later foreign wines as well through the retail channel. Though the license may be on a long term lease and need to be renewed every year, the qualifying individual is allowed only one license. A few circumvent the law by using the names of family members but the control is generally through loose partnership and informal syndicates which keep on changing the shareholding pattern every year. Thus, no stand-alone ‘wine shop’ qualifies to be a big retail outlet.
Situation has been similar in other cities like Mumbai, Bangalore, Kolkata and Pune where these retail shops were allowed to sell wine as well. Initially, they worked as retail counters, open to dust and heat and without any air-conditioning, where one would stand in front of the counter and pick up whatever was doled out by the salesman. But this has gradually changed over the last few years when the sale of imported wines and liquor was allowed and the gradual awakening through education stressed the need to stored properly and that proper display was an important marketing tool. The scenario has also changed with the liberalization by most state governments.
Two years ago, the Delhi government allowed retail of wine through supermarkets and stores in the shopping malls. Though initially the reaction was slow because of high rents, 20 such shops now sell wine and liquor in Delhi alone, with DSIDC taking the lead. The same phenomenon has taken place in cities like Mumbai, Bangaluru (Bangalore) and Chandigarh and States like, Rajasthan, Punjab and Haryana and West Bengal. UP has a 51/49 partnership with a private sector entrepreneur and controls all liquor stores. (With the change of government last month, this policy will be under Review)
In Mumbai where no such controls exist, there are chains of stores selling wines-notable being Nature’s Basket owned by the family owned business of Godrej. With floor space ranging from 180 sq feet to 2000 sq feet at prime locations within supermarkets, Living Liquidz is currently Mumbai' s only branded liquor retail chain to have tie-ups with Hypercity , Gourmet City , Reliance Fresh , Adity Birla Retai group, Spinach, Tata Star Bazaar and more. All in all, Living Liquidz has 11 eponymous shops and 23 stand-alone shops in Maharashtra..
Retailing Wine through organised Retail
Due to current restrictions in Foreign Direct Investments (FDI) in Retail-the foreign ownership in multi brand stores like Wal-Mart, Tesco and Carrefour must be less than 51%, so Wal-mart, Metro and Carrefour are operating in the wholesale segment only. While, the imminent change in policy (it has been announced but not yet enforced due to political considerations) will change the Retail scenario significantly, currently the Indian chains having minority foreign interest have been doing well and are already taking wine initiatives. They are opening supermarkets and hypermarkets and adding wine and spirits to their portfolio in compliance with the local sales laws.
Top of the heap- Pan India is Spencer’s Retail. It has 14 supermarkets and hypermarkets selling wine and spirits meandering through complex State laws. Starting with one store in a Mumbai suburb in 2006, the company sells wines in all stores. ‘Nine of these stores in Hyderabad, Kolkata and Bangalore serve full spectrum of wine,’ says Mohit Kampani, Chief Merchandising and Operations. While their Kolkata store is very modern and the signature store, they sell over 1000 cases a month all told- the split being even in terms of value though the Indian wines whereas Indian wines are 70% of the volume sold, he says. The chain is committed to stay the top wine destination and a basic differntiater where wine drives the customers to the store. Three of the stores have even trainee sommeliers to guide the customers and train the rest of the group.
Another fast growing supermarket and hypermarket chain Spar is also committed to retail of wines. Under license from the Netherland-based international food stores chain has tied up with Dubai based Landmark group and already opened 10 retail stores in Bangalore (3), Hyderabad (2), Mangalore (1), Pune (1), Coimbatore (1), Delhi (1) and Gurgaon (1). It sells wine in 6 of its stores and is a leading chain in Bangalore for wines with Gurgaon soon to follow lead.
In Delhi, new supermarkets must operate for one year before applying for license to retail wines. Spar completes a year on January 26 when it will apply for the license for wine and beer. The company is opening 4 more stores in next 3 months and plans to touch 25 stores by the end of 2013, targeting wine retail in all such stores where legislation allows.
Nature’s Basket, another gourmet retailer chain, owned by well known company Godrej is the third in the hierarchy. Started in 2005, it was the first supermarket chain to start selling wine and stored in acceptable ambience at that. It has 19 stores across the country- Mumbai (9), New Delhi (4), Gurgaon (2), Pune (2), Hyderabad (1) and Bengaluru (1) and plans to reach 32 within the next two years. Emphasizing on selling premium wines only, it is the retailer to watch.
There are other recently opened supermarket chains which do not give enough importance to selling wines directly and have at least partially outsourced the activity. Hypercity , Gourmet City , Reliance Fresh , Aditya Birla Retail group, Spinach and Tata Star Bazaar are a few such chains. They have been working with Living Liquidz in Mumbai which has over 40 such stores and is expanding fast because of relaxation in rules and special permission at lower cost for wines. Jeuben Wines is an progressive wine and spirit retailer with 4 outlets.
Similarly, Bangalore where it is easy and inexpensive to get an excise license to sell wines and beer in a wine boutique, a few groups of vendors has come up recently- more notable ones are Drops Total Spirits, Classic Group’s Modern Trade Outlet chain under the brand of ‘Not Just Wine & Cheese’ and Madhuloka each with around 8-10 outlets- a pointer towards multi-branch specialty retail stores in future where the State laws allow.
The last retail bastion could be the Indian army canteens- known as Canteen Stores Department-spread over throughout India, retailing a host of products including wine to the Defence Service personnel. Unfortunately, storage is still an issue with these ‘canteens’ and the sales of around 15,000 cases do not justify their being included in the Top Five retailers.
The article was written based on an intensive survey of Retail Marketing in India by the Indian Wine Academy and was first published in the February issue of Germany-based Meininger’s Wine Business International magazine of which Subhash Arora has been the India Correspondent since its inception. The information is up-to-date till January 2012 and there has been no significant changes in the policy or the players- Editor
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