Insight – Uncorking the growing wine market in India
In a country with a population of 1.3 billion and where around 700 million
people are above the legal drinking age – a number growing by 19 million a
year – India is a market with many opportunities for Australia’s
Exposure to new cultures, growth in foreign tourists, overseas education,
and rapidly changing demographics are driving wine consumption in India.
Despite high tariffs, wine imports registered 14% growth (by value) from
last year. This reflects evolving Indian consumer palates over the past
decade, making a case for international winemakers to expand their business
With a young population, increasing urbanisation and the perception of wine
as a ‘status choice’, India has parallels with other Asian markets where
there is a growing acceptance of and preference for wine among the upper
and middle classes. As Indian cities attract greater numbers of
increasingly sophisticated residents, exclusive wine bars have emerged and
the number of restaurants and higher-quality hotels have increased.
The Indian wine market
The number of wine importers in India has been estimated at between 50 and
100 over the past few years. The five largest importers account for around
60% to 70% of imports, with the balance of active importers, perhaps 30
firms, each handling fewer than 10,000 cases per year. Several importers
started as distributors of alcoholic beverages other than wine and
subsequently added wine to their portfolios. Additionally, some Indian wine
producers who seek to offer their customers a full range of options are
importing wines that complement their domestic production.
In 2018, India imported 5.2 million litres of wine with an admittedly low
value of US$27.4 million (approximately A$40 million). The country imported
approximately 550,000 cases of wine, an increase of 75,000 on 2017. While
there is a strong market for bottles priced below A$30 at retail, high
duties and taxes on imported wine mean importers ideally look to pay a low
FOB price – around A$2 to A$3.50 FOB per bottle.
Australia continues to be the leading exporter of wines to India by value
and by volume. According to Wine Australia, for the year ending December
2018, Australian wine exports to India grew in volume and value by 50% and
52% respectively. However, this is coming from a fairly low base – 1.5ML
with an FOB value of A$5.3 million. Australian wine exports to India were
worth US$6.35 million (approximately A$9.3 million) in 2018–19
(April–March). This represents a 22.64% market share of imported wine in
There are over 40 Australian wine companies with a presence in India
including established brands such as Penfolds, Lindeman’s, Westend Estate,
d’Arenberg, Jacob’s Creek, De Bortoli, McWilliam’s and Wines by Geoff
The largest exporters of wine to India are Australia, Spain, France and
Italy, who combined supply almost 75% of the country’s wine imports.
Secondary exporters include Chile, South Africa and Argentina. The European
Union previously supplied over half of India’s wine imports yet over the
past two years, Australia has surpassed the EU through more competitive
prices and lower logistical costs.
India has its own domestic wine industry too, with Sula Vineyards and
Grover Vineyards among the top Indian vineyards and wineries. Collectively,
they have 90% of the market and are perceived as ‘better value for money’.
Based on trade sources and available sales data, national wine consumption
is over 30 million litres per year. Most of India’s wine consumption takes
place in urban centres, including Mumbai (32%), Delhi (25%) Bangalore
(20%), Pune (5%) and Hyderabad (3%). At present, consumers have a strong
preference for red wines followed by fortified, white and sparkling wines.1
The hospitality sector (hotels, restaurants, catering, clubs and pubs) has
a larger market share than the organised retail sector, as the Indian
Government allows hotels to import alcohol duty-free (equivalent to 5% of
the average foreign exchange earned). This means much of the imported
alcohol consumed in India is in five-star hotels in major cities.
Wine’s softer image has also made it more attractive to female consumers.
Indian women view wine as classy, healthy and a socially more civilised
drink to be seen drinking among family members. These trends suggest a
dissolving of social taboos and cultural inhibitions related to alcohol
especially for women, and wine is increasingly viewed as an acceptable
drink within Indian society.
Alcohol sales have been problematic for certain state governments in India
for some time. Alcohol is banned in Gujarat, Bihar, Nagaland, Mizoram, and
Lakshadweep, with additional restrictions in many other states.
Each state government controls the taxation, distribution and sale of
alcohol. Brand/label registration is mandatory for the brand to be sold in
the respective states. Separate licences are required to produce, bottle,
store and sell all liquor products. Alcohol advertisements are also banned,
making it hard for companies to promote their brand(s) directly.
Australian winemakers should note that customs duty on wine is 150% on
cost, insurance and freight (CIF). Thus, the final cost to the consumer is
around 9 to 11 times FOB in Mumbai, around 7 to 8.5 times FOB in Delhi and
around 6 to 7 times FOB in Bangalore.
Despite the sector’s accelerated growth over the past few years, wine
penetration is still low with an estimated two to three million consumers
consuming 24 million litres.
Many of the established Indian importers carry Australian wines within
their portfolios and prefer not to carry similar varietals of wine from the
same state. Wineries from new regions or with new varieties may find
greater interest among Indian importers. Importers appreciate the superior
quality and range of Australian wines but are keen to explore opportunities
at entry-level prices.
Opportunities for Australian winemakers
The growing Indian wine market offers Australian winemakers an opportunity
to engage at a mid-tier price level. Growth factors – including the rising
middle class, a trend towards wine rather than spirits, and the status
associated with wine – mean the market is on a strong upward trajectory,
regardless of the significant tariff and non-tariff barriers to entry.
Although Australian wineries shouldn’t compare the Indian wine market with
China and expect similar growth patterns in the short term, India is a
stable and longer-term opportunity for Australian wines.
Austrade is welcoming a ministerial-led trade mission to India in the third
week of February 2020. This mission will include B2B meetings with wine
importers and retailers and opportunities to showcase Australian wines
through tastings in Delhi and Mumbai.
Austrade has a team of eight full-time staff working to promote Australian
food and beverage in South Asia across India, Sri Lanka and Bangladesh.
Contact Austrade for more
information on the trade mission and wine opportunities in India.