Wine sales in India drop as steep prices and lack of knowledge deter consumers
Despite the burgeoning middle class population with hefty sums of disposable income, wine sales in India dropped by as much as 9% last year, according to figures from the IWSR. Wine came sixth out of nine alcohlic beverage categories (excluding beer) in terms of volume sales in 2017, with Indians still preferring whisky, rum or gin.
“This is a question that all wine producers and importers grapple with –when you talk to consumers everybody seems to say we love wine and are switching over to wine. Yet the numbers don’t stack up,” said Sonal Holland, a Mumbai-based wine educator and consultant speaking to Livemint.
Some of the sales decline could be attributed to the Supreme Court’s ban on all alcohol sales along highways from April 2017 which led to the closure of several retail outlets and even temporarily affected hotels and restaurants within city limits. However, this should have also had a similar impact on spirits sales, but they were far less badly affected, with whisky sales, for example, dipping by a mere 0.1% and vodka by 3.2%, while rum and brandy were down by 4%. The fall in these categories are not only smaller than the nosedive experienced by wine sales, they also came from much larger bases than wine.
However, most alcohol firms have said the hit from that ban has now dissipated, with wine, like other categories, bouncing back. India’s largest winemaker Sula Vineyards saw sales jump by 15% in 2017-18, compared to a flat 2016-17.
“Wine is by far the fastest growing alcobev segment in India. People are moving away from spirits to wine every single day,” claimed Rajeev Samant, chief executive officer of Sula Vineyards. “Of course, it is small, compared with other categories, but we started out being one-third of a per cent of alcobev consumption 10 years ago and today we’ve gone above 1%. You can say that’s minuscule, but when you talk in terms of CAGR of the overall industry it’s huge."
One of the biggest barriers to further growth in wine sales in India is steep prices, while another factor hindering growth is lack of education amongst consumers, many of whom feel intimidated by the whole wine buying process, according to Karishma Grover, chief winemaker at Gover Zampa, India’s second largest wine company.
“When consumers try a particular wine for the first time and they don’t enjoy it, they go off it as a beverage altogether,” said Holland. “Or they don’t turn into loyalists. They will have it only occasionally and stick with either whisky or rum or cocktails for regular consumption.” “It’s all these little issues that add up. Wine is the fastest growing beverage category but our base is so small that even a 15% growth rate is not much,” said Holland.