India’s wine and spirits market offers lucrative business opportunities. Demand for wine and spirits in India, both domestically produced and imported, has grown as the economy has expanded and customer preferences have changed. Urbanisation, rising disposable incomes, shifting consumer preferences, and the emergence of a middle class have been the main market drivers. The majority of the world’s top brands are either already present in India or quickly moving in to import or manufacture locally. Pawan Bhatnagar, Asian Insiders Partner for India investigates.
In this report we offer an overview of the wine and spirits market in India, including an analysis of the growth of the market over the past 10 years, consumption patterns, local production capabilities, import and export figures along with recognition by world bodies, government policies, and the nature of import duties and local taxes.
The wine and spirits industry in India was estimated in 2020 to be worth USD 22.3 billion and is projected to reach USD 40.3 billion by 2025, with a CAGR of 12.5, according to the International Wines and Spirits Record (IWSR) Drinks Industry Analysis Report.
Wine: Despite starting from a relatively modest base, the Indian wine industry has expanded substantially over recent years. The Indian wine industry was estimated at USD 530 million in 2020 and is projected to reach USD 1.1 billion by 2025, expanding at a CAGR of 15%, according to the Indian Brand Equity Foundation (IBEF) Report. Indians consumed roughly 34 million litres of wine in 2021 and this is increasing.
Spirits: With a major rise in Indian consumers’ consumption of spirits, the Indian Hard Spirits Industry has also expanded rapidly in recent years. According to IBEF, the Indian spirits market was estimated to be worth USD 43.8 billion in 2020 and is projected to rise at a CAGR of 8% to USD 61.1 billion by 2025. According to the Scotch Whisky Association, 219 million bottles of whisky were sold to India in 2022, a 60% increase over the 136 million bottles exported in 2021. India surpassed France as the country that imports the most Scotch whisky globally.
Alcohol drinking is a delicate social and cultural issue in India. While drinking is not frowned upon, it is typically only done at special events like weddings, festivals, and celebrations. Wine and alcoholic beverage usage is also more common in cities, where the younger generation has embraced a more Westernised lifestyle. In India, whisky is the most consumed alcoholic beverage, followed by rum and vodka. Wine consumption has, however, also been rising recently, notably among women and younger people.
Alcoholic beverages, including spirits like whisky, rum, and brandy, have a long history of production in India. Wine production is concentrated in the states of Maharashtra and Karnataka, which are excellent for wine grape cultivation because to their favourable climatic and soil conditions, whereas the production of hard spirits is mostly concentrated in Punjab, Maharashtra, Karnataka, and Tamil Nadu. After China and Japan, India has Asia’s third-largest wine production capacity. In the entire nation, there are 54 wineries, 52 of which are in Maharashtra.
Imports and Exports
The majority of the wine and spirits imported by India are from nations like France, Australia, and Italy. The Ministry of Commerce and Industry’s data indicates that India imported wine and spirits worth $640 million in 2019–20. However, India also exports alcoholic beverages, with the US, the UK, and Germany serving as its main export destinations. In 2019–20, India exported wine and spirits worth $64 million, 78% of which went to Singapore, the Netherlands, and Hong Kong Special Administrative Region.
The International Wine and Spirit Competition (IWSC) and the Decanter World Wine Awards have both given the Indian wine and spirits business distinction. Indian Wines have received numerous awards in these events, demonstrating the rising calibre of homegrown output.
Alcohol production, distribution and sales in India are controlled by a network of state-level laws and rules. Alcohol is subject to excise taxes and levies levied by the federal government, which vary from state to state. Customs duties, which range as high as 150% of the import value, are applicable to the import of wine and spirits in India.
In conclusion, a growing appreciation for alcohol, changing lifestyles, and increased disposable incomes have all contributed to the tremendous rise of the wine and spirits market in India during the past ten years. While foreign brands still dominate the Indian market, local brands and production capacity continues to rise. The market for wine and spirits in India is mature, with distinct dynamics from those of other Asian markets. However, there is plenty of opportunity for further brands and suppliers amongst the Indian population of 1.4 billion people.
Asian Insiders is able to assist clients looking to understand and enter the wines and spirits market in India, with decades of on-the-ground experience and practical knowledge of the business conditions in the country. For a no obligation call, please contact Jari Hietala, managing Partner: jari.hietala(at)asianinsiders.com or Pawan Bhatnagar, India Partner: pawan.bhatnagar(at)asianinsiders.com