. Analyst View 2. Indian Wine Market - An Overview 3. Market Attractions 3.1 Favorable Demographics 3.

2 Changing Consumer Tastes and Preferences 3.3 Growth in Foreign Tourists 3.4 Expansion into Tier I and Tier II Cities 3.5 Foreign Players Eagerly Vying the Market 4. Market Performance and Future Outlook 4.1 Consumption 4.1.1 Imports Vs Domestic Wine 4.1.2 Price Structure 4.1.3 Product Segmentation 4.1.4 Distribution Channels 4.1.5 Regional Segmentation 4.2 Production 4.2.1 Government Support 4.2.2 Major Wine Producing Areas 4.2.3 Leading Wineries 4.2.4 Key Players 4.3 Imports 4.3.1 Types of Wine 4.3.2 Major Import Destinations 4.3.3 Key Importers 4.4 Exports 4.4.1 Types of Wine 4.4.2 Major Export Destinations 5. Government Policies and Regulations 6. Roadblocks

The JBC International staff travelled to India for 21 days to conduct a practical on the ground research travelling to Mumbai, Bangalore, Delhi and Goa and interacting with people from all walks of life, says James Gore, the principal author of the monograph. 1. Twenty-five million Indians are drinking wine as you read this piece 2. 25 million is just 2 per cent of Indias population. And they consume a mere 1.1 million cases of wines annually (each case contains 9 litres of wines). Market watchers predict that by 2012, 10 per cent of Indians will be drinking wine 3. Red wines rule the taste buds of Indians 4. There were only 6 Indian wineries in 2000. Today, the number has grown to 65 5. Indians consume 9.9 million litres of wines annually. It will touch 18 million by 2010 6. A survey conducted on the members of a wine club in India showed that nearly 50 per cent of consumers were women and this segment is growing at 5 per cent every six months

7. There were only six Indian wineries in 2000. Today, the number has grown to 65. Around 85 per cent of these are located in MaharashtraNashik, Pune, Baramati and Sangli 8. Between them, the top five players (Chteau Indage, Sula, Grover, Vinsura and Reveilo) produce over 920,000 cases of wines every yeara figure projected to be 1,700,000 by 2011 as relative newcomers on the block (Pernod Ricard, Mallyas United Spirits and the multi award-winning new brand Chteau dOri) produce a further 480,000 cases by 2011 9. Nearly 75 per cent of Indias population is under 25 years old, so this is an audience that is yet to really mature to wine drinking. So, nothing, not even a recession, will stop the wine industry in India from booming, says Cecilia Oldne, Manager (International Business), Sula 10. The 80 registered wine importing firms in India currently bring in over 120 foreign wine labels to the country 11. Statistics show that the French, control 45 per cent of the imported wine market share. But their dominance is being challenged by new world wines from Australia and Italy, which together control almost 30 per cent of the market

India has emerged as one of the fastest growing markets for wine on the global map. Despite the countrys vast population of over 1.1 Billion, the consumption of wine remains extremely low. The per capita consumption of wine in the country was estimated at around 9 Milliliters in 2008, indicating huge potential for growth in the coming years. Various factors such as favorable government policies, increasing disposable income, amplified wine marketing and influence of western culture are helping to drive Indias wine consumption. According to our latest research report, Indian Wine Industry Forecast to 2012, wine consumption in India is expected to grow by 25-30% annually between 2009 and 2012. We have found that various policies by the state level governments are encouraging domestic wine producers to set up their own wineries in the country, giving a boost to the domestic industry. Efforts by the Maharashtra and Karnataka governments remain far-fetched in this regard. However, such measures have raised concerns to WTO which states that India is adopting protectionist policies for its domestic wine industry meanwhile curbing growth of imports. While local players are including affordable imported wines in their portfolios to attract new consumers, foreign firms are trying hard to expand in the market owing to high rate of tax levied. Our research indicates that the premium wine segment in the country is dominated by imported wines. This is because domestic wines are still unable to demand a high price, largely because of low brand awareness and lack of quality taste. Meanwhile, total consumption is dominated by domestically-produced cheap wine. Indian Wine Industry Forecast to 2012 provides extensive research and rational analysis on the wine market in India. Our research gives deep insight into Indias wine consumption in terms of domestically-produced and imported wines, price structure, sales by location, type of wine consumed and a possible regional segmentation. Our research also highlights the market trends and developments that are expected to play key role in the growth of Indian wine market over the forecast period. Besides this, the report provides thorough analysis on the wine production, wine exports and wine imports of the country.

India has become the 10th largest growth nation for wine consumption, in value and volume terms, for the period 2009-13, according to the Vinexpo/IWSR 2010 study. In 2008, wine consumption in India reached 1.449 million 9-litre cases, equivalent to 17.38 million bottles, an increase of 372% compared to 2004. A report.

The Vinexpo/IWSR study forecasts an increase of 1.475 million 9-litre cases in Indian wine drinking up to 2013. The study, which was released in New Delhi in mid-March, also outlined the immense demand for red wines in the Indian market. In 2009, 71.9% of the still light wines drunk in India were red, said Mrs. Dominique Heriard Dubreuil, Chairman, Vinexpo Asia Pacific. She was in Delhi along with Mr. Robert Beynat, Chief Executive, Vinexpo Asia-Pacific, to promote the upcoming Vinexpo Asia-Pacific 2010 in Hong Kong in May. But surprisingly, despite the bright picture in which the Indian wine market finds itself, not a single Indian participant had registered for the Vinexpo event in Hong Kong when reports last came in around the closing date for entries. The study indicated that the consumption of imported wines doubles every five years in the country. In 2008, imported wines accounted for 14.4% of the volume of wines drunk by Indians and 29.3% of the total sales turnover of all wines in India. Consumption of imported wines, essentially concentrated in the countrys major cities, doubled between 2004 and 2008, said Mrs. Dubreuil. The sector saw growth of 106.45% and reached 208,000 9-litre cases. The forecasts of the Vinexpo/IWSR study estimate a further growth of 100.44% in the consumption of imported wines between 2009 and 2013, reaching more than 5 million bottles by the end of th period. Consumption of Indian wines, which grew by a massive 502.38% between 2004 and 2008, is expected to continue to increase by 84.12% in the period from 2009 to 2013. But a real point of note in the report was the increasing popularity and consumption of red wines in India. The red wine proportion is set to increase by 112.66% by 2013, when red wines will account for more than three quarters of all the wine consumed in the country. Between 2009 and 2013, consumption of white and rose wines will also grow, though to a lesser degree, by 53.23% and 30.77%, respectively. This kind of growth will obviously depend a lot on government policies. Wine exporters, particularly the EU bloc, have cried foul of Indias protectionist policies in heavily taxing imported wines but the matter is still a subject of debate. In some measures, there has been a trade-friendly atmosphere developing. For example, the Delhi government has liberalized licensing laws to allow private stores selling fruit, vegetables and groceries to retail wine. The decision is expected to significantly boost sales and increase the visibility of wine. And earlier last year, Karnataka took a significant step by issuing the countrys first ever wine policy allowing the sale of liquor products in marts and malls. According to some estimates, the sale of wine has increased to 2.5 million litres in the state. At the end of the day, wine is being promoted as a family drink, an entirely new concept in India, where drinking of any alcoholic product is still viewed with a significant amount of

prejudice. But these new measures have also triggered a growth in areas under grape cultivation. This somewhat minute picture comes against the backdrop of overall consumption in the world, where a billion more wine bottles will be drunk between 2009 and 2013. In 2008, world wine consumption reached 2.621 billion 9-litre cases, the equivalent of 31.452 billion bottles, a 5.64% increase compared to 2004. According to the forecasts in the Vinexpo /IWSR study, consumption should grow by a further 3.57% between 2009 and 2013 to reach 2.7 billion 9-litre cases. Asia a Key Driver Still light wines account for 92.6% of total world wine consumption in 2008. (See later in article for more world details) As expected, Asia will be a key driver to wine growth in the world, led by China.

In Asia, consumption of grape-based wine reached 111.63 million 9-litre cases in 2008, the equivalent of 1.34 billion bottles, an increase of 51.93% compared to 2004. Consumption is expected to increase between 2009 and 2013 with more than a further 30 million 9-litre cases being consumed, a forecast increase of more than 25%. In 2008, Asian-Pacific countries accounted for 6.6% of all the wines drunk in the world. Over the 10-year period from 2004 to 2013, Asian-Pacific wine consumption should grow by 86 million cases, which is more than the 85-million-case growth expected on the North American continent in the same period, the study said. China, including Hong Kong, was the 8th largest wine consumer in the world and the 10th largest producer in 2008; it is clearly the growth driver for wine consumption. In 2008, China, including Hong Kong, posted the highest worldwide growth in volumes of wine consumed: 8.720 million more cases of still light wine drunk in one year. This trend recurred in 2009 with growth of 5.29 million 9-litre cases.

In 2008, China accounted for 68.9% of all still light wines consumed in Asia and 3% of the world total. Japan is the second largest wine-consuming nation in the Asian region with moderate increases in the volumes consumed by Japanese drinkers from 2009: 0.03% between 2004 and 2008, then 3.65% from 2009 to 2013. India, the 5th largest wine-drinking nation in Asia, posts the largest growth in consumption: 327% from 2004 to 2008, then 97% between 2009 and 2013. Not Much Bubble for Asians

Although, the consumption of sparkling wines grew sharply between 2004 and 2008 by 55.96%, these wines only accounted for 3% of the total volumes of wine drunk in Asia in 2008, while they represented 7.3% of the total world volume. The Vinexpo / The IWSR study forecasts that sparkling wine consumption in Asia will increase by 10.69% between 2009 and 2013. Furthermore, the value of wine sales in Asia had already grown by a substantial 62.97% between 2004 and 2008, reaching US$6.94 billion. Over the 10-year period from 2004 to 2013, the value of Asian wine sales will more than double with average annual growth of 11.5%, said Mr. Beynat. Imported Wines Boost Thirst In Asia, one bottle out of four that is consumed is imported, or more precisely 27.8% of the volumes consumed. However, imported wines account for 59.8% of the total value of wines sold there. In 2009, Japan remained the leading wine-importing nation in Asia, managing to still exceed the multiplication of wine imports into China by four between 2004 and 2008, triggered especially by the ban on import taxes in Hong Kong. Finally, coming to the overall world scenario, there have been changes in the consumption patterns of the top 10 still light wineconsuming countries.

Having consumed 298.34 million 9-litre cases of wine in 2008, Italy strengthened its position as the leading still light wineconsuming nation in the world, which it won in 2007. In France, which is now in third place, consumption continued to fall by 8.31% between 2004 and 2008. Apart from regulatory restrictions, health awareness, decreasing regular drinkers in France, the habits of consumption have changed in many ways. We used to have long lunches, even in business settings-up to two hours or so. Now, its much like here in India, we have just about 45 minutes to an hour. So, less wine is consumedbut at the same time, since people are more discerning about what they drink, you see an increase in value terms in the wines they choose, said Mrs. Dubreuil. US & China Boom The US maintained regular consumption growth of around 2% per year and became the second largest wine-drinking nation in the world in 2009. According to the forecasts already made in previous Vinexpo / IWSR studies, the US is expected to become the leading still light wine-consuming nation around 2011-2012. By 2013, American consumption is expected to reach around 310 million 9-litre cases. China is the 8th largest wine-consuming country, having drunk more than 74.58 million 9litre cases of still light wine in 2008. Between 2004 and 2008, the Chinese consumption of still light wines grew by 80% and should continue to increase to reach more than 100 million 9-litre cases by 2013. The Russian Federation also entered the top 10 wineconsuming countries in 2007. Russian consumption is expected to continue to grow between 2009 and 2013, but at a slower pace of 6.41% compared to the 59% growth rate from 2004 to 2008. Total Russian consumption is expected to reach 74.91 million 9-litre cases by 2013. Between 2009 and 2013, half the growth in worldwide wine consumption is expected to be located in just two countries: the US andChina . The Vinexpo Asia-Pacific / The IWSRstudy forecasts that the US and China should increase their still light and sparkling wineconsumption by 53.241 million 9-litre casesbetween 2009 and 2013, which represents57% of the total growth in consumptionworldwide over that period. Canada, Russia and Brazil are also expected to increase their wine consumption substantially by 6.51%, 5.63% and 4.23% respectively. The Vinexpo / The IWSR study forecasts that sparkling wine consumption in Asiawill increase by 10.69% between 2009 and 2013 In this table of countries with the fastest growth in volumes of wine consumed, India moves into 10th place with an expected increase of more than 1.47 million 9-litre cases between now and 2013.

Red Sun Rising The majority of world wine consumption is red. In 2008, worldwide consumption of red wine accounted for 51.86% of the total. With growth expected to be 3.79% by 2013, this proportion should increase slightly to reach 52.27% in that year. World consumption of white wine, however, should stabilise between 2008 and 2013, increasing by only 1.15% to reach 955.251 million 9-litre cases by the end of the period. Although ros wines are drunk significantly less throughout the world, the greatest increase is forecast to come in this category with growth estimated at 6.13% between 2008 and 2013. Significantly, the rise in the value of wine sales is twice as fast as the increase in volumes consumed. World wine sales in 2008 reached US$151.817 billion, up 9.87% compared to 2004. Sales are expected to grow by a further 8.05% in value between 2009 and 2013. Over the 10-year period from 2004 to 2013, the value of worldwide wine sales will have grown by 19.75%, while the volumes consumed will have increased by 8.82%. The world wine trade also continues to develop, Spain has become the leading wine exporter in the world in terms of volume, having increased its exports by 13.66% between 2004 and 2008. Over the same period, Italy posted 8.97% growth in the volumes it exported, while French exports fell by 3.88%. France remains the leading wine exporter in the world in terms of the value of its export sales, ahead of Italy and Spain, having delivered consignments abroad worth US$ 9.731 billion in 2008. There was a last word in the Vinexpo/IWSR report on spirits consumption and its worth a mention. Worldwide spirits consumption is slowing down, the study says. World spirits consumption grew by 10.7% between 2004 and 2008, topping the figure of 2.383 billion 9-litre cases. Between 2009 and 2013, the study forecasts slower growth of 2.9%. However, Tequila consumption should grow the most between now and 2013. If locally produced liqueurs are excluded, vodka remains the spirit that is the most consumed in the world, representing 49.3% of total spirits consumption in 2009. Between 2009 and 2013, the fastest growing spirits will be tequila, up 7.18%, and rum, up 5.11%. The consumption of cognac, brandy and scotch are expected to stabilise. The Vinexpo / The IWSR study forecasts that sparkling wine consumption in Asia will increase by 10.69% between 2009 and 2013 For its 8th show outside France, Vinexpo international wine and spirits exhibition

is again travelling to Hong Kong, as it did in 1998, 2006 and 2008. Vinexpo AsiaPacific 2010 will take place at the Hong Kong Convention & Exhibition Centre from 25 to 27 May 2010. The exhibition will represent the largest showcase of wines and spirits ever exhibited under one roof in Asia. In order to accommodate a growing number of requests for stand space, Vinexpo took advantage of extension work at the Hong Kong Convention & Exhibition Centre and decided to increase its overall exhibition area by adding an extra hall. This year, 750 exhibitors from around 30 countries will occupy 8,000 sq. m of floor space. Companies from all over the world will exhibit individually or in national pavilions. The US, Spain, Chile and Germany will be significant participants. Sites have also been reserved for the Italian, Argentinean and Rumanian pavilions, as well as for companies and regions of China and South Africa. Amongst the major international names, the following may be cited: Dynasty Fine Wines and Dra-gonet (China), Santa Rita and San Pedro (Chile), Henkell & Co (Germany), Cape Legends (South Africa), Marques de Riscal and Gonzalez- Byass (Spain), Sogrape (Portugal), Hayman Distillers (UK) and Banfi Distribuzione and Casa Vinicola Zonin (Italy).

Imports wine in India have increased from 14.3 million in 2009 to 27.8 million US$ in 2010. After two difficult years (2008 and 2009 because of the global recession), the wine industry in India is witnessing a significant increase in its wine imports and domestic production.

Wine in India

Duties on wine in India however remain high: 150% custom duty (only Egypt, Indonesia, Jordan and Vanuatu have higher duties!). In addition each state in India has (different) excise duties, which are either a percentage on the sales price or an absolute amount per bottle. Normally the excise duties result in additional 4-5 USD per bottle. Then add another 20% VAT on top of that and prices end up six times higher then the ex-cellar price. Some few states dont allow sales of alcoholic beverages at all. This is why India is still not amongst the top 50 global wine

importers (India ranks 52th in terms of value of imported wine, behind Serbia and Kazakhstan). Other Asian countries like China are far ahead in terms of wine imports. In Hong Kong the wine trade is now a billion dollar business. So what about the domestic wine production in India? Wine in India is mostly produced in Maharashtra (Nasik area) and and Karnataka (near Bangalore). United Spirits(UB Group, Kingfisher brand), Indias leading spirit producer is all set to increase production of wine in India and is targeting sales of 1.5 million cases within the next 3 to 5 years. Other important wine producers in India areChateau Indage, Grover Vinyards and Sula Vineyards. Most of this Indian wine producers also have a selection of imported wines in their portfolio. United Spirits even bought a French winery (Bouvet Ladubay, produces 5-8 million bottles / year) and sources few brands from across the world. Chateau Indage had some financial problem over the past years and Sula manged to become the number one winery in India producing some 3 million bottles a year. Brindco, Indias largest spirit (and wine) importer, took over the pan-India distribution of the Grover brands. The total production of wines in India stands now at around 13 million bottles. Considering the 1.2 billion population of India, thats hardly a teaspoon of wine per capita! Other Asian countries like Singapor and Hong Kong have a consumption of more than 5 bottles per capita. So the potential for wine in India is big, be it imported or produced in India.