Wine Popularity Hinges on State Policies

It is no longer enough that young Indian consumers are embracing wine, armed with global exposure and an appreciation for diverse varietals. While this shift in preference signals promise, it cannot on its own fuel the growth of India’s fledgling wine industry. For real change to take root, state governments must step in with structured, unified policies, especially around taxation and retail access, that create a level playing field for both large-scale producers and boutique wineries, argues Kishan Pedhapally, Founder of Asav Vineyards, Hyderabad.

The wine industry across the world is currently facing challenges due to a decline in wine sales. Vineyards are being uprooted in Europe, Australia, and other regions. This trend, as observed by some within the industry, is creating a wave of uncertainty. The scenario in India, however, is somewhat different. Wine still holds only a marginal share, just about one percent, of the country’s overall alcoholic beverage market. Even within this limited segment, competition is intense, with both domestic and international players vying for the same group of consumers.

“Wineries are blindly offering discounts to get their products into retail outlets. Apart from three large producers, most small wineries cannot afford to offer such deep discounts or pay for retail shelf space. This is putting immense pressure on smaller wineries and producers,” says Kishan. In their attempt to outdo one another, domestic players are even selling at a loss, merely to maintain brand visibility. Unfortunately, this is not beneficial to consumers either, as they continue to pay full listed prices, with the discounts rarely passed on to them.

Rules & Resistance

After a prolonged struggle with bureaucracy spanning six years, Kishan played a key role in securing a fair policy on demurrages for domestic wines in comparison to imported ones. However, large producers are now attempting to transfer the benefits of recent demurrage reductions to retailers. “This has affected small players like us drastically,” he notes.

This situation stands in stark contrast to practices elsewhere. “On my recent trip to Germany, we saw how each player plays by the rules and does not undercut their fellow wineries. We hope this kind of attitude and sense comes to domestic players soon,” Kishan adds.

Commenting on the recent free trade agreements (FTAs), Kishan acknowledges that domestic wines cannot be shielded indefinitely through high import duties. While Indian wines are of good quality, he believes the focus must shift towards improving quality and consistency to withstand global competition. “All producers should work on quality and consistency rather than work with unmanageable discounts,” he advises. 

The good news is that small boutique producers, who create just a few cases of wine, are finding the most success. This boutique model is likely to be the one that endures in both India and abroad. 

Policy Push

Kishan also urges state corporations and ministries to formulate new policies that support boutique wineries and enhance wine tourism. “This will also increase the percentage market share of wine while educating the consumers,” he says. His presentation to the Telangana government highlights the need to align the state’s wine policies with those of Maharashtra and Karnataka. “I have given several inputs to the state government and the onus is on them to take appropriate remedial action,” he adds.

While wine is increasingly becoming the drink of choice among younger consumers, there is general consensus that state governments must address policy inconsistencies to truly enable the wine industry to thrive.