Purchase motivators in the Indian wine industry

Abstract

India has evolved as one of the immense potential markets for wine on the global front. Although the wine industry is currently on upswing and despite having large population the consumption of wine is India is low as compared to other Asian countries. The per capita consumption of wine is very low which suggest the great potential for domestic as well as foreign players to capture this untapped market. Growth of Indian wine industry is mainly dependent on domestic production but imported wine also plays an important role in increasing awareness and demand among consumers. According to Indian Wine Industry Report as an emerging wine market it is growing at the rate of 30% but this is from a low base consumption. Indian wine Industry experienced a decent growth rate [CAGR] during 2006 to 2011. For the same period the sales by volume has grown by 14.4% (CAGR). The major significant factors associated with the growth of Indian wine industry are increasing disposable income, rapid urbanisation and growth in retail sector, emergence of modern food retail chains, wine tourism and increasing preference of women for wine. In India premium wine segment is primarily dominated by imported (from Europe and USA) wine, which is generally highly priced due to high custom duties and tariff rates in India. However due to the affordability concerns locally produced domestic wine still holds a significant mind space in Indian consumers. Currently few major players dominate the Indian wine market. But the industry is an expansion phase with more and more new players are entering in the market which includes small and medium wine producers in India and few large national and international players like United breweries, Diageo, Seagram’s and Cobra. Hence in order to formulate the entry strategy of any new international player, one requires an in-depth analysis of current microeconomic trends, government regulations, consumer behaviour and buying patterns, their preferences and willingness to pay. This aim of this research is to formulate an entry strategy for Dubai based A&E Company who is ambitious to enter into the Indian wine market in coming future. We started our study with secondary study and literature review. Latter on we also conducted a wine tasting event to gauge the taste and concerns of Indian consumers. As a primary research we surveyed multiple industry players and consumers for collecting their views. At last we analyzed all the data and came up with the critical factors, which A&E need to take care before entering into the Indian markets. Conclusions of motivations in the wine industry were diverse and have been summarized in the Study Highlights below. Macro economically, the pillars for growth remain in place and efficient government will continue to drive the wine industry’s potential. This potential however, will only be achieved with a loosening of the current delimiting taxes and duties. The scissor effect of lowering prices combined with increased disposal income will have a double leverage effect to excite the Indian consumer – from better wine ending up in the glass. Following traditional queues of wine typically associated to France, and engaging all levels of trade and drinkers through education, reliability and respecting that growth is coming from females and young adults sympathetic to western culture will allow for relative competitive success.