Between 2022 and 2027, the wine market in India is expected to experience substantial growth, with a Compound Annual Growth Rate (CAGR) of 30.92%. Historically, Indian consumers have shown a preference for spirits and beer, but there has been a notable shift towards wine, particularly among women and young adults, who are increasingly choosing grape-based beverages over grain-based ones. Since the 1980s, India has seen the presence of three main types of wines - Still Wines, Sparkling Wines, and Fortified Wines. The demand for wine is primarily concentrated in major metropolitan areas such as Delhi, Mumbai, and Bangalore, which collectively account for approximately 85% of the market demand.
Estimated Costs of Setting up a Winery in India
The costs and requirements for setting up a winery may vary between different establishments, but there are general approximations to consider. For an annual production of around 200,000 liters, a working capital of INR 1 crore (USD 0.1 million) per month is typically needed. The Plant and Machinery expenses amount to approximately INR 6-7 crore (USD 0.8-0.9 million). For the winery's physical infrastructure, an average area of 900 square yards is sufficient, and the cost of acquiring the land and building is approximately INR 3 crore (USD 0.5 million). These figures can serve as a guideline for prospective winery owners.
Required Raw Materials for Wine Production
The machinery required for wine production is typically imported from esteemed European countries such as Italy and Spain. These specialized machines, including the de-stemmer, crusher, hydraulic helical pump, filtration plant, chilling plant, and pressurizer, play vital roles in the wine-making process. However, it is noteworthy that all the necessary equipment for wine production can also be sourced domestically within India. This includes grape crushers for grape processing, wine containers for fermentation and storage, bottling machines for packaging the final product, and filters to ensure the wine's quality and clarity during production. These essential tools are readily available from local suppliers, providing a convenient option for wineries to establish their operations without relying on international imports.
Storage/Production Facility Specifications
Temperature is a critical factor in wineries as it can significantly impact the quality of the wine, making the difference between a good and bad product. Proximity to the vineyards ensures the freshness of the grapes, while having a fully automatic bottling line streamlines the production process.
Wine Manufacturing Procedure
The wine manufacturing process can be summarized into five key steps. Firstly, the grapes are harvested at the right moment. Next, the grapes undergo crushing using mechanical crushers. The crushed grapes are then pressed to extract high-quality juice. Subsequently, depending on the type of wine being produced, fermentation takes place. Finally, the wine goes through aging and bottling, where it is stored in bottles or barrels for further development and packaging.
Regulatory Framework in India
Licensing procedures for handling alcoholic beverages in India vary by state, with different regulations governing the sale and distribution of alcohol. Some states have complete alcohol prohibition, such as Bihar, Gujarat, Mizoram, Nagaland, and the Union Territory of Lakshadweep, while all other Indian states and union territories permit alcohol sales. Licenses are required for importers, distributors, retailers, restaurants, and hotels involved in the alcohol trade. Depending on the state, licenses may also be specific to certain services like room service sales of alcohol, and they usually require annual renewal with associated fees.
Obtaining the required License
To obtain a license in any open market state in India, applicants must submit a set of required documents, including a comprehensive description of the premises, a copy of the lease deed or register deed, details of the manufacturing apparatus used, and a premises map outlining the boundaries. It is important to note that licenses are granted only until the 31st of March of the following year from the date of their commencement, and cannot exceed that period.
Taxes and Duties
In India, there are both federal and state taxes and duties applicable to alcoholic beverages, including wine. The Central Sales Tax (CST) is imposed at a rate of 2% on the sale or purchase of alcoholic liquor for human consumption in inter-state trade. On the other hand, the State governments are responsible for levying various duties such as Excise Duty, Value Added Tax (VAT), Transport Fee, Import Fee, Export Fee, Toll Tax, Label Fee, and others concerning the import, purchase, sale, or manufacturing of alcoholic liquor, including wine, within their respective states. The specific rates of these state taxes and duties vary from one state to another.
Government Initiatives
- National Wine Board (Pune)
- Interest subsidy
- Stamp Duty Exemption
FSSAI Regulations on Wine
The following are the applicable laws in Food Safety and Standard Authority of India (“FSSAI”) for Wine in India:
- Food Safety and Standards Act, 2006
- Food Safety and Standards Rules, 2011
- Foods Safety and Standards (Licensing and Registration of food business) Regulations, 2011
- Food Safety and Standards (Packaging and Labelling) Regulations, 2011
- Food safety and standards (Alcoholic Regulations), 2018
- Food Safety and Standards (Import) Regulations, 2017
- Food Safety and Standards (Contaminants, Toxins and Residues) Regulations, 2011
FSSAI Standards for Wine Produced in India
Wines produced in India are classified based on two main criteria: color and the amount of carbon dioxide content they contain. Firstly, they are categorized by color, which includes Red Wine and White Wine. Secondly, wines are distinguished by their carbon dioxide content, leading to the classification of Semi-Sparkling Wine and Sparkling Wine. These categorizations help consumers understand the characteristics and styles of different wines available in the Indian market.
Documents to obtain BIS Certificate
The process of obtaining BIS Certification in India usually takes about four months from the date of application submission. The required documents to be submitted for the certification include an application form, details of test equipment and calibration, information about raw materials and components used, the layout of the manufacturing plant, and test report(s) for the product, which must be within 90 days of issuance. For wine testing, a self-evaluation report may be sufficient, but the BIS authority holds the discretion to conduct testing if deemed necessary.
Labelling Regulations
The Food Safety and Standards Authority of India (FSSAI), under the Government of India (GOI), introduced new alcoholic beverage standards effective from April 1, 2019. These standards outline specific labeling requirements for wine, which encompass a list of ingredients, declaration of alcohol content, date of bottling, and statutory warnings such as "CONSUMPTION OF ALCOHOL IS INJURIOUS TO HEALTH" and "BE SAFE-DONT DRINK AND DRIVE," among others.
Prohibition of Advertising Wine in India
The Advertisement Codes of Indian Cable Networks & All India Radio, along with the Norms for Journalist Conduct issued by the Press Council of India, strictly forbid any advertisement that directly or indirectly encourages the production, sale, or consumption of cigarettes, tobacco products, wine, alcohol, or other intoxicants. Despite this general prohibition, certain states may permit advertising through billboards, signboards, etc., but subject to specific restrictions and guidelines.
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