India is a rapidly changing country — a market of over one billion people and a young generation eager to experience new products.
Traditionally, Australia’s largest exports to India have been coal and international education. However, Australian brands have recently uncovered the potential of two new sectors: health supplements and wine.
India’s appetite for wine
India is a market with numerous prospects for Australia’s wineries, with a population of 1.3 billion people and about 700 million individuals over the legal drinking age — a number that is growing by 19 million each year.
In May this year, Victoria-based Barokes Wines became the first winemaker to introduce canned wine in India, despite the catastrophic COVID-19 second wave. Canned wine is a novel concept in India.
According to reports, the canned wine format is well-suited to India, where the wine market is small but aspirational, with domestic production dominating. Five varieties of Barokes canned wine are now available. Three sparkling wines, as well as a cabernet-shiraz-merlot and a chardonnay-semillon, are among them.
“Retail is a very buoyant sector in India, and as the wine moves mainstream, you will find a shift of consumption from on-trade to off-trade,” Aman Dhall, executive director of Brindco, an importer of alcoholic beverage brands, said in an interview to Livemint.
“In Australia, 30-40 years ago people used to drink a lot of wine outside, but today 80% of the wine is consumed at home.”
Australian wines have grown quickly among imported wines, increasing roughly 25% by volume and 30% by value. Australian brands appear to be more appealing to many wine buyers.
Australian Wineries
Over 40 Australian wine labels are available in India, including well-known names such as Penfolds, Lindemans, Westend Estate, AVL, D’Arenberg, Jacob’s Creek, De Bortoli, McWilliams, and Wines by Geoff Hardy.
Jacob’s Creek has maintained a steady leadership position in India with its wines over the last five years in a market where makers and merchants have long been challenged.
“Jacobs Creek is the most popular wine imported into India, followed by Moet & Chandon, Sauvignon, Dom Perignon, and Carlo Rossi,” said Dr Mark Morley, Trade & Investment Specialist from Victoria.
Growing market
According to the Australian Trade and Investment Commission, India’s number of wine importers has increased from 50 to 100 in recent years. India’s wine imports have been expanding at a rate of 12-13 per cent despite an unfavourable domestic tax regime.
In terms of value, imported wines account for around 35 per cent of overall wine consumption in the country, but only about 12 per cent in terms of volume.
The five largest importers account for roughly 60 per cent to 70 per cent of all imports to India, with the other active importers, maybe 30 enterprises, handling fewer than 10,000 cases each year, as per data by Austrade.
In terms of volume, the imported wine market in India was approximately 475,000 cases during the fiscal year April 2016 – March 2017. Major consumption occurs below a price of A$36 a bottle. Another distinguishing element of the Indian market for Australian winemakers is that women constitute the majority of wine buyers in the country.
Sula wines, Indage, and Grover Vineyards are among the finest Indian vineyards and wineries. They collectively control 90 per cent of the market and are (naturally) seen as offering superior value for money.
However, according to Indian trade data, wine imports from the new world are increasing, with France, Italy, and Australia being the top three wine suppliers to India. Chilean wines are also making inroads into the Indian market at the entry-level, with fierce rivalry expected at the lower end in the coming years.
Geographical advantage
In terms of location, Mumbai continues to be India’s largest wine consumption market. Still, Delhi has an evolved culture with a higher share of consumption of international wines over domestic wines.
Consumers in these two cities have an equal affinity for local and international wines across a range of styles. On the other hand, Goa, Bangalore and Pune are also thriving wine markets that cannot be overlooked.
It is important to highlight for Australian winemakers interested in entering the market that the customs duty on wine is 150 per cent on CIF. Because the Federal Government allows duty-free imports to hotels (Hotels, Restaurants, Catering, Clubs, Pubs), the hospitality industry has a larger market than the organised retail sector.
This indicates that a large portion of the alcohol consumed is consumed on the premises of five-star hotels in big cities.
Way ahead for Aussie winemakers
The South Australian Government had initiated a two-year wine education program in Mumbai and Delhi to enhance the profile and place South Australia in the premium and ultra-premium wine category, a windfall for Australian winemakers.
“This will have ramifications for Australian wines in general. Despite high tariffs, Australia’s wineries should not compare the Indian wine market to China and expect similar growth trends in the short term,” Austrade said in a report.
“Instead, India offers a tremendous, stable, and long-term opportunity for Australian wine,” the report added.
Health Supplements
Lifestyle changes among India’s upper and middle-class Indian has resulted in increased demand for nutritional supplements. Nutraceutical use is rapidly expanding in India as buyers seek products that boost immunity, energy, and wellness.
Due to a well-regulated home environment in Australia, Australian products have a reputation for being e premium quality, clean, green, and safe
with Indian consumers.
According to current market segmentation in an Assocham report, vitamins and minerals account for the lion’s share of about 40% in the Indian dietary supplements market, followed by herbal supplements (30%), probiotics (10%), omega-3 fatty acids (5%), and proteins, amino acids, and other essential nutrients (5%).
The Indian nutraceuticals market was valued at around $4 billion in 2017 and is expected to grow at a 21 per cent CAGR to $10 billion by 2022, according to data by FI India, a food and beverage event platform. More than 60 per cent of this market is accounted for by dietary supplements.
Swisse, a multivitamin brand based in Victoria, is a vitamin, supplements, and skincare business that manufactures its products to Australian pharmaceutical standards. In 2019, the company planned to expand into India.
According to Akash Bedi, Group Chief Strategy & Operations Officer for H&H Group, India is the logical next step for Swisse’s market expansion progression.
“We looked at growth trajectories for our target customers and saw that India is now a significant, long-term opportunity for premium consumer goods, regardless of short-term challenges.
According to Austrade Business Development Manager Yaser Siddiqui, the rapid growth in India’s middle class and changes in buying habits are powering growth in the fast-moving consumer goods (FMCG) sector.
“India is now a major market for consumer goods and a logical next step for companies that have built successful brands in India,” he said.
Similarly, another Australian health supplement business, KARORA, launched premium whey proteins in India in September of last year. The products were initially released in New Delhi and will soon be available for purchase on other e-commerce platforms, making them available throughout the country.
India is a digitally savvy country, with digital impact and online transactions expanding dramatically over the last five years.
A young demographic profile, higher internet penetration, and somewhat superior economic performance are the key drivers of the Indian health supplements market.
India’s internet user base is predicted to grow from 493.96 million in March 2018 to 829 million by 2021. This provides an ideal channel for selling health supplements to the affluent middle class via e-commerce, which targets both men and women.
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