India at present levies a steep 150% responsibility on imported wines. Below the pact, that might be lowered to 75% and finally to as little as 20% for premium wines and 30% for mid-range wines, in keeping with an official launch by the European Fee. The phased reductions are anticipated to slim the value hole between French, Spanish and Italian wines and domestically produced manufacturers.
That narrowing value hole worries home winemakerswho say imported manufacturers carry aspirational enchantment even when priced equally.
“Albeit inferior, if there’s a French wine accessible at an analogous value to an Indian wine bottle, an individual will gravitate in direction of selecting that,” stated Gaurav Sekhri, founding father of Fratelli Vineyards, in an interview with Mint.
He warned that native manufacturers threat shedding visibility earlier than shoppers even pattern their merchandise. “Finally, you must get the particular person to attempt the liquid to finally make a alternative. But when they’re not even making an attempt it…”
Sekhri stated decrease import duties could make it tougher for Indian wines to retain shelf house as European labels look to faucet India’s small however rising shopper base amid slowing alcohol consumption of their residence markets.
Whereas the tariff cuts at the moment are a actuality producers should adapt to, he acknowledged the potential fallout may prolong past wineries to grape farmers linked to the sector. Fratelli has about 1,400 acres beneath energetic farming in Maharashtra, together with Sholapur and Jambhali.
Premium pivot
To counter rising import competitors, Indian winemakers are more and more transferring up the worth chain. At Fratelli, that shift is already seen.
Sekhri stated the corporate has seen clear development in its luxurious portfolio inside its broader premium vary, a development he views positively as shoppers commerce as much as higher-quality wines.
Fratelli Vineyards reported gross income of ₹130 crore in FY21, which grew to ₹204 crore by FY25. About 67% of its income now comes from its premium and above portfolio, whereas simply 23% comes from the worth class, signalling a sharper concentrate on higher-end wines. The remaining 10% comes from ready-to-drink wines.
This week, the corporate launched a 15-year particular version luxurious wine, Sette 15 Anniversary, in collaboration with designer Manish Malhotra. It is usually engaged on two different premium-and-above wines.
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Uneven insurance policies
Sekhri stated India remains to be not identified globally for wine in the way in which it’s for merchandise resembling tea or rice, leaving home labels extra uncovered to imported competitors.
Whereas he acknowledged efforts by the central authorities to safeguard the sector, he pointed to uneven state-level insurance policies. Rajasthan and Haryana, he stated, nonetheless must do extra to assist home wine, including that Haryana at present has the most cost effective wine costs within the nation.
Fratelli has posted double-digit development for 3 consecutive years after Covid, making the present single-digit growth really feel subdued by comparability. “The excellent news is we are going to develop this 12 months too,” Sekhri stated.
The Confederation of Indian Alcoholic Beverage Firms (CIABC), an trade physique representing a lot of Indian alcohol firms, stated it has requested state governments to withdraw excise concessions given to imported liquor. The foyer group warned that cuts in customs duties beneath the India–EU commerce framework may additional damage Indian merchandise throughout each spirits and wine classes, creating a possible double whammy for home firms.
Market dynamics
Fratelli at present holds about 35% of India’s wine market, in keeping with Sekhri, making it one of many nation’s largest home gamers after Sula Vineyards, which dominates the sector and controls over 60% share in sure premium and elite classes.
Final 12 months, Sula founder Rajeev Samant advised Mint that after driving a post-pandemic wine increase, city consumption had slowedprompting the corporate to reset stock ranges, promote cooler varietals resembling rosé, increase wine festivals in newer cities and cut back imports.
Fratelli’s strongest markets embrace Delhi, West Bengal, Telangana, Andhra Pradesh and Uttar Pradesh. The corporate additionally operates in Maharashtra, Goa and Bengaluru, the place Sekhri stated there’s scope to construct share additional.
Retail accounts for about 65% of Fratelli’s gross sales, with the rest coming from accommodations, eating places and catering. Whereas giant volumes proceed to promote within the ₹500– ₹1,200 value bracket, wines priced above ₹2,000 are seeing regular traction.
Mint reported in late Januarywhen the deal was introduced, that Indian winemakers are more likely to stay largely insulated from decrease tariffs on premium European wines, as responsibility cuts would largely apply to cost bands the place home manufacturers have restricted presence. Wines priced under €2.5 is not going to obtain any tariff concessions, a phase that accounts for the majority of Indian wine volumes.
Hospitality plans
Most of Fratelli’s capital expenditure linked to wine manufacturing is full, although Sekhri stated future fundraising might be thought of as new initiatives take form.
One such mission is a winery hospitality enterprise at Fratelli’s current Maharashtra property, the place the corporate plans a roughly 40-key property designed to showcase its vineyards and supply wine-led experiences. Sekhri stated Fratelli is near finalizing an working companion and has seen robust curiosity from potential collaborators, although development has not but begun.
The vineyards are owned by the founding household, and the hospitality improvement might be built-in into the present property.
Regardless of rising competitors from imports, Sekhri stated Fratelli’s focus stays on enhancing effectivity throughout manufacturing and distribution whereas persevering with to spend money on high quality.
“I feel finally all wine producers should up their sport, get extra environment friendly, make even higher merchandise after which discover their very own ft,” he stated.