FNB News - Red wine industry witnesses CAGR of 4.2 per cent over last five years

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BEVERAGE

Red wine industry witnesses CAGR of 4.2 per cent over last five years

Friday, 07 April, 2017, 08 : 00 AM [IST]

Ken Research’s report on the growth estimates of red wine in the global market, titled Global red wine industry in-depth investigation and analysis report 2017, analysed the growth prospects of red wine [which has grown at a compounded annual growth rate (CAGR) of 4.2 per cent over the last five years] and provided valuable data about its production, revenue, consumption, import and export in North America, Europe, China, Japan, Southeast Asia and India between 2011 and 2016, and forecast up to 2020.

The red wine industry can look for a colossal growth in future. Currently, the developed world and China are major consumers of red wine. The United States, Europe, Japan, and China collectively account for 51 per cent of the global red wine market. But the market scenario will change with the red wine trend gaining momentum in emerging economies.

The regions covered in the report are:

North America
China
Europe
Japan
Others

Scope in developing economies
There is a steady growth in red wine consumption in emerging economies such as India and Brazil, apart from China. Most of the red wine brands are likely to include China in their strategic global planning to tap into the country’s wine market. The average growth of red wine in China is 4.4 per cent.

Ken Research’s analysts believe that red wine consumption in China will continue to increase with an average growth rate of 4.6 per cent in the next five years. Therefore, China will remain a go-to market for red wine producers for increasing their business.

China’s neighbouring country, India, is another market with good prospects for red wine. Previously, the growth of the wine sector in India was hampered by bottlenecks, such as lack of storage and transport facilities, absence of proper wine marketing and promotional activities.

Besides, stringent rules for domestic marketing of wines, regressive and strict government policies and different taxation across various states also hindered wine growth. With the expected implementation of goods and service tax (GST) from July 1, 2017, many problems of red wine producers and marketers will disappear.

The Indian wine industry has grown due to changing lifestyle of the urban people. The westernisation of the urban people has made wine drinking a style statement for them. The Indian wine industry has also benefited from the provisions of the World Trade Organisation (WTO) agreements applicable to it, and due to the Indian government’s tourism initiative, Incredible India.

At present, the share of red wine is enormous in India compared to other wine varieties. Wine consumption and awareness in India is still in a nascent stage. Thus, marketing becomes important to tap the Indian market. Reduction in the prevailing heavy taxes will make wine cheaper for consumers, thus boosting its growth.

Innovation and marketing
The cut-throat competition in the wine market demands constant innovation and a strategic market approach. In countries where the red wine market share has already peaked, companies are innovating in terms of the taste, colour and design of the wine packing.

The wine industry is about delivering premium and luxury quality products, and ensuring that these products must stand out on the shelf to face the ever-increasing competition successfully.

A red wine brand, with its eye-catching labels, can also attract consumers. Also, different packaging sizes tailored to meet the varying needs of customers helps in popularising a red wine brand.

Companies are also investing in wine-tasting events and taking consumer feedback for the taste and quality of their products to tailor their products as per consumers’ tastes.

Key factors considered in the report