How to Produce Wine & set up a Winery in India?
Thu, 13 April 2023
The wine market in India is estimated to grow at a CAGR of 30.92% between 2022 and 2027. Traditionally, Indian consumers have been more inclined towards spirits and beer. However, wine has been steadily gaining acceptance as increasing numbers of women and young adults opt for grape over grain. Still Wines, Sparkling Wines and Fortified Wines are the three major types available in India since 1980s. 85% of the demand is from major metropolitan areas including Delhi, Mumbai and Bangalore.
What are the Estimated Costs of setting up a Winery in India?
- Each winery may differ from another, but the approximate costs and requirements remain the same.
- To produce an average of 200,000 litres annually, an estimate of the working capital for a month is INR 1 cr. (USD 0.1 Mn.)
- The Plant and Machinery costs approximately INR 6-7 Cr. (USD 0.8-0.9 Mn.)
- An average area of 900 sq. yd. is sufficient to set up the winery. The cost of the land and building is approximately INR 3 Cr. (USD 0.5 Mn.)
What are the Raw Materials needed?
All raw materials can be sourced domestically in India.
- Grapes : About 90% of the wines produced in India use the grape Vitis Vinifera.
- Tannins : Used in all fermented packaged food or beverage.
- Sugar : Used usually in small quantities.
- Ethyl Alcohol : An essential for all fermented fruits and grains.
- Packaging Materials : Include bottles, crates, barrels.
Which Machines are required?
Machinery required for production of wine is usually imported from Italy, Spain and other European countries. Some of them are listed below:
- De-stemmer
- Crusher
- Hydraulic Helical Pump
- Filtration Plant
- Chilling Plant
- Pressuriser
Which other Equipment is required?
The essential equipment required in the production of wine is listed below. All of these can be sourced domestically (within India itself):
- Grapes Crusher
- Wine Containers
- Bottling Machines
- Filters
What are some Specifications for the Storage/Production Facility?
- Temperature being one of the key elements in any winery, this can be the difference between a good and bad wine.
- Closeness of the winery to the vineyards ensures freshness of the grapes
- Fully automatic bottling line
What is the Process of Manufacturing Wine?
The manufacturing process can be broadly explained in the following five steps:
- Harvesting - the grapes at the appropriate time
- Crushing - the grapes using the mechanical crushers
- Pressing - the crushed grapes to obtain high quality juice
- Fermentation - depending upon the type of wine being manufactured
- Aging and Bottling – in bottles or barrels
What are the Licenses and Regulations for Manufacturing Wine?
- Licensing procedures vary by state; some states prohibit the sale of alcohol, others permit it, while some have state-run monopolies that control the distribution of alcohol. In general, importers, distributors, retailers, restaurants and hotels must have a license to handle alcoholic beverages.
- The alcohol prohibition in India is in force in the states of Bihar, Gujarat, Mizoram and Nagaland as well as in the Union Territory of Lakshadweep. All other Indian states and union territories permit the sale of alcohol.
- In some states, licenses are further delineated to allow for services such as room service sales of alcohol. Licenses are typically subject to annual renewal fees.
How is the License obtained?
- A set of documents are required to apply for a License in any open market state in India. These include Full description of Premises, Copy of Lease Deed/ Register Deed, Full description of apparatus used for manufacturing, Map of premises (showing boundaries) etc.
- No licence shall be granted for a period beyond the 31st March next following the date of the commencement of the licence.
What are the Taxes and Duties charged in India?
- Federal Taxes and Duties - The Central Sales Tax (“CST”) is a levy of tax on sales in the course of inter-State trade or commerce. The rate of CST on the sale or purchase of Alcoholic liquor for human consumption in the course of inter-State trade or commerce is 2%.
- State Taxes and Duties - The State governments levies the duties such as Excise Duty, Value Added Tax, Transport Fee, Import Fee, Export Fee, Toll Tax, Label Fee etc on import, purchase, sale, or manufacturing in relation to alcoholic liquor including wine in their respective state. These taxes and duties vary from state to state.
What are some Initiatives taken by the Government for this sector?
- National Wine Board (Pune)
- Interest subsidy
- Stamp Duty Exemption
What are the 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
What are the Standards set by FSSAI for Wines Produced in India?
Wines produced in India have been categorised either by colour or the amount of Carbon Dioxide Content they contain.
- By Colour : Red Wine and White Wine
- By amount of Carbon Dioxide content : Semi Sparkling Wine, Sparkling Wine
What are the required documents to obtain a BIS Certificate?
BIS Certification is expected to be granted within 4 months of submission of application. The following documents are to be submitted:
- Application Form
- Test Equipment & Calibration
- Raw Materials and Components
- Plant Layout
- Test Report(s): The test reports of the product shall not be more than 90 days old.
- Factory Testing: For wine testing self-evaluation report shall be sufficient, or BIS authority may at its own discretion carry out testing.
What are the Packaging and Labelling Regulations for Wine?
The Government of India’s (GOI) Food Safety and Standards Authority of India (FSSAI) recently published a notification to announce the implementation of new alcoholic beverages standards of April 1, 2019. These standards include specified requirements for the labelling of wine which include- List of Ingredients, Declaration of alcohol content, Date of Bottling, a statutory warning - “CONSUMPTION OF ALCOHOL IS INJURIOUS TO HEALTH” and “BE SAFE-DONT DRINK AND DRIVE” etc.
What are the Prohibitions on Advertising Wine in India?
The Advertisement Codes of Indian Cable Networks & All India Radio, Norms for Journalist Conduct issued by Press Council of India prohibit any advertisement 'directly or indirectly' promotes the production, sale or consumption of cigarettes, tobacco products, wine, alcohol or other intoxicants. However, some states allow advertising through billboards, signboards etc but subject to restriction.
How can we help?
- Feasibility Study: Assistance in evaluating the project of setting up the winery in India.
- Technical Collaboration: Assistance with collaboration with an entity for technical know-how and providing advisory on installation and procurement of raw materials.
- Fundraising: Assistance in the raising of funds and/or financing for the project.
- Legal Services: Assistance in legal formalities including corporate and regulatory compliances, approvals, and all other legal formalities.
- Sales Network: Assistance in creating a good sales network in domestic and foreign market based on consumption of an application.