| Recent Round Table on Lifestyle products organised by FICCI and Comité Colbert discussing the challenges and opportunities for luxury goods market in India, spell a boom for premium wines too, reports Subhash Arora who attended the conference.
The demographic trends are very favourable for sale of Luxury goods that include premium or mid price wines. Some of the positives for India are a robust 8.6% growth during the last 3 years and a targeted growth of 10% over the next few years. India 's Maharajas are the discerning Indian business families and High Net Worth Individuals (HNI) numbering 70,000; they have assets over US $1million.
Economic prosperity is expected to reach a larger section of the population with the number of Indian millionaires trebling every three years. The affluent have increased from 3.4% of the population to 5.6% last year. This is expected to grow to 9% by 2009-2010. Similarly the upper middle class increased from 10.8% to 13.8% and is expected to increase to 17.5% by 2009-10.
The total potential market for wine based on the income would have doubled from 2001- 2002 (14.2%) to 2009-2010 (26.5%) of the population of 1.1 billion. The upper middle and affluent class have households with an annual income of Rs. 500,000 (US$11,000). The statistics were reeled of by Mr. Vivek Bharti, a well-known economist and Advisor to FICCI. This also encompasses the potential wine market based on demographics.
Another important statistic related to the increase of urban population from the existing 300 million to 600 millon in 2025. Growth of wine drinking is much faster in the urban sector. Consumption of imported fine wines is restricted mostly to urban areas.
Younger people are more likely and keen to drink wine, even premium wine. The 82 million Young Urban Liberalised Indian Consumers (YULICS) aged between 21-34 years, account for nearly 30% of urban population. This is growing at 6.4% (three times higher than the annual growth rate of overall population).
KSA Technopak published a report in 2006, estimating that the luxury market segment in India is worth $444 million. There are 1.6 million high-income households with an earning capacity of Rs. 45 lakh (approximately $100,000) annually. These households, growing at 14 per cent annually spend nearly $9,000 on luxury goods. This number is likely to cross 3 million by 2010.
These figures were also re-affirmed later by India's Commerce Minister, Mr. Kamal Nath too at the HT Luxury goods conference on Friday, 30 th March in Delhi.
Growing at an annual rate of 20%, luxury goods market is expected to hit US $10 billion in the next five years. Premium wines will find a significant consumer space in this segment.
Comité Colbert is an association of internationally well known French brands. It was formed in 1954 with just 18 companies and has now 68 members including Martell Cognac brand. The brand is owned by Pernod Ricard, the French company that owns many wine labels including Jacobs Creek . Ms. Elisabeth Ricard, Communications Director, niece of the CEO and Chairman Patrick Ricard spoke at length about the controlled and moderate drinking and the steps her company had taken to promote it.
FICCI is the Federation of Indian Chambers of Commerce and Industry, a private and prestigious body of businessmen though various chambers. Its suave Secretary General, Dr. Amit Mitra was the moderator of the half-day seminar.
The figures flying around in the conference spell a boom for the premium wines as well. A key point of observation was made by one of the invitees, Anuradha Mahindra, editor and publisher of Verve magazine. 'The figures of growth are already impressive for luxury brands but what they don't show is that the brands are also about people's dreams and aspirations and cannot be really measured. The growth could be 200% instead of 20% if the labels could make them fulfil their aspirations', she said.
A point from our book of wine promotion too and the one we focus on in various international conferences. Many brands have not yet caught the fancy of the HNIs and the upper middle income groups and the YUNICS. Once they understand that drinking a Gaja or Sassicaia, Margaux or Latour, Henschke or Harlan means 'you have arrived', the people chasing these brands will increase in a percentage not reflected in any numbers. The way people pick up the luxury brands, Johnny Walker Blue Label or bottles of Single Malt at the duty free shop will apply equally to the wine labels.
Today, they serve Blue Label and a French or Australian table wine on the side. Tomorrow will be another story! |
