EU Wine Tariff Cuts Spark Competitive Fears Among Indian Winemakers
As India implements phased reductions in import duties on European wines under a landmark trade agreement with the European Union, domestic wine producers are preparing for a significantly more competitive market landscape. The move, which follows the signing of the India-EU trade deal last month, is expected to narrow the price gap between imported and locally produced wines, posing challenges for Indian brands.
Steep Duty Reductions Reshape Market Dynamics
India currently imposes a substantial 150% duty on imported wines. Under the new pact, this will be reduced to 75% initially, with further reductions to as low as 20% for premium wines and 30% for mid-range wines, according to official European Commission documentation. These phased reductions are anticipated to make French, Spanish, and Italian wines more price-competitive against domestic alternatives.
Gaurav Sekhri, founder of Fratelli Vineyards, expressed concern about the psychological advantage imported brands maintain among Indian consumers. "Even if a French wine is of inferior quality, when priced similarly to an Indian bottle, consumers will naturally gravitate toward the imported option," Sekhri stated in an interview. He emphasized the risk of domestic wines losing shelf visibility before consumers even sample them, noting, "Ultimately, you need consumers to try the product to make an informed choice. But if they're not even trying it..."
Sekhri warned that lower import duties could make it increasingly difficult for Indian wines to retain retail space as European labels aggressively target India's growing consumer base, particularly as alcohol consumption slows in their home markets. The potential fallout, he acknowledged, could extend beyond wineries to affect grape farmers connected to the sector. Fratelli currently manages approximately 1,400 acres of active farmland across Maharashtra, including regions like Sholapur and Jambhali.
Premiumization Strategy as Competitive Response
In response to rising import competition, Indian winemakers are strategically shifting toward higher-value segments. At Fratelli, this premium pivot is already evident. Sekhri reported clear growth within the company's luxury portfolio, part of a broader trend where consumers are trading up to higher-quality wines.
Fratelli Vineyards reported gross revenue of ₹130 crore in FY21, which increased to ₹204 crore by FY25. Notably, approximately 67% of current revenue now derives from premium and above categories, while only 23% comes from value segments. The remaining 10% originates from ready-to-drink wines, indicating a sharpened focus on higher-end offerings.
This week, the company launched the Sette 15 Anniversary luxury wine, a special 15-year edition created in collaboration with renowned designer Manish Malhotra. Additionally, Fratelli is developing two other premium-and-above wines to strengthen its luxury portfolio.
Market Position and Policy Challenges
Fratelli currently holds about 35% of India's wine market, positioning it as one of the country's largest domestic players after Sula Vineyards, which dominates certain premium and elite categories with over 60% market share. Sekhri noted that India lacks global recognition for wine compared to products like tea or rice, leaving domestic labels more vulnerable to imported competition.
While acknowledging central government efforts to safeguard the sector, Sekhri highlighted uneven state-level policies. He specifically mentioned Rajasthan and Haryana as states needing to do more to support domestic wine, noting that Haryana currently maintains the cheapest wine prices nationwide.
The Confederation of Indian Alcoholic Beverage Companies (CIABC), representing numerous Indian alcohol companies, has urged state governments to withdraw excise concessions granted to imported liquor. The industry body warned that customs duty reductions under the India-EU trade framework could adversely affect Indian products across both spirits and wine categories, creating a potential double challenge for domestic companies.
Strategic Expansion and Future Outlook
Fratelli's strongest markets include Delhi, West Bengal, Telangana, Andhra Pradesh, and Uttar Pradesh. The company also operates in Maharashtra, Goa, and Bengaluru, where Sekhri identified further growth potential. Retail accounts for approximately 65% of Fratelli's sales, with the remainder coming from hotels, restaurants, and catering establishments.
While significant volumes continue to sell in the ₹500–₹1,200 price bracket, wines priced above ₹2,000 are experiencing steady traction. Industry analysis suggests Indian winemakers may remain somewhat insulated from tariff reductions on premium European wines, as duty cuts primarily apply to price bands where domestic brands have limited presence. Wines priced below €2.5 will not receive tariff concessions, a segment that constitutes the bulk of Indian wine volumes.
Hospitality Ventures and Production Efficiency
Most of Fratelli's capital expenditure related to wine production is complete, though Sekhri indicated future fundraising could be considered as new projects materialize. One significant initiative is a vineyard hospitality venture at Fratelli's existing Maharashtra estate, featuring a roughly 40-key property designed to showcase vineyards and offer wine-centric experiences.
Sekhri reported that Fratelli is close to finalizing an operating partner and has received strong interest from potential collaborators, though construction has not yet commenced. The vineyards remain owned by the founding family, with hospitality development integrated into the existing estate.
Despite increasing import competition, Sekhri emphasized Fratelli's continued focus on improving production and distribution efficiency while investing in quality enhancement. "Ultimately, all wine producers will need to elevate their game, become more efficient, create superior products, and establish their unique market position," he concluded.
