New Delhi: The Indian wine industry is on a high, literally. The domestic wine market, currently growing at 20 percent, will grow at 25 percent by 2010, according to industry lobby Associated Chambers of Commerce and Industry of India (Assocham).

By 2010, domestic wine consumption will reach around 9 million litres, an Assocham study said.

"India's wine market is currently growing at 20 percent but is likely to grow at 25 percent in the next two years in view of rising wine consumption patterns not only among youngsters but equally so among the aged," said Assocham president Sajjan Jindal while releasing the study here Wednesday.

According to Assocham estimates, the Indian wine market is currently about 5 million litres in volume terms and Rs.5 billion in value terms.

In contrast, Indians consumed more than 300 million cases of beer and 90 million cases of whisky and other spirits in 2007-08.

France accounts for almost half of India's wine imports and Italy 30 percent.

Metropolitan cities account for 80 percent of the demand for wine. About 41 percent of the wine quaffed in India is consumed in western India followed by the north at 29 percent.

Around 63 percent of the volume sales of wine are through off-trade channels such as five-star hotels, pubs and bar-restaurants. However, a wine consumption trend is emerging in tier II cities as well.

Jindal said that rising disposable incomes among the people imply that a greater part of the population can afford wines.

The influence of the west is pushing Indian youth to change their lifestyles and standards of living.

Various measures by the government like reduced duties on wine, eased restrictions on distribution by allowing wine to be sold in supermarkets and incentives for wineries to establish new facilities has further boosted the market.

In India, the cost of opening and setting up a wine distillery is cheaper - Rs.10-15 million for a plant with a capacity of 100,000 litres.

No wonder many Indian and foreign companies are jumping on to the Indian wine bandwagon, Jindal said.

The conducive conditions thus formed for winemakers have already drawn the likes of top drinks maker Diageo, Pernod Ricard, LVMH's Moet Hennessey and SABMiller to India, which was once described as having only small and mid-sized players.

Other companies like Anheuser-Busch Co. Inc. and Danish brewer Carlsberg are also on their way.

The soaring popularity of imported brands, which sell at much higher prices than domestic varieties, offers international companies great opportunities for strong value growth, Jindal said.