‘India had about 9000 acres of vines grown by about 2500 farmers, about 8000 acres of which were in Maharashtra,’ laments Holkar who is also a grower with 60 acres of vines, ‘50% of vineyards have been uprooted because of slack demand. Next two years will see the balancing of supply and demand and liquidating current extra stocks, but the existing farmers would not be able to cope up with the demand of wineries in a couple of years and I believe that in 5-7 years it would be the day of the farmers.’
Understandably, the hapless farmers have been badly hurt by much lower offtake and many had to leave grapes hanging on the vines during the last two years. Despite the unexpected heavy rains and loss of up to 40% crops in some areas last year, the prices only steadied at Rs. 25-30 kg whereas it had gone up to Rs. 40 three years ago when the new wineries with no long term contracts had to pay whatever they were asked, admitted the members of the delegation that, besides Holkar, consisted of Mahendra Bhamre of Prathimesh Wines (Vice President), Rajesh Yadav Of Bio Wines (Secretary) and Shivaji Aher of Renaissance Winery (ex-Board member of IGPB ).
Interestingly, Holkar refuted allegations that Chougule (Indage) had neither lifted the grapes according to the contract nor made payments to the farmers since 2008-09 as rumoured in the industry. Full payments have been made to them till 2009, he said with confidence. Interestingly, ‘Indage also picked up fresh grapes of 600-900 tons to fulfill their long term commitment with the farmers and the fermented grapes are currently in the tanks.’
Excess Stocks
Talking of the excess stocks in the tanks about which a figure of 20-25 million liters is generally floating around in the industry, Holkar admitted that the excess stocks were closer to the estimate of about 10 million liters made by the Indian Wine Academy. Apparently the figures bandied about include stocks after the much reduced level of crush of this year, with only around 5 million liters of fresh wine being produced. It was with these figures in mind that the Association felt that in 2 years’ time equilibrium would reach and since the vine growth has been curtailed due to up-rooting, the shortage was bound to occur. The Association is apparently trying to get the farmers to come under a common umbrella to make sure that the long term contracts are drawn up with all of them and the new wineries being set up will need an NOC from the Association. The current rate of contract generally varies between Rs.25-30 according to Holkar.
Inter-State Problems
Though this producers’ Association is much stronger than the importer’s Association in Delhi, it has still not reached an all-India status and a grape shortage in Maharashtra may work to the advantage of Karnataka. Efforts are being made to get more producers inducted into the Association from there as well although there are inherent problems and conflicts. For instance, the K-Form in Maharashtra has been an irritant for outside producers. ‘We don’t mind the State bringing down the annual cost of K-form from the current Rs.800,000 to the proposed Rs.10,000 for out-of-state wines. But the problem is that states like Goa and Pondicherry do not have any special duty on the import of bulk wine while we have to pay Rs. 200 per liter. If Maharashtra allows free import from other states, we will be flooded by these wines,’ says Holkar, reflecting on the intricacies of inter-state movement. It may also be an indicator of the future scenario if there is a grape shortage in Maharashtra. Interestingly, barring Indage no producer has openly gone out of state to take advantage of cheaper bulk imports though there are whispers of a few containers of bulk wine sneaking in here and there.
Delhi wine market
Delhi market has opened up for domestic wines in the current fiscal year due to reduced annual license charges of Rs.100,000 a label announced by the Delhi Excise department, in part due to the efforts of the Association. This brings to the fore the marketing constraints of smaller producers because of the financial commitments required. ‘We hope to seek the help of IGPB to introduce our wines in the market through public tastings which are not allowed by the excise department as in Maharashtra,’ says Jagdish.
Expanding cheaper wine market
The economics of wine marketing seems to be favouring introduction of wines made from wine grapes but at a much lower price of less than Rs. 300 a bottle. Confirming that the real growth had been taking place for wines selling under Rs.300, there has been a growing trend to lower the prices, not only by one-for-one schemes, Holkar asserted, adding ‘we want to lower our prices by 20-30% with whisky and beer going up recently by 30-35% and thus promote table wines.’
Bhamre of Prathimesh Wines said they have introduced a wine at Rs.125 MRP at entry level. Interestingly, he makes it with 30 gms/liter residual sugar for the local market, bringing it down to 13-18 gms for other towns while the same wine when sold in Mumbai has 4gms/liter, indicating the sweetness preference of various markets. He did not clarify however, how he manages different levels of sugar from the same fermented wine. Renaissance has a label for Rs. 200 while Holkar claims to have brought out a label Xxingo in the same range too. The trend seems to be to compete with Sula’s Samara at Rs.165 and Nashik Port at Rs.100 and hope that younger people who drink beer might switch to wine. (It would be extremely important to ensure drinkability of these wines, lest the budding wine drinkers get put off). However they would be well advised that the wines must, first and foremost, be clean with no unpleasant smells or flavours if they hope to survive.
Brandy and Distillation Policy
Although it is like David fighting Goliath, the Association is trying to bring to the government’s notice that Brandy made in India from molasses is not real brandy and it must be classified as such only if made from grapes. They have their ally and strong supporter in the EU which has been arguing their case for the benefit of its member countries. ‘In India they make brandy with molasses by adding just 5% grape brandy to give it flavours. The government must re-look at its distillation policy. The Association has also been lobbying for getting permission for one-time distillation of the excess wine stocks in the tanks which in any case are past their prime and the quality when bottled and unleashed into the market might have indirect negative impact.
The Association is also disturbed about throwing away the grape pomace which they feel should be allowed to make grappa etc. Some of the by- products can also help in feed making. They would like to see such units allowed in the wine clusters that are in the offing in order to further reduce the cost of making a wine bottle.
Irrational crusade against cheaper imports
DelWine is sympathetic to the cause of Indian producers and many of the issues would be solved when proper wine laws come into place although a much tighter control would be exercised when that happens, but their demand made to the Commerce Ministry to ban the import of cheaper wines, costing less than € 3 to avoid dumping, seems to be extremely irrational and the evil needs to be nipped in the bud. Millions of liters of bulk wine is available at less than € 0.70 to 0.80 from countries like Chile, Australia, South Africa and even Spain, Italy and France. In fact, now there is an annual Bulk Wine Fair in Amsterdam to felicitate multi-million liter contracts. Average cost of export wines from most countries is less than € 2 a bottle. To say that these countries are dumping wines in India is a thought as unpalatable as some of these low end wines and delWine is strongly opposed to even the sowing of this idea.
What is required is an expansion of the Rs.150-250 a bottle wine range with improved quality for the new drinkers. The Rs. 500 plus wines will also be able to compete with the imported wines as the awareness and real quality of these improves. Unfortunately, our government does not understand the arithmetic very well, it seems. For instance, while the excised duty has been marginally reduced for cheaper wines- it has not been passed on to the consumer due to other increased distribution costs, the higher end of imported wines have become even more expensive and prohibitive, putting a spoke in the wheel for expansion in the medium to higher priced wines.
All India Wine Producers Association has some interesting ideas for the growth of the industry and sustainability of existing businesses and with the wider base and more acceptability and clout they would gain through a unified approach, it ought to be able to help steer the industry in the right direction with a bit of help from the government to frame policies that are more wine oriented- not only for Indian wines but also the imported counterparts.
But the projected grape shortage in two years may not be any help to the wine industry.
Subhash Arora |