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‘India's wine market is growing by almost a third per year. Annual category volumes are predicted to reach 28m liters next year, up from the current 21m liters (2.35 million cases), according to a report from The Associated Chambers of Commerce and Industry of India (ASSOCHAM). This is a projected growth of 35% in one year and would justify the title of the Study, ‘Wine bearing fruit in India.’ For good measure the report also mentions that last year, Moët Hennessy’s India unit launched its first two wines that have been produced in the country, specifically for the domestic market.
‘The state's wine story is losing its sparkle. Of the 75 wineries in Maharashtra (93 are reported Pan India), 50 are on the brink of closure; an estimated 50 lakh liters of unsold wine stacked up in barrels and winery owners staring at unpaid bank loans they had taken on interest. Even farmers have shunned growing wine grapes and have switched to the sober table grapes business,’ says a report in TOI
‘Officials of All India Wine Producers' Association and Indian Grape Processing Board (IGPB) said the state's decade-long high on wine has hit a roadblock as most farmers who walked into the business with crates of grapes, a skill-set to make wine and heavy bank loans, failed to factor in marketing expenses,’ says the same report.
‘Even in the country's wine capital, Nashik, most wineries are reeling from financial losses. "As many as 30 of 37 wineries across the district are in financial trouble, their growth blocked due to lack of funds for marketing. These wineries are owned by farmers and have a wine stock of around 25 lakh liters, but they don't have funds for marketing," said Shivaji Aher, president, All India Wine Producers' Association. Only the bigger wineries are doing well, he said, adds the report.
If you are confused and not sure which tale to pick, think whether you believe that the glass is half full or half empty. Although the figures released by Assocham seem to be on the button so far as the current year wine production is concerned – presumably, it includes all the fortified wines and Ports now being produced by all the biggies including Sula, Grover and Four Seasons and the growth is maximum in this sector - it is difficult to swallow that a 35% growth is achievable or sustainable in the present scenario.
Sula, the market leader, is not likely to sell more than this year - 650,000 cases is what the market expects them to sell this year, marking a 15% growth. To achieve a growth of 30% is not practical. Four Seasons is not expected to grow more than 15%. In 2013-14, Grover is the only one with a projected sales of 120,000 which would indicate a growth of 100%-this without much presence in the Delhi market. Fratelli may be the dark horse with the sales crossing 50,000 cases. The growth may clock 20%, aided with higher growth in the low segment of boozy wines. A growth of 30% in 2014-15 the study refers to, is not easy.
It is also pertinent to mention that wine is a business, even though it is an agro-business and spells boom for the farmers in the long run-provided wines made from the fruit are of good quality and drinkable. It needs proper marketing and branding - Sula and Grover should be a shining example. The situation pointed out by Shivaji Aher brings to mind a brilliant, ambitious and passionate farmer, Prahlad Khadangle, who was a co-founder of Sankalp Winery that later transformed to Vinsura. Tipped to be a tough potential competitor to Sula, it became a prey to the marketing and financial exigencies and he had to sell out his shares in the company and today Vinsura is not doing well at all.
There is no doubt that the industry is going through a tough period. But it is also a new industry. Unfortunately, it does not get enough and desired help from the government. But where it does-Maharashtra is a good example of being very helpful - the producers complain that it was too liberal and helpful a policy that made many people jump into the fray and get into trouble!
Apurva Chandra, principal secretary (industries) hits the nail on the head when he talks about the infrastructural help given to the industry and says, "Our objective is to provide proper infrastructure at the Vinchur wine park and two units have also started operation there. Marketing is not the government's responsibility." The producers need to take the lesson that marketing (and the financial regimen for the last mile management in terms of working capital management).
A couple of interesting aspects of the Assocham report should be pointed out to novices who are learning the ropes on wine and depend on the newspapers or Blogs for their knowledge. The report says, ‘Nashik is one of the most fertile regions for growing wine in the country. Indian companies based outside the city in Maharashtra which have stakes in the wine industry are Grover Vineyards and Four Seasons Wines. Both are based in Karnataka, in southern India.’
Wine grapes grow best in areas which are not very fertile and the KRSMA winery in Karnataka is a living example. The land is not very fertile and so the quality of grapes is outstanding. Similarly, one does not 'grow wine'. One grows grapes (vine) and produces wine from them - minor details. Also the study does not point out that Grover moved into Maharashtra through its merger with the Nashik based Zampa and now focuses on wines produced in Nashik for sale in Maharashtra due to tax purposes, else it won’t produce La Reserve label in Maharashtra. It may also be noted that Sula has ventured into Karnataka now because of the tax lopsidedness in our Federal system.
Another minor detail may be pointed out for the academic purposes only - ‘approximately 63 per cent of the volume sales of wine were through off-trade channels in five-star hotels, pubs and bar-restaurants,’ according to the report. The last I knew, off-trade referred to Retail sales-someone please point out if I am wrong. The report means on-trade.
With due credit to the Assocham report, delWine checked up with Bruno Yvon, Managing Director of Moët Hennessy India to find out if they had any export ambitions just as their Argentina company announced its plans to export Chandon to UK, a couple of days ago. He denied and said that the Chandon was for the domestic market only.
As I said, the glass is half empty or half full. Mine is half full…. and when I swirl it steady and long, I smell roses and plenty of red fruit.
Subhash Arora
Tags: Assocham, All India Wine Producers' Association, Indian Grape Processing Board (IGPB), Nashik
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