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Recently prices of the high end wine from Sula, Dindori
have been increased by Rs. 100 a bottle. The cheapest
bottle you find is perhaps in Delhi at Rs. 650. Mumbai
and other places sell it as high as Rs. 850. This has
been not surprising for two reasons. The quality of
this wine has been exceptionally good. It has good aging
potential and has smooth and rounded flavours due to
aging in French barrels. The limited production is always
snapped up and there is a perennial shortage of this
wine. ‘I would like to be able to store this wine
longer in the barrel. We don’t get a chance to
do it as there are always pending orders. With the increase
in prices, we will slow down their sales and try to
make better wine.’ Says Rajeev Samant, owner of
Sula.
Among all the Indian reds, Dindori proves to be the
wine with the best aging potential. Grover La Reserve
selling at Rs.490 in Delhi (the price was increased
from April1, informs DSIDC shop in GK II, and a ridiculous
Rs.650 in Chandigarh has also got the similar potential
but has been less consistent; though still the best
value for money wine. Are they going to increase their
prices too? ‘ I don’t think so,’ says
Madhulika B Dhall, the Marketing manager for Brindco
who as the minority partner is handling the national
distribution of Grover wines. Kapil Grover could not
be contacted in London where he is attending the London
Wine Fair. But said Rajeev, ‘Grover wines are
under-priced, anyway’. Indage is reportedly increasing
the prices by Rs.30-40 a bottle too.
Sula is considering a raise of Rs. 30-40 a bottle on
their regular range too. One reason has been that the
grapes have become more expensive, selling as high as
Rs.35 a kilo as compared to the earlier Rs.25 a kilo
for the red grapes like Shiraz and Cab.
Champagne Indage seems to have led the pack in the
hardening of prices. Their 2 for 1 offer (buy one, get
one free) offer seems to have been withdrawn w.e.f from
April 1. This has resulted in removal of all discounts
available to the customer on wine. Whereas it was selling
as low as Rs.250 earlier, now it has suddenly shot up
by over 60% in retail. Many dealers have confirmed to
DelWine that all discount schemes have been withdrawn,
except MDP which was not discounted, to start with.
Wineries like Sankalp, Flamingo and ND Wines would
welcome the price hardening as it will help them liquidate
their inventories at the existing prices. Nine Hills,
on the other hands has no plans to increase as, ‘We
had kept the prices quite high, to start with, since
we knew we wanted to produce a top quality product,’
says Rukn Luthra, the Assistant Vice President of Seagram
India, who is also the business head of the domestic
wine project. The first vintage of Nine Hills, priced
at Rs.475 to Rs.500 is comparable and in fact slightly
higher than Sula in Delhi.
The hardening of prices harbingers bad news for the
hapless consumer in two ways. The faster growing, cheaper
priced domestic wine industry has been providing cheaper
wines than the imports with a massive duty of up to
267%. In a scenario where wine production is increasing,
the increased prices will hit their pockets.
The proximity of these two top producers to the power
corridors, including the Minister for Agriculture and
a strong lobbyist for the Indian grape industry, Mr.
Sharat Pawar, might imply that the imminent import duty
reduction has yet been postponed one more time Indeed,
one school of thought is that the government has decided
to wait till the case is decided against them by the
WTO and then reduce taxes rather than being pro-active
and bring them to the committed levels.
Some confusion has been created by the front page article
in Economic Times on Tuesday morning, where it was reported
that the government has come to an agreement with the
secretaries of the state governments who have concurred
on the removal of CVD. The article goes on to add that
the duties will come down by September. Earlier, the
stand taken by the government and Mr. Kamal Nath, the
Commerce Minister has been that they are considering
a legislation through which the states wont be able
to levy excise at rates higher than the domestic liquor,
and thus bringing the duties down in most states. The
current session of the Parliament has been adjourned
without taking up this topic and we are left in the
lurch, waiting for the next bout. I bet this won’t
happen too soon. But this is a bet I would love to loose.
Under the circumstances, any shrewd businessman worth
his salt will increase his prices (simple economics,
my dear Watson!) for a short term, and it looks like
the price hardening is what we shall see for a while.
‘Make hay while the sun shines,’ says the
famous proverb. Sun is shining brightly on the Indian
wine producers and they are busy making lots of hay….ooops,
w-i-n-e. Bumper profits are only a bye-product.
Subhash Arora
May 23, 2007
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