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Reportedly, a meeting has been called by the Director
General of Foreign Trade (DGFT), today wherein the hotels would present
the rolled down price –lists. If the Commerce ministry is satisfied
that its intent has been followed in spirit, the benefits will continue.
Prices Slashed up to 50%
If one goes by the roll-down of prices of the Taj and
The ITC Welcomgroup, there is no cause for worry. Wine prices have been
brought down between 25-35% as predicted by delWine. In case of whiskies
and liquor, the drop has been up to 50%.
It could not be ascertained whether the Commerce Minister,
Mr. Kamal Nath would be present at the meeting. But the seriousness with
which these and possibly other hotels are revising their lists downwards,
it is clear that the government is finally getting control of the situation
it had let get out of hand due to inaction.
One reason the government is very keen to pressurise
the hotels to reduce prices rather than withdraw the benefits, is the
Commonwealth games to be held in 2010 and it needs no rocket science to
surmise that this action would have a negative impact on tourism.
Delay due to Excise Policy
The government would keep the pressure till all hotels
and restaurants fall in line. Many like the Hyatt and Park have been slow
in their response, presumably because they were not clear about whether
the excise duties would be revised upwards as had been approved by the
Delhi government. In fact, there has been a few days' delay in bringing
out the new price list as the hotels were awaiting the new policy.
No change has been made in the Delhi excise so far as
the government seems to have taken the wise decision of maintaining the
status quo. One hopes there would not be any changes during the year.
Excise policies by states are announced before March 31. But importers
are jittery as Mumbai changed the duties twice during the course of last
year.
Excise duty in Maharashtra had been increased to 150%
in July and further to 200% in November when the importers had pleaded
a lenient view. Ironically, the premium whiskies and liquor saw the duties
reduced to 75% in November.
What is causing anxiety is also the excise department
reportedly asking the licensees to declare MRP on the wines. DelWine had
already reported that an imposing of excise at 25% of the MRP (Maximum
Retail Price) was on the cards for wines; liquor was to suffer 30%. Several
importers sell only to hotels and do not have MRP on their labels.
Happy Hours 24*7 at the Delhi Taj
I did a spot check on the latest prices at the Taj and
The Maurya. The drop in prices beats the recent free-fall crash of the
stock market. At both hotels, the management confirmed that the instructions
were specific - prices on each item in the wine and liquor list must be
brought down within limits, individually.
Here are some of the prices in Rupees (picked at random)
at the Taj Hotels which deserves kudos for the swift
action and sizeable reduction:
| Pinot Grigio Danzante 2004 |
800 |
| Santa Cristina Marchesi Antinori xxxx |
900 |
| Soave xxxx |
900 |
| Orvieto xxxx |
900 |
| Tarapaca Chardonnay 2005 |
1000 |
| Cab Shiraz Oxford Landing |
1200 |
| Chianti Classico Peppoli 2001 |
2000 |
| Chardonnay Alto Tarazzas |
1200 |
| Beaujolais Villages Albert Bichot 2004 |
1250 |
| Pinot Noir Sonoma 2003 Mushal |
1500 |
| St. Emilion Philippe Rothschild'03 |
2500 |
| Cab. Sauv Napa. Trefethen 2001 |
2900 |
| Brunello di Montalcino Castello Banfi 2001 |
3900 |
Such low prices suggest that a few of their wines may
be past their prime, in which case it is good to know the benefits are
being passed to the consumer rather than the shareholder. I am not even
mentioning Montepulciano Terre Palladiane 2000, listed at ...hold your
breath... Rs.650 ($16) without actually tasting it and making sure it
is still drinkable!
The Maurya
Despite the reduction, prices at The Maurya are not
as exciting. There is hardly any bottle costing less than Rs. 2000 even
after reduction. Significantly higher prices of the comparable Pinot Grigio
Danzante (Rs.1600), Sauvignon Blanc Oxford Landing (Rs.1950), Santa Cristina
(Rs.1950) and Peppoli (Rs.3250), suggest differences in cost calculation
or possibly better costing for the Taj, although there are some excellent
wines like the South African Life from Stone Sauvignon Blanc 2003 at Rs.
1900.
Confirming that the wine prices had been brought down
by 25-35% on each label, Mr. Ashutosh Chhibba, EAM for Food and Beverages
for the Maurya also revealed that the situation was happier for the Scotch
drinkers. The Johnny Walker Black Label has been slashed from Rs.1320
a shot to Rs.650, though the drop in the Red Label has been from Rs.840
to only Rs.550.
Interestingly, Indian wines consistently cost 50% higher
at the Maurya.
High License Fees
The excise department might have been pragmatic in not
increasing the taxes, but they have been extracting their pound of flesh
from the importers and hoteliers alike by continuously increasing the
annual License Fees. The cost of license for distributors was increased
from Rs. 200,000 to Rs.500,000 for importers last month, applicable from
this month. The Maurya paid Rs.81, 24,750 for its 10 outlets last financial
year which is rather steep. It is also not clear whether Maurya has apportioned
these fees to the individual bottles on a pro-rata basis while arriving
at the costs.
The difference in prices and full compliance from other
hotels will keep the DGFT busy for a while. But surely the message from
the Honourable Minister, Kamal Nath has been heard loud and clear by the
industry. Though belated, it augurs well for the consumer and the government
deserves kudos for taking a tough stand.
Expect Higher Sales
The hotels are generally putting up a brave front on
this forced measure and 'believe' that the fall in prices will not impact
the sales. Some of them perhaps still believe that the earth is square.
Once the customers come to believe the improbable and
realise the prices have come down (paradoxically, unlike the mobile companies
who go to town announcing the price decreases forced on them by TRAI,
the hotels cannot advertise this windfall for the tipplers) , the demand
is sure to pick up.
The History in future years will rate this as a defining
moment for the quantum jump in wine consumption and record appreciation
for the belated step taken by the government . So go ahead, order a bottle
of wine and raise a toast to the minister, hotels or your own health.
But please do drink wine in moderation, to stay healthier.
Subhash Arora
April 22, 2008
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