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 Hotel Leela Palace in Chanakyapuri is a luxury hotel with no match for its plush suites and opulent character that can floor many a guest entering the lobby for the first time. It has several unbeatable features including the wine list that makes one salivate looking at several excellent wines listed. The throat does feel dry though, looking at the prices and you may find a bead of sweat on your host’s face when you are about to order wine; the prices are astronomically high!
Many Indian producers often complain to me, wondering why the 5-star hotels do not promote Indian wines. They have even fumed and perhaps already approached the Ministry to make it conditional for granting the license for duty-free imports, to keep a certain number of Indian wines in their portfolio. The hotels seem to be melting but only … so… much. Whereas the duty free license enables them to buy the low-ended imported wines cheaper than Indian wines and a guideline notification from FHRAI (Federation of Hotel and Restaurant Associations of India) advised them to cap the profits at 250% the Indian wines do not have to follow these guidelines. So they are marked up to Olympian highs, thanks to the ambitious finance people eagerly watching their bottom lines.
An Indian example-Sette
My heart started beating faster when I saw ‘Sette’ by Fratelli priced at Rs. 7000 +taxes (causing a dent of a little over Rs.9000 a bottle to your pocket) during my recent visit to the hotel. That is about 6 times the cost of the bottle to the hotel! Even with full sympathy for the hotel forced to pay astronomical license fees and the heavy debt interests to take care of, the price is ridiculous. If you feel the price is justified here are some details:
Sette sells for Rs. 1650 in retail inclusive of 20% VAT. Hotels generally get 15% to 25% discounts on the List Price (my apology to the importers/producers who are getting away with lesser discounts-I am only making an assumption based on my feedbacks). Therefore cost with discount is Rs. 1420. Let’s take out the VAT @20% because that is chargeable extra to the consumer anyway-in fact much higher in terms of absolute amount as it is charged on the Sales Price. The net cost to the hotel is Rs.1140 (it does not include freebies and other promotions). The Wine List prices Sette at Rs.7000 (Seven thousand only)! Even if the cost were slightly higher, they are selling it at 6 times the cost (a margin of 500%!).
Coca-Colisation of wines
The term Coca-Colisation applies to many New World countries making wines with the same style every year to keep the same flavours without any personality. In India, it means differently. If they charge 6 times the cost of one can of Coca-cola, they also give customers a choice of buying it or not. The hotel has the full right to tell me it is none of my business what they price an Indian wine at-I can buy it or not. I hope I am in a minority but I don’t buy. What intrigues me is how many people would buy a bottle of Sette at Rs. 7000 - just as it intrigues me how people buy it at $52 a bottle at the Duty Free Shop at the Departure Lounge of the Delhi International Airport T-3. I often joke with Kapil Sekhri, Director/Partner of Fratelli whether he pays money to these marketers to keep the prices high to create a super-premium quality label. I notice the pain in his melancholy smile when he says they don’t have a say in the selling price of the hotels or at the airport.
A German Example
I had a quick glance at the Menu to see how many German wines they carried since I had gone with a German friend. I could spot a lone label only - Dr. Loosen Riesling priced at Rs. 5000. Now, I have been to Dr. Loosen winery in Mosel a few times and know the owner winemaker Ernie Loosen (pronounced as Loh-zon by the way) very well. He makes some of the finest wines  in Mosel. But he also bottles an ordinary Riesling that he buys from outside or crushes bought out grapes in another winery and sells millions of bottles of these entry level wines that carry his name only as Dr. L
Perplexed by the label, knowing there is no such label and suspecting it was a Dr. L I requested to see a bottle- AND I was right! The Menu had smartly or mistakenly labeled the wine simply as Dr Loosen Riesling-charging a huge margin on a wine that retails in the US for $10-12 a bottle. According to my estimates, the wine should cost the hotel around Rs. 1000 inclusive of excise duty (which would be same or higher than the cost of wine, by the way) but exclusive of VAT.
Thus the hotel is charging a profit of 400% though the FRHA guidelines based on the commitment to the government should be 250%- it means the wine should be priced at Rs.3500 and someone could rightly sue the hotel for cheating by misrepresenting a label to make it look like a regular higher ended wine. (In all fairness to the hotel, Dr. Loosen has also devised the label in such a way that L is superimposed on Dr. in a flowery text with Loosen underneath, providing scope for confusion). Interestingly, the bottle for some reason has been changed from the original green tall German wine-shaped to dark brown Burgundy-like shape in the current vintage.
Back to the Indian Basics
The unusually high price of Sette could be a marketing strategy even Fratelli cannot argue with. Although I doubt if people order even one case a month (I would love to pay to be allowed to do a profile study of people ordering it!) But the expats can go home and tell their friends in their countries that Indians are making such high quality wines that a bottle costs as high as Rs. 7000!
A positive effect is that even the price of Rs. 2500 for a bottle of Sula Sauvignon Blanc starts looking very attractive and you forget that the Rs. 500 MRP of this otherwise very decent Indian wine implies a profit margin of exactly the same magnitude to the hotel - 600%!
But if you are obliged to order wine and do not want to pay a bomb or if you want to order Indian wines, Fratelli Chardonnay at Rs.3000 is the best value of the whole lot for a white wine. Rasa Shiraz Sula at Rs.3500 offers the best value for the red although Grover fans also can get their favourite La Reserve for Rs.3000.
If you would not drink anything Indian, you can find a few decent imported wines at Rs.3500-4000++ a bottle. Cheers (even if you have ordered that can of Coke)!
Subhash Arora
Rasa Leela- A dramatic presentation of gopis’ complete dedication to Lord Krishna in Hindu mythology
Rasa Leela –Also refers to a good value for money India red wine at Leela- Rasa Shiraz from Sula at Hotel Leela Palace
Dilli-ancient name of Delhi- getting slowly popular as the current name of the city
‘ki’- Hindi word denoting ‘of’
Metaphorically, the title could be interpreted as Dance of wines at Leela in Delhi - especially Rasa (shiraz)
Tags: Hotel Leela Palace, Sette, Fratelli, Sula, Grover, La Reserve, Ernie Loosen |