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Posted: Wednesday, 31 March 2021 11:22

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Blog: Masterclass and Master of Wine about an Impossible Dream

March 31: Sonal Holland Wine Academy had organised Zoom Knowledge Summit 2021 earlier this month, starting with a Masterclass with a panel consisting of Ravi Viswanathan (Grover), Gaurav Sekhri (Fratelli) and Subhash Arora (Indian Wine Academy) with Sonal Holland MW moderating on How to grow the Indian Wine Industry to INR 5000 Cr by 2026. Arora presents his personal views only some of which he could share due to paucity of time and were a part of his notes for the Masterclass

To dream the impossible dream
To fight the unbeatable foe,
To bear with unbearable sorrow
To run where the brave dare not go.

This is my quest,
To follow that star,
No matter how hopeless,
No matter how far.

It is wishful thinking to imagine the wine industry at Rs. 5000 Cr (Rs. 500 billion) in 5 years by any stretch of imagination, knowing that such lofty goals can only be set for a positive tone of discussion. But the topic for the Masterclass curated by Sonal Holland MW in the company of Ravi Viswanathan (Chairman, Grover), Gaurav Sekhri (Director, Fratelli) and Cav. Subhash Arora (President, Indian Wine Academy) did remind me of my old favourite song by Andy Williams.

So let’s follow the Star!

Last year (2019-2020), India’s largest producer Sula had sales of around Rs. 500 Cr, followed by about Rs. 100 crores each of Fratelli and Grover; the 3 bigwigs had a total of Rs. 700 Cr. Presuming the Top Three control about 80% of the total market (including imported wines), the total Indian wine market was estimated to be an optimistic Rs. 900-1,000 Cr (current year would see a drop of about 20% thanks to Covid-19, making it a total market at best, of around Rs. 800 Cr. This works out to an average estimated growth of less than 10-12% since 2000.

To reach the target of Rs. 5000 Crores, we will need to have a year-on-year growth of around 40%! To say it would be a Herculean Task would be putting it mildly; average growth has been no more than 15% in the best years-with a couple of serious crashes in 2008-2012 and last year. But let’s follow the Star!

I could quickly come up with a list of over 30 points we need to push with full throttle, in our quest for achieving the impossible dream. These random thoughts came to my mind instantly and in no particular order- some of these were discussed in the Masterclass while others would need a separate one-day conference to elaborate:

1. Stop giving schemes like today: The industry has become notorious for offering ridiculous schemes to retailers offering discounts of up to 50% (BOGO-Buy One Get One) or even more on the MRP, through the wholesalers. Partly due to high retail costs, but mostly due to strong Cartels across the country, retailers have smelt blood and have been arm-twisting the producers but hardly passing the benefits on to the customers. In Delhi and some other cities/states they aren’t even allowed to give any discounts. Producers are victims of the schemes but in order to improve the top line or in some cases even for survival, they openly indulge them - with a Holier than Thou attitude. The retail prices are even marked up higher than MRP at times, and the customer pays more, resulting in lower sales and consumption.

2. GST: Most products in India have been brought under GST except the cash cows like petrol, diesel and gas, alcohol, and electricity. These were kept out of the ambit even before the GST talks began with States who have been constitutionally authorised to have the final say.  They can charge any duties on alcohol, making interstate price variations of 30% or more, even across the border at times. It is a double whammy for producers who have to pay GST on several ancillary products but do not get a set-off, adding to costs.

3. Label Registration charges: Different States have their own archaic laws to charge whatever they like as label registration charges- Delhi government mandates the price to be the lowest in India but increased the label registration charges from Rs. 5,000 to an astronomical Rs. 60,000 a label a few years ago for imported wines. This blocks out smaller producers and exporters from introducing their products since the expected low sales in the initial years do not justify paying these charges.

4. Penetrate smaller towns: Whenever we talk of expanding the markets, we think of metros like Mumbai, Delhi and Bangalore and sometimes Kolkata, Goa and Chennai but we need to push a lot more in the Tier-2 and Tier 3 cities. Sula took the lead over a decade ago but others have been unable to penetrate these markets significantly, except in the producing States due to excise duty and other benefits.

5. Government support for Exports- It is a given that higher exports are helpful in improving quality, if not sales. Chile, Argentina and Australia are glaring examples and they are heavily supported by their governments. No such schemes are visible to a naked eye in India and the producers have set their sights inwards. 

6. Wine tourism- Barring Sula, the others did not take Wine Tourism more than a Postscript Note-though a few have started following the leader during the last few years. Funds have been always a constraint but the vision was also missing. We must spread awareness that the wine is at its peak quality in the winery and lower prices or not, people should buy as much as practical, to get them when they sing the best. Smaller wineries also have a better chance of selling at the winery if they can attract wine tourists.

7. Education-including government staff- Education, education and education are the hallmarks of improving wine culture. It should not be restricted to the consumer and professionals but also the government and senior bureaucrats and even the ministries of finance, health, agriculture and food and process industries to make them aware of the importance of wine culture and the employment potential the wine market has if the industry goes global with the government support.  

8. Wine shows, festivals- We need more and more wine shows and festivals where people can be encouraged to learn about wines in a tasting environment and wines from different vintages- an important hallmark sadly ignored in India.  

9. Well-priced quaffable wines are needed for mass consumption at the middle class/lower middle class level.  Quaffable Wines are much too expensive for ordinary mortals to buy and open a bottle at the dinner table daily. The price range of Rs. 300-500 should be the target price for masses-considering that a whole bottle needs to be consumed at one sitting.  

10. Fruit wines to be a part of the total wine industry- Many States have an abundance of fruits that go waste every year. Several fruit wineries have come up in the last few years. This trend needs to be accelerated-possibly with the government’s help but the output should be included in the (grape) wine industry’s production and sales and synergies should be built up in sharing knowledge in production and marketing.

11. Interest at reasonable costs: The industry is getting more and more technology oriented and one needs to invest constantly to improve quality production. Easy borrowing at lower interest rates needs to be implemented.

12. Differentiate between wine and liquor- This is a problem in some other countries too and is a big hindrance. Most of the governmental policies classify wine with liquor. There are sociological taboos against wine seen as liquor by the ignoramuses. I believe wine is not alcohol; it has some (and in natural form-though alcohol beyond moderation is harmful for health). It is a lifestyle and healthy food product when consumed in moderation with food.

13. Online sales must be allowed. In most countries, the wine industry survived during the pandemic because of online sales. In India, there was no possibility of buying wine or liquor and it hit the industry in no small way. It’s time for the government to realise that online sales for beer and wine and other low alcohol products need to be encouraged. Proper controls can be implemented just like in the rest of the civilised world.

14. Department stores should be allowed to sell wine and beer; some states have already allowed for several years. Delhi took longer to allow but again banned it a couple of years ago for unpalatable reasons. It must open up the sales in department stores.

15. State Banquets- I have been saying for the last 12 years now that the government should consider allowing serving Indian wines at State Banquets. This will help change the mind-set about wine being a liquor whereas it is merely a food product and a health enhancing liquid. Currently, no alcohol may be served at such functions.

16. Indian Wine Day: Indian Wine Academy started celebrating Indian Wine Day on November 16 in conjunction with the Lalit Group of Hotels in 2017. It has been increasing the scope over years but a lot more needs to be done. Indian wines need to be promoted on this day in every part of the country where wine is consumed. We must feel proud of Indian wines and the producers, restaurants and hotels should participate in these paid activities.

17. Jai Ho to Vinotalers: Though Indian Wine Academy does not expect people to stop drinking alcohol and stick to only wine but to encourage acceptance and respect for wine, there should be many more Vinotalers like me in the country (I define them as teetotallers who drink only wine- think fishitarians). Perhaps there should be groups of Vinotalers who get together regularly and taste wines together.

18. Export related funding to be generated thru an Act – by charging a small cess that goes to promoting wine exports. Producers might not be happy but funds are needed for export related activities and those with bigger production will part with proportionally bigger amounts. Every licensee producer should be within the Ambit of this policy to be controlled by the government and the industry jointly.

19. Restaurants usually do not promote Indian wines and get incentives for promoting foreign wines because of duty free licenses (though it has gone down constantly during the last few years). The government should give some incentives to restaurants to sell Indian wines.

20. Entice more people to drink wine: More tasting facilities and opportunities have to be created for novices and others to taste wines. The excise rules should be flexible to allow tasting of wines at select wine stores. It may be pertinent to point out that 100 years ago tea was not the beverage of choice in India but the Tea Board made it a daily necessity by years of serving free tea to passers-by at various nooks and corners.

21. Encourage Indian wine with Indian food at restaurants which can make suggested pairing of a glass of wine with food at a special price in the Menu. Wine bars are of course an important aspect of the wine culture.

22. Discounting to be allowed in all states with the retailers getting the major chunk of the booty, they must be allowed to share the discounts with the customers. It does not make sense to let them pocket profits unfairly.  

23. Conferences to discuss the latest Studies:  for health and wines should be encouraged where customers can also learn about the responsible drinking and wine in moderation is emphasised. Only those studies that are not sponsored by the wine and liquor industry should be included in this programme.

24. Wines at their best in the wineries. Due to the temperature sensitiveness of wine, wines show their best at the starting point-the winery. From there, the journey is downwards in terms of quality, depending on the cold supply chain and variations in temperature. Wineries should be motivated to sell directly at the winery and at discounts. -at least to their members

25. Home delivery to be allowed: This proved highly successful during the pandemic and there is no reason why this facility cannot be extended. The convenience of delivery, especially to senior citizens and women will increase the wine consumption-however, this must be limited to wine and beer.  

26. Serving Indian wines in all Indian Embassies The embassies overseas must be mandated to buy Indian wine and serve at all the embassy functions. Some embassies have been doing so already but most of them look for complimentary wines. They should have the budgets to buy them without duties so that it helps the exports and produces make some money.

27. Social Media has proven to be a big success during pandemic, highlighting the importance of this tool to send out information by even small wineries and one would see it playing a higher role in the next few years.

28. Archaic Storage laws: It is unappreciated by the State governments that fine wine matures with time. Most Indian wines costing over Rs. 1000 will get better for 2-15 years. But the State laws putting a cap on the storage discourage wine lovers to store these wines. This should be liberalised to enable wine connoisseurs to experiment with storage and get the best performance from wine.

29. Wine Clubs and Societies should be allowed to sell to their members directly, as is a common practice in developed countries, within the strictly defined legal framework.

30. Legal age should be 18 years for wines to be delivered directly from wineries. Wine can be consumed from the age of 16 under the supervision of parents. Even where the legal age is 21 or even 25 years, those under 18 should be allowed to order directly from wineries.

Many would laugh away at some of these points and some would even scoff at the impracticality. But it is feasible to adopt these measures, not all at the same time. In any case, it’s all about educating people, bringing respect to the wine and government collecting higher revenues through higher compliance. There could be many more pointers that would help us take the wine industry to 5000 Cr-in 2026… or 2036!!

But remember:

This is my quest,
To follow that star,
No matter how hopeless,
No matter how far!

Subhash Arora

Video of the Masterclass

 

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