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Delhi Wine Club
Maha Grape Shortage Expected in Two Years

Posted: Friday, 15 July 2011 12:16

Maha Grape Shortage Expected in Two Years

If one believes Jagdish Holkar, President of All India Wine Producers Association, there is going to be a grape shortage in two years when the existing wine overstock is exhausted because of constrained production, since half the farmers uprooted their vines last year when they were unable to sell their grapes, writes Subhash Arora who met a delegation of the AIWPA at his residence last week to discuss the current state of the industry and the possible steps by small producers to survive and sustain.

 ‘India had about 9000 acres of vines grown by about 2500 farmers, about 8000 acres of which were in Maharashtra,’  laments  Holkar who is also a grower with 60 acres of vines, ‘50% of vineyards have been uprooted because of slack demand. Next two years will see the balancing of supply and demand and liquidating current extra stocks, but the existing farmers would not be able to cope up with the demand of wineries in a couple of years and I believe that in 5-7 years it would be the day of the farmers.’

Understandably, the hapless farmers have been badly hurt by much lower offtake and many had to leave grapes hanging on the vines during the last two years. Despite the unexpected heavy rains and loss of up to 40% crops in some areas last year, the prices only steadied at Rs. 25-30 kg whereas it had gone up to Rs. 40 three years ago when the new wineries with no long term contracts had to pay whatever they were asked, admitted the members of the delegation that, besides Holkar, consisted of Mahendra Bhamre of Prathimesh Wines (Vice President), Rajesh Yadav Of Bio Wines (Secretary) and Shivaji Aher of Renaissance Winery (ex-Board member of IGPB ).

Interestingly, Holkar refuted allegations that Chougule (Indage) had neither lifted the grapes according to the contract nor made payments to the farmers since 2008-09 as rumoured in the industry. Full payments have been made to them till 2009, he said with confidence. Interestingly, ‘Indage also picked up fresh grapes of 600-900 tons to fulfill their long term commitment with the farmers and the fermented grapes are currently in the tanks.’  

Excess Stocks

Talking of the excess stocks in the tanks about which a figure of 20-25 million liters is generally floating around in the industry, Holkar admitted that the excess stocks were closer to the estimate of about 10 million liters made by the Indian Wine Academy. Apparently the figures bandied about include stocks after the much reduced level of crush of this year, with only around 5 million liters of fresh wine being produced. It was with these figures in mind that the Association felt that in 2 years’ time equilibrium would reach and since the vine growth has been curtailed due to up-rooting, the shortage was bound to occur. The Association is apparently trying to get the farmers to come under a common umbrella to make sure that the long term contracts are drawn up with all of them and the new wineries being set up will need an NOC from the Association. The current rate of contract generally varies between Rs.25-30 according to Holkar.

Inter-State Problems

Though this producers’ Association is much stronger than the importer’s Association in Delhi, it has still not reached an all-India status and a grape shortage in Maharashtra may work to the advantage of Karnataka. Efforts are being made to get more producers inducted into the Association from there as well although there are inherent problems and conflicts. For instance, the K-Form in Maharashtra has been an irritant for outside producers. ‘We don’t mind the State bringing down the annual cost of K-form from the current Rs.800,000 to the proposed Rs.10,000 for out-of-state wines. But the problem is that states like Goa and Pondicherry do not have any special duty on the import of bulk wine while we have to pay Rs. 200 per liter. If Maharashtra allows free import from other states, we will be flooded by these wines,’ says Holkar, reflecting on the intricacies of inter-state movement. It may also be an indicator of the future scenario if there is a grape shortage in Maharashtra. Interestingly, barring Indage no producer has openly gone out of state to take advantage of cheaper bulk imports though there are whispers of a few containers of bulk wine sneaking in here and there.

Delhi wine market
Delhi market has opened up for domestic wines in the current fiscal year due to reduced annual license charges of Rs.100,000 a label  announced by the Delhi Excise department, in part due to the efforts of the Association. This brings to the fore the marketing constraints of smaller producers because of the financial commitments required. ‘We hope to seek the help of IGPB to introduce our wines in the market through public tastings which are not allowed by the excise department as in Maharashtra,’ says Jagdish.

Expanding cheaper wine market
The economics of wine marketing seems to be favouring introduction of wines made from wine grapes but at a much lower price of less than Rs. 300 a bottle. Confirming that the real growth had been taking place for wines selling under Rs.300, there has been a growing trend to lower the prices, not only by one-for-one schemes, Holkar asserted, adding ‘we want to lower our prices by 20-30% with whisky and beer going up recently by 30-35% and thus promote table wines.’

Bhamre of Prathimesh Wines said they have introduced a wine at Rs.125 MRP at entry level. Interestingly, he makes it with 30 gms/liter residual sugar for the local market, bringing it down to 13-18 gms for other towns while the same wine when sold in Mumbai has 4gms/liter, indicating the sweetness preference of various markets. He did not clarify however, how he manages different levels of sugar from the same fermented wine.  Renaissance has a label for Rs. 200 while Holkar claims to have brought out a label Xxingo in the same range too. The trend seems to be to compete with Sula’s Samara at Rs.165 and Nashik Port at Rs.100 and hope that younger people who drink beer might switch to wine. (It would be extremely important to ensure drinkability of these wines, lest the budding wine drinkers get put off). However they would be well advised that the wines must, first and foremost, be clean with no unpleasant smells or flavours if they hope to survive.

Brandy and Distillation Policy
Although it is like David fighting Goliath, the Association is trying to bring to the government’s notice that Brandy made in India from molasses is not real brandy and it must be classified as such only if made from grapes. They have their ally and strong supporter in the EU which has been arguing their case for the benefit of its member countries. ‘In India they make brandy with molasses by adding just 5% grape brandy to give it flavours. The government must re-look at its distillation policy. The Association has also been lobbying for getting permission for one-time distillation of the excess wine stocks in the tanks which in any case are past their prime and the quality when bottled and unleashed into the market might have indirect negative impact. 

The Association is also disturbed about throwing away the grape pomace which they feel should be allowed to make grappa etc. Some of the by- products can also help in feed making. They would like to see such units allowed in the wine clusters that are in the offing in order to further reduce the cost of making a wine bottle.

Irrational crusade against cheaper imports
DelWine is sympathetic to the cause of Indian producers and many of the issues would be solved when proper wine laws come into place although a much tighter control would be exercised when that happens, but  their demand made to the Commerce Ministry to ban the import of cheaper wines, costing less than € 3 to avoid dumping, seems to be extremely irrational and the evil needs to be nipped in the bud. Millions of liters of bulk wine is available at less than € 0.70 to 0.80 from countries like Chile, Australia, South Africa and even Spain, Italy and France. In fact, now there is an annual Bulk Wine Fair in Amsterdam to felicitate multi-million liter contracts. Average cost of export wines from most countries is less than € 2 a bottle. To say that these countries are dumping wines in India is a thought as unpalatable as some of these low end wines and delWine is strongly opposed to even the sowing of this idea.

What is required is an expansion of the Rs.150-250 a bottle wine range with improved quality for the new drinkers. The Rs. 500 plus wines will also be able to compete with the imported wines as the awareness and real quality of these improves. Unfortunately, our government does not understand the arithmetic very well, it seems. For instance, while the excised duty has been marginally reduced for cheaper wines- it has not been passed on to the consumer due to other increased distribution costs, the higher end of imported wines have become even more expensive and prohibitive, putting a spoke in the wheel for expansion in the medium to higher priced wines. 

All India Wine Producers Association has some interesting ideas for the growth of the industry and sustainability of existing businesses and with the wider base and more acceptability and clout they would gain through a unified approach, it ought to be able to help steer the industry in the right direction with a bit of help from the government to frame policies that are more wine oriented- not only for Indian wines but also the imported counterparts.
But the projected grape shortage in two years may not be any help to the wine industry.

Subhash Arora



Suresh Says:

Strange that Mr. Rajeev Samant says that the AIWPA represents only 10% of the industry, implying that Sula is not a part of it, when his chief viticulturist and his head of operations regularly attend its meetings. A cursory look at the industry and one would know that Sula's actions don't go beyond self interest. No doubt, sometimes others benefit from the outcome of their actions. The truth - The industry, being in its formative stage, would love to have, and will benefit from a warmer, inclusive and helping approach from its poster boy and shining star. Whether Mr. Samant is up to the task is another matter.

Posted @ August 01, 2011 15:34


Jagdish Holkar Says:

One of the reasons that Indian Wine Industry is not progressing is because of no unity among the producers.If Rajeev Samant has different of opinion on AIWPA Presidents statement, he should politely put forward his opinion. He may not be aware of the facts and figures. All India Wine Producers Association has the authentic data base, for which it made lot of efforts. Marketing and Co-operation Department of Maharashtra Govt. as well as Nabard had verified the data with bankers. AIWPA has collected this data from all the wine producers and 2142 contract farmers including Sula. This is a fact that total plantation had reached 9000 acres in the year 2009 and afterwards 50% vineyards have been uprooted, so total acrerage remains less than 4500 acres as you stated.

Secondly, to stop dumping and manipulation of under billing cheap imported wines from abroad in the middle and lower segment, AIWPA have made appeal to Govt. of India to make uniform duty structure either 150% or 3 Euros whichever is maximum in the interest of antidumping to protect the Indian Wine Industry. This argument was passed in the of AIWPA meeting unanimously. AIWPA is a registered association since 1996. It  was the Association which played an important role to implement VAT reimbursement scheme in Maharashtra- Sula has got the maximum benefit of more than 3.5 cr. In the year 2009-10. AIWPA has taken a lead to take extension for Excise Duty Exemption up to 2021 in the state of MH. AIWPA take a lead to support the small wineries and grape growers to survive and arranged No. of meetings with Govt. of Maharashtra and Govt. Of India level for restructuring with lower rate of interest, interest subvention, to define finance model to industry and to get additional finance through NABARD. The entire MOM has been forwarded to all the members. NABARD proposal is in last stage of implementation. In the state New Delhi, AIWPA has take a lead to arrange the Meetings with Hon. Sheila Dixit, CM, Commissioner and collector Excise in presence of Hon. Sharad Pawar Saheb,and succeeded to partly remove the entry barriers of high duties and taxes for small producers. Now the policy is more liberal than before. 

AIWPA has taken a lead on various issues for MH state excise such as multiple vendors shoppy, SRP System, Wine Café, Small and minor changes in labels, bag in box permissions, Pot still distillation license fee, Court case, etc. 

AIWPA has take lead to promote Indian Wine in Defense, Embassies, Para Military Forces, Duty Free Import, Cheap wine import, interstate barriers, one window system, wine promotion through tourism, lower duty on packaging and winery equipments, Exports through trade commissions, and explore the possibilities by bilateral trade., suggestions on wine and vine to the planning commission for the 12th plan, wine and vine education and skill development, Etc. These are the effort made by AIWPA in the common interest of the industry. Jagdish Holkar President, AIWPA

Posted @ July 23, 2011 10:45


Kapil Says:

The same problems being enlisted for quit a few years now. Also about expected "good days" for farmers, I wish not to see the 'sugar factory' model here in wine industry. Though ( barring few brands) wine is not less than a commodity in India. The group branding probably can yield some better results. Would like to appreciate efforts of Mr Arora for his motto to increase CONSUMPTION of wine, which is the only and ultimate solution ( everyone knows that). Also would request Mr Arora to encourage different branding and marketing initiatives in the industry. The wine cafes and wine bars are looking real good ideas. Also first time really can observe ( even without statistics) increase in demand for wine particularly in Maharashtra, courtesy the price hikes of every other liquor (or would call alcoholic drink)also the new age segment 21-25 left exclusive for wine and beer :).

Posted @ July 19, 2011 13:09


Siyamalan Says:

Brandy and Distillation Policy the ultimate solution to get rid of poor wines and to improve standard/quality of our domestic wine. Hoping for a positive outcome

Posted @ July 16, 2011 11:10


Rajeev Samant Says:

I would like to gently point out that from the first paragraph alluding to 9000 acres of wine grapes having been planted in India, these are misleading statements from the AIWPA to say the least. This association speaks for less than 10% of the wine being produced in India currently and perhaps they should stop using this "All India" title and also stop misleading people. Unfortunately since there are no official statistics on our industry no one will take these statements to task. Trying to ban imported wine below 3 Euros shows a poor understanding of the way the world works. We do not support this position, nor do we support the continued high duties on inter-state movement of wine. It is anti-consumer and anti-Indian. Let us make consistently good quality wine at a good price and all else will follow! Rajeev Samant Sula

Posted @ July 16, 2011 11:00


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