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Delhi Wine Club
Rise and Fall of Indian wines at Duty Free Shops

Posted: Friday, 26 August 2016 17:27


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Rise and Fall of Indian wines at Duty Free Shops

Aug 26: Just as there is talk about Japanese domestic Japanese whisky and Sake being made tax-free for foreign tourists if a request by their tourism agency is accepted, one reminisces how the Indian wines enjoyed an increasing space at our Indian Duty Free shops since 2010 but faced sudden death in Delhi, Mumbai and Bangalore airports within five years perhaps due to sales not being up to the expectations with the Duty-Free shops being solely profit- driven

Click For Large ViewThe Japan Tourism Agency hopes to exempt domestically produced alcoholic drinks from the liquor tax if purchased by foreign tourists by pleading for the exemption to the Finance Ministry for annual tax changes in the next fiscal year starting in April- like in the Indian system. The objective is to promote the export of the domestic products. But just as under the consumption tax-free shopping system for foreign visitors, they will not be allowed to transfer or consume them while in Japan.

In October 2014, the Japanese government expanded its list of duty-free items for foreign travellers to include foods, alcohol, drugs and cosmetics besides electronic goods, clothing and bags already exempt from the consumption tax, according to a report in Kyodo News. As a result, sales of foods and cosmetics grew and the number of foreigners visiting Japan for shopping has been on the rise with record foreign visitors in 2015.

Though not directly related, this news report reminds one of presence of Indian wines available to foreigners and the other outgoing passengers at the Duty Free shops starting in Delhi in 2010, followed by Mumbai around the same time and soon thereafter at Bangalore. They were considered deemed exports and priced generally slightly lower than the retail market with few exceptions.

Rise of domestic wines in Duty-Free

It is not clear who was actively behind the move but it was a step in the right direction to sell Indian wines at Terminal T-3 of the Indira Gandhi International (IGI) airport when it was inaugurated in 2010. Thanks to the clout of Vijay Mallya, then the owner of Four Seasons Winery through United Spirit ltd., Four Seasons enjoyed monopoly for months till Sula also cracked the code. Nine Hills then also made appearance because of the powerful Pernod Ricard behind them. Grover and Fratelli also followed later.

By May 2011, Sula had a fairly wide range of premium wines which were quite reasonably priced. Sula Brut at $7 was probably the best value-for-money wine in the whole wine section. The most expensive wine was Dindori Reserve Viognier ($10). Chenin Blanc was priced at $6, Sauvignon Blanc at $7 and Shiraz was $8. In contrast, the complete range of Four Seasons varietals was priced at $10 while the Barrique Reserve range had the most expensive tag of $20 a bottle in the Indian- wine section.

The price of Indian wines kept on increasing during the later years, perhaps because of the rentals and higher mark ups expected by the shops. The classic example was that of Fratelli Sette that ruled the roost at $52, fetching a premium of around 90% over the street price that included excise duties and VAT. Surprisingly, the shelf space kept on expanding for this label till 2014.

Then Vroom...! Curtains came down on the Indian wines suddenly...early last year.

Delhi Duty- Free Freed of Desi Wines

Indian wines shown the door

Suddenly Indian wines were shown the door and were removed from the shelves unceremoniously. Some producers feel that they were not given any special rates to sell to the Duty Free. Sumedh Singh Mandla, CEO of Grover Zampa clarifies that the sales were considered deemed exports and were exempt from the excise duty and the benefit was passed on to the shops. ‘Each Duty-Free shop gave different reasons for stopping the sale of domestic wines but Delhi told us that the wines were not selling well. Perhaps the reason was that since each outgoing passenger is allowed only a bottle or two in his or her country they looked for special bargains in the wine section. Perhaps the shops preferred to promote the sale of foreign wines as the prices being higher the sales and profits could be more.’

Whatever the reasons, the Indian producers would like to see some sales in the Duty Free section. Though the shops cannot be compulsorily made to sell Indian wines, it seems to be a lost opportunity for Indian wines especially since the quality of our top wines has seen a sea change during the 5 years they were introduced at the airports. 

Domestic wines make a good gift for Indians going abroad and meeting their friends and family members residing overseas. More and more foreign wine lovers are getting inquisitive about Indian wines which they find something of an enigma and are keen to taste. There is more  need resulting in more demand today than ever before, provided the prices are attractive and tempt the passenger passing through the Duty-Free shop to pick up a couple of bottles.

Perhaps our wine industry has not given enough thought to the brand image these wines display and sales could help in creating. Perhaps this still remains an area of low priority for them. The now-defunct Indian Grape Processing Board, could have given some thought to the promotion through this channel. Perhaps the Association of Indian Wine Producers should lobby with the Airport Authority of India to rent them space at nominal or special price through the Ministry of Food Processing Industries where Indian wines could be showcased and sold exclusively.

It seems myopic to miss out on an opportunity to showcase Indian wines. At a time when the Indian wine industry has found firm ground to set its feet by improving the quality and bringing some of the wines to international standards, there is need to look at the export angle through the presence of Indian super premium wines on the Duty Free shelves.

Sooner or later Indian wines must find shelf space at the point of exit from the country and we hope it is sooner than later. We need to continuously showcase the top quality Indian wines to the outside world, if we want to make a reasonable impact in wine exports. The news report about Japan in Kyodo News should give us some food for thought.

Subhash Arora

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Rajeev Samant Says:

Subhash - our wines were selling very well indeed at Duty Free departure outlets when suddenly State Excise authorities in their wisdom decided that local products being sold in DF threatened their excise duty collections as they might "leak" into the domestic market. Finally we have found the route that satisfies these authorities and you can expect to see our wines back on the shelves very soon! It has been tremendously frustrating and not at all in keeping with our PM's "Make in India" mission...obviously State Excise doesn't listen to Mann Ki Baat.... RS

Posted @ August 29, 2016 14:40


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