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Wine production in Maharashtra
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Tuesday, 10 February, 2015, 08 : 00 AM [IST]
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Rajesh Patil
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fiogf49gjkf0d Twenty-Fifteen has set in motion all the wine refineries across Maharashtra.
With freezing winters this year, the weather has made a perfect milieu for table and wine grapes to mushroom to their prime. Nearly 100,000 hectare (240,000 acre) of vineyards spread across the western, southern and central Maharashtra will harvest fresh, plump grapes to be sold to the wine producers in India. This year, an estimated 25,000 tonne of grapes will be crushed with an industry target of quadrupling output to 100,000 tonne by 2020 as more and more farmers are shifting to cultivating wine grapes. Although this is barely 2% of the total wine grape plantation in India as compared to 90% in Europe and USA, which consume wine on a routine basis.
Nashik, popularly known as the Wine Capital of India, and its neighbouring districts will have their orchards and vineyards crushing large amounts of grapes to bottle some premium wine. Maharashtra and Karnataka, the grape producing states of India, have the most appropriate weather conditions and thus produce 75% and 25% of the country’s wines and grapes respectively. Offering a fluctuating temperature of warm days and cold nights, the fruit flourishes well in this season in Nashik and its closeby areas.
Promotion of investment
In the last decade, assuming high potential in viticulture, the science of production and study of grapes, the Indian government and state governments of Maharashtra and Karnataka have promoted investment in wine production by establishing a number of integrated wine parks, which provide basic infrastructure facilities, endorse viticulture as an economic development tool and a tourism revitalisation tactic to highlight foreign investment as the key to honing industry potential and offered incentives for new units like a 100 per cent exemption from excise duty for 10 years, relief in sales tax levels and subsidies for production duties.
As a result, many new wineries have since then commenced production and flourished over the years. In addition, the IGPB (Indian Grape Processing Board) has assisted producer participation in several international wine fairs and the National Research Centre for Grapes has undertaken numerous projects to develop improved production technology and management techniques. Thus, the Indian market for wine has sprung up rapidly and last year, the country’s wine production hit a record 17 million litre, with export sales rising 40 per cent year-on-year to reach US$4.4 million in the first 7 months.
Domestic consumption
There has been a distinct change in the domestic consumption of wine as well. Following the Western tradition, the elite of society especially in metros and cities like Mumbai, Delhi and Bangalore have started consuming wine before dine fairly every day. A holiday destination like Goa is also a huge market for liquor and the sales for wines have risen lately. Though, Indians top the global charts in per capita whisky consumption, since few years the government has also actively promoted soft liquor and has been taking efforts to change the culture of hard liquor consumption by Indians to wine and beer. Several regular bars have been shut and new ones have opened as exclusive wine and beer outlets. This is a slow yet a changing scenario in the Indian history. Two major reasons for the increase in the sale of wine are the awareness of health hazards from strong alcohol and the trend of women consuming liquor preferably wine.
Currently, there are 29 working wineries in the Nashik district and most of them have the facility of wine tasting centre. While some also offer wines at a retail price, there are others who have picturesque in-house restaurants overlooking the vineyard. Such facilities not only market the product but have generated sales when throngs of people visit these places for wine tasting sessions. As most of these wineries and vineyards are just a few hours’ drive, it has become a major weekend gateway for ‘Mumbaikars’ and ‘Punekars.’ The younger generation as compared to the ones before it, has also shown interest in wine and its varieties over hard liquor.
Make in Maharashtra
Today, the Maharashtra government is eyeing Rs 5 lakh crore industrial investment across the state in the next five years as part of its 'Make in Maharashtra' initiative and close to 16 industries from Germany, Belgium and other countries have already agreed to make fresh investment in the state, while 10 other foreign companies are willing to set up industries here. This is a step further towards inviting more investors and entrepreneurs in Maharashtra, thereby increasing wine sales. Moreover, such huge investment calls for several job opportunities, better infrastructure, real estate and a rise in the standard of living thus calling for a better lifestyle. The trend of wines in India is slowly developing thereby making wine production more lucrative.
In 2013, India exported almost 1.8 million litre of wine, rising 41.82 per cent year-on-year to reach US$6.88 million. Last year, the total production estimate for wine for the states of Maharashtra and Karnataka was 14.2 million litre (1.58 million cases). Furthermore, production in Karnataka was predicted to increase to 5 million litre (555,000 cases), a rise of 1.3 million litre (145,000 cases) year-on-year. In addition, supermarket sales are increasing as high-end chains have begun to allocate spaces for fine wine. However, sales are largely of domestic wines, as imported wines suffer from high retail prices due to import tariffs and consumer unfamiliarity, something preferred by the Indian winery owners.
The Indian wine industry has overcome a long battle as consumption of liquor is still a taboo in many parts of the country. To add to it, there are further challenges faced by the wine producers which have hindered their growth considerably. A complex system of excise taxes, licensing processes and distribution procedures dramatically increase retail prices on imports and limit interstate trade, thus restricting sales. In addition, the market is constrained by inadequate storage options and facilities.
Inadequate units
Furthermore, India’s grape processing units are inadequate and feature poor price realisation on produce. The international demand for adherence to quality parameters, coupled with a severe lack of infrastructure to support the high investment crop, has seen many producers suffer severe economic loss due to an overexpansion in supply. As a result, many domestic wine companies are struggling to recover, with over 50 per cent of Maharashtra’s wineries closing, lying dormant or reverting to the production of table grapes.
Indian state governments have exclusive competence to levy excise duties on alcohol and determine their rates. As a result, each state has differing and complex licensing, taxation and registration procedures with regard to manufacturing, labelling, registration, distribution and sale of wine. Furthermore, in many states wine is grouped with other alcoholic beverages such as spirits with regard to taxation and prohibition. Consequently, foreign investment in the industry is marred by difficulty in navigating the fragmented market.
However, India is on track to reduce barriers to investment in wine-producing states in the coming years. Promotion of foreign direct investment (FDI) in India’s wine industry is on the rise, and international cooperation can provide vital market solutions in the form of capital, technology, and expertise. India’s viticulture industry currently allows 100 per cent FDI through the automatic route. Access to reasonably priced quality wines is considered by some to be the key to speeding the development of a wine culture in India. Consequently, some local wineries are working to produce inexpensive sweet wines to cater to the palate of the Indian consumer and expand the market to those with moderate incomes. While significant challenges remain, investors can expect the industry to become increasingly inviting in the short- to medium-term and should prioritise the Indian consumer in any attempt to enter the market.
Source
1. Maharashtra Turns into Wine Paradise this Winter – Newindianexpress.com
2. Investing in India’s Emerging Wine Industry - India-briefing.com
3. State to evolve wine policy to boost industry - Timesofindia.indiatimes.com
4. Karnataka vintners ready for Kerala wine harvest - Deccanherald.com
(The author is CMD, Pause Wines)
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