Churn in the cellar

New wine brands flow in but high duties continue to plague the industry

Indian oenophiles have reasons to raise a toast. Not only are there nearly 28 brands and 400 varieties of wine to choose from, there are more coming from the cellars of both domestic and foreign wine producers.

Earlier this month, Grover Vineyards launched Sauvignon Blanc. Last week, Moet Hennessy India Private Ltd introduced four varieties of wine from Yarra Valley, Australia "" a sparkling, Chardonnay, Pinot Noir and Shiraz "" under the Green Point brand.

That's not all. Delhi-based Ace Beveragez is set to import wines from Catena Zapata (Argentina), Michele Chiario and Carpinetto (Italy) and port from Warre's Port (Portugal). Q'zinemart, another Delhi-based wine importer has plans to bring in Italian wines from wineries such as Cassetta, Pelleigrino and Zanata.

If you aren't already tipsy with joy, there's more: Mumbai-based Sansula has finalised plans to import the Chilean Paso de Luz while Grover Vineyards will launch Viognier claret. All the new launches will take place in the next three months.

Players in the wine market are upbeat about the growing popularity of wine as a beverage of choice for the growing Indian middle class. "Wine is slowly evolving as a drink of choice in social circles, especially, among women," says Surinder Singh, CEO, Q'zinemart.

Figures to buttress his claim are difficult to come by. However, industry guesstimates say that in 2003-04 wine consumption increased by 14 per cent to touch 490,000 cases against the 430,000 cases consumed the previous year. Five-star hotels in the capital sell anything between 800 and 1,000 bottles a month.

"Today there are roughly 150,000 wine drinkers in India and the figure is likely to grow in the next few years," says Ashwin Deo, managing director, Moet Hennessy India.

But he points out that the growth in the wine market is being affected by the skewed duty structure. "If excise and customs duties are rationalised, India will become a major destination for global wine majors," says Deo.

Earlier this year, the customs duty was reduced by 8 to 12 per cent but it's still steep "" ranging from 140 per cent to 250 per cent (cheaper wines draw higher duties).

"Customs duties and state levies imposed on wine imports add up to nearly a 250 per cent mark up on wine prices," says Debjit Dasgupta of Ace Beveragez.

Predictably, wine importers have been pushing for a reduction in the customs duties as well as a uniform sales tax and excise structure across the states.

Importers face other problems too. For instance, a huge amount of paperwork has to be completed to reach wine to the consumers.

Sources say that in Maharashtra, considered to be a wine-friendly state, there are 23 rules to be complied with before the wine hits the retail stores. In a number of states, including Delhi, retailing of imported wine is restricted only to hotels and restaurants.

"The market for imported wines is restricted. The government needs to set up a mechanism whereby imported wines can be retailed across the country," says Sanjay Menon, managing director, Sansula.

But even the wine distributors need to put their house in order. Importers complain that a number of domestic wine manufacturers import bulk wine which attracts a lower customs duty (around 100 per cent), bottle it in India and then flood the market.

"Basically, importing and retailing cheap (as low as 10 to 20 cent a litre), poor quality wine will not help develop the market," says Q'Zinemart's Singh. In a developing market, it may put people off wine forever, he fears.

Grover Vineyard's director, Kapil Grover adds that duties on bulk imports should be raised. "The moment duties are rationalised the quality of Indian wines will improve," he says.

Poor wine distribution infrastructure is an issue too. Wine has to be stored at a proper temperature. "How many retail outlets would do that," asks Menon, adding that everybody wants to be a wine importer without investing in infrastructure. "It's a capital intensive business and only the big players will be around," he says.

Wine experts say India's wine market will mature in about five years. But that shouldn't stop Indian wine connoisseurs from soaking in the aroma and flavours that are on offer now.