Sucheta Dalal :The shine fades from wine
Sucheta Dalal

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The shine fades from wine  

November 20, 2009

 

Although Cyclone Phyan hit Nashik a week back and damaged a major portion of the grape crop under cultivation, consumers might not have to pay much for their bubbly in the coming months as last year’s recession has left unsold stock of wine at various wineries across Maharashtra.
 
The unsold wine stored in tanks will result in winemakers selling their produce at a lesser price. Sula Wines still has over 40%-50% of its wine lying unsold in its tanks, while Indus Wines has around 90% of its wine still in its inventory.
 
“Because of the recession and the terrorist attacks, the hospitality industry was hit hard. People stopped patronising hotels or visiting Mumbai. The food and beverage industry also took a hit with a result that our wines could not be sold,” said Violet D’souza, director, Indus Wines.
 
For winemakers, the season from Diwali to the end of the year is the peak season which sees maximum wine sales taking place.
 
The market for wine before 2007 was growing at 28%. However, since 2008, the market has dropped by 30%.
 
The problem facing the industry is not only reduction in sales and demand, but also the restricted marketing structure—both domestic and international—for Indian wine firms, according to Nasik Valley Grape Promotion Association president, Pradeep Panchpatel.
 
Adding to this, winemakers are a part of the agriculture industry, but are made to pay 20% sales tax as wine is considered as ‘hard liquor’ which impacts the annual bottom-line of various winemakers.
 
According to Sula Wines vice president Neeraj Agarwal, the prices of grapes will increase by at least Rs10/kg as there will be a shortage in the fruit output this year.
 
“The production cost will increase by about 10%-20% as the wines are still in our tanks. Holding cost will go up,” Mr Panchpatel said, adding that due to the cyclone the production of grapes will decrease.
 
Even with this scenario, winemakers will not increase prices of their product as their main objectives for this year is to promote the product, Mr Panchpatel added. This view is maintained by Indus Wines which has launched Mumbaai Dreamz, a low-priced wine category.

— Aaron Rodrigues [email protected]

-- Sucheta Dalal



 



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