With the wine market in the country growing at around 40% major, players like United Spirits Limited (USL) and Diageo are planning to flood the market with more brands. New varieties of wines will be produced in domestic wineries. Experts fear that there is going to be a shortage of grapes of the wine variety because while the capacity of wineries are increasing, the production of grapes are not increasing at the same pace.
Wine experts like Subhash Arora fear that, “If the cultivation of the wine variety of grapes do not increase, there is a possibility that grapes of the table variety will be mixed with the original variety to make wines. This will result in the production of inferior quality wines.”
Abhay Kewadkar, chief wine maker, USL, said, “The shortage of grapes will be more profoundly felt in the next three to five years. To tide over this problem we have tied up with farmers on a long-term basis and we are even offering them shares in our company as incentives.” He added, “We are giving the farmers buy-back assurance. A lot of farmers are therefore keen to shift from the table variety to the wine variety of grapes as it has higher returns.”
We are getting into long-term agreements of 10-15 years with the farmers so that we do not face any shortage of grapes. “The situation will stabilise 10 years down the line,” Kewadkar predicted.
USL is however not planning to import grapes because until the grapes are fresh, the flavour and aroma of the wine is affected adversely. Some companies like Diageo and Pernod Ricard are confident about their provisions and do not fear any grape crisis in the future. Asif Adil, MD, Diageo, said, “We have enough stocks of grape crush. We have tied up with three vineyards and have correctly forecast our requirements for the next couple of years.”
Reflecting the same sentiment, Rukn Luthra, assistant vice president, Pernod Ricard, said, “We do not own land for vineyards. We have good relations and annual contracts with our grape growers.”
Analysts are expecting that wine consumption in India is expected to touch 17 million litre per annum by 2011 from the 6 million litre in 2006. This is threefold growth in the segment.
While imported wine accounts for only 25% of the total wines consumed in India, the bulk of the wines consumed in the country are produced locally. United Spirits is now planning to invest about Rs 140 crore ($33 million) in the next three-four years to increase wine production capacity both in India and France, as it plans to flood the domestic market with about 100 brands.