Faced with a high excise duty on its wines in Karnataka that has slowed sales, United Spirits (USL) has tied up with a Bangalore-based winery in a bid to recoup by making wine locally. The company had nearly removed its entry-level product Zinzi from Karnataka over the past six months because of the duty on wines made outside the state, said Abhay Kewadkar, business head (wines) and chief wine maker at USL. The company makes Zinzi and Four Seasons brands at its winery in Baramati, Maharashtra.
?Zinzi is being launched this coming week manufactured in Karnataka,? he said, adding that the move would enable it to sell at lower than Rs 300 a bottle. ?We expect the category to expand. That will be a substantial market at that price point.? The company is targetting an overall growth of 30% this year, he said, but did not reveal its sales figures. In 2008, Karnataka had hiked its excise duty by Rs 290 a litre for wines made outside the state while exempting local wines. The move was aimed at promoting the local wine industry but it was widely seen as the state’s response to a similar rule brought into force in 2001 by Maharashtra where a majority of the manufacturers were based at the time.
The two states account for most of India’s wine production and Karnataka’s excise duty had met with opposition from wine makers in Maharashtra who claimed that their sales dipped.