On the periphery of a 10,000-acre zone outside Bangalore, where an enormous IT hub is being planned, a new generation of entrepreneurs is seeking its rightful place in the sun. In the Indian context, it?s a fresh burst of activity in an industry that has, over the previous decade, staked a claim in the new world order, attracted a rush of new players and seen its perils as well.
The Nandi Valley, as this vineyard region roughly 40 km north of Bangalore is called, was where Karnataka?s first vintage was produced by Grover Vineyards two decades ago. Till six years ago, Grover and Hampi Heritage Vineyard, which made wine from grapes grown in Karnataka?s northern district of Bijapur in an appellation known as the Krishna Valley, were the only two wineries in the state.
Now, that number stands at 17 across three grape-growing regions, thanks to the state government?s decision in 2008 to streamline rules and lower licence fees for making and selling wine. Neighbouring Maharashtra could boast at least 51 wineries at the time its rival amended rules, but a glut of wines and a slowing demand due to the global downturn forced many of the smaller wineries in Maharashtra to shut shop.
?We have studied the successes and failures of the wine business over the last decade and have entered the sector well aware of the challenges as well as the opportunities. I think this gives us a distinct advantage moving forward,? says Shaambhavi Hingorani, director at SDU Winery from Bangalore?s Nandi Valley, which rolled out its first wines under the brand ?Deva? in June. ?The wine business may struggle in the short term, but we feel that the long-term prospects are good.?
Hingorani, the younger daughter of former external affairs minister SM Krishna, is certainly no stranger to the business, as SDU has been growing wine grapes in its two vineyards for a decade. ?I think we have a clear insight into the business. Our effort is clear, focused and realistic.?
New entrants into the wine business include Krsma Estates, located about 70 km from Hampi in northern Karnataka and run by C Krishna Prasad, managing director at pharmaceuticals company Granules India. At the southern end of the state close to Mysore, entrepreneur Raghavendra Gowda?s Alpine Wineries is crushing grapes grown in the new appellation region known as Kaveri Valley.
What?s driving the ambitions of the new entrants and veterans alike is a gradual increase in the number of people preferring wine to hard liquor or willing to learn about wine varieties and pairing them with food. The relative sales volumes are, however, nowhere near comparison?probably around two million cases (each of nine bulk litres) of wine, including port wine, sell annually in a country that gulps down over 250 million cases of spirits, most of it whisky. On a per capita basis, Indians drink about two teaspoons of wine annually.
The overall wine market in India is projected to reach 19.9 million litres in 2013 from 18 million litres last year, a growth of 10.5%, according to an estimate by market research firm Euromonitor. Winemakers are hopeful that the industry will return to the high-growth rates that defined the previous decade. Some say it would take a combination of the right wines, the right prices and better wine education to make that happen, but the lesson from the industry?s troubles over the past few years is also equally clear.
?Bad quality won?t sell now. In the past five years, there has been a substantial improvement of quality in wines in India. Consumers have better choices,? says Ravi Jain, managing director of Grover Zampa, a company formed from the merger of Bangalore-based Grover Vineyards and Vallee de Vin of Nashik. While consumption is certainly increasing in a section of society in the big cities, he says the trend would soon spread as people trade up. ?Even if it is port wine, at least the name is going to the smaller markets,? he adds.
Indian wines still mostly sell for under R1,000 per 750 millilitre bottle, while imported wines are priced above that owing to higher duties. A bottle of port wine, or fortified wine, which typically accounts for more than a third of India?s overall wine sales, often sells for a couple of hundred rupees. That makes wine more expensive than Indian-made whisky, brandy or rum?drinks that can outmuscle beer in India because they are all taxed on a par.
Jain, who has worked with the UB Group and the erstwhile Shaw Wallace, reckons there will be a bit of bloodshed in the wine industry as more companies are now competing for limited volumes and also because the high fee for registering labels in most states impacts profitability and expansion plans. ?The industry as a whole is still losing money. You cannot enter any new market. Maharashtra and Karnataka are the only places where they have favourable policies,? he says.
In its efforts to promote its wine produce, the Karnataka Wine Board is now planning wine festivals across its smaller cities such as Mysore, Belgaum, Mangalore and Bijapur later this year. It is also toying with the idea of retailing locally-made wines at neighbourhood grocery stores, run by a cooperative of horticulture farmers, in Bangalore?s posh residential localities. Besides, wine is exempted from the value added tax (VAT) charged at restaurants.
?The way the government is supporting wine in Bangalore is encouraging. You do not pay any tax on wine,? says Anoop Verma, who runs Aioli BBQ & Grill Smokehouse, a restaurant that has an exclusive agreement with Sula, India?s largest-selling wine brand from the Rajeev Samant-led Nashik Vintners. Verma says he has lost many a customer because he does not serve alcohol, but those who are patient enough to listen to his sommelier explain the menu, often like the experience. ?The majority of the people who are told, do remember. In case they have a distinct taste in mind, they want to have the same dish with the wine.?
Hingorani of SDU Winery adds: ?With the introduction of ?half? bottles, the cost of sampling a wine is much lower. SDU Winery finds that in all the sampling exercises, the consumer is younger than before (within the permissible drinking age, of course), ready to experiment and eager to learn and try different wines, which is a very healthy situation for the wine business.?