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The grapes of wrath

Source : BUSINESS_STANDARD
Last Updated: Fri, Nov 16, 2012 19:50 hrs

No, this article has nothing to do with either the American Midwest or the Great Depression of the 1930s in the US as portrayed by John Steinbeck’s award-winning novel. It is merely an attention-grabbing title, much like the recent headlines that screamed “India to allow cheaper wines from Europe”.

I’ve heard that one before — remember when in 2007 they proclaimed that duties on imported wines were being rationalised? All that happened was that the prevailing three-slab system (by which more expensive wines were taxed at 40 per cent) was abolished and customs duty on all wines was levied at the same rate: 150 per cent of the assessed value. The result was that all better and higher priced wines became hugely more expensive: state 1, consumers 0.

The rationale for levying a 150 per cent customs duty (plus prevailing state excise duties) on imported wines goes something like this: “Wines are an alcoholic beverage, consumed only by the affluent, and so must be taxed at the highest possible rate; in any case we must protect the domestic wine industry, which provides vital livelihood to thousands of grape farmers, from competition by multinationals.”

My own position on this is ambivalent: as a consumer I would love to have access to good-quality wines from around the world at prices closer to international levels. But as a long-time observer of the Indian wine industry, I admit that allowing cheap imported wines to flood the country would kill the emerging domestic wine industry.

There is no doubt that the quality of most Indian wines needs to improve and that prices need to decrease. Currently state-level taxes and regulations inhibit competition and push up prices — this means that only big players with deep pockets can prosper. Boutique wineries, producing small quantities of good wines, cannot find their way to consumers as the three-state distribution system ensures that wines cannot be shipped directly. Available on retail shelves are either the national brands (Sula, Four Seasons, Nine Hills et al) or poor-quality local stuff being pushed with 25 to 50 per cent discount.

The answer is to reduce state-level taxes and allow the production and sale of wine to become easier and less expensive: wine is a low-alcohol product that is farmer-friendly and good for health, and as such should be differentiated from spirits. A good model to emulate is that of Karnataka (without the pernicious Rs 300 per litre tax on wines from outside the state), where we today have over 20 wineries (from only two in 2008), with more in the pipeline.

Interestingly, wine grapes thrive in poor soils that do not support farming of grains, which has deep implications for the use of kharab land and areas that are uncultivated. Policymakers — are you listening?

Wines I’ve been drinking: The KRSMA Estates Cabernet Sauvignon 2011 from Hampi Hills came in a very heavy tapered bottle that presaged a quality wine, and we weren’t disappointed. This is a serious wine, with loads of attitude — still young and a bit brash, but kept improving in the glass. The rocky hillocks near Hampi (north Karnataka) are not known for wine grapes, so this is a new terroir — in effect the owners have gone boldly “where no man has gone before”. KRSMA (no, it’s not Krishna) is an amalgamation of the names of the owners (Krishna Prasad & Uma Chigurupati). The wine is yet to be launched, and it would be interesting to see how it compares with other premium Indian wines — I suspect it will rank very high.

Cheers and a belated Happy Diwali to all!


Alok Chandra is a Bangalore-based wine consultant




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