...largest state, consumes more than 40% of all wine. Most wine is drunk in the cosmopolitan city of Mumbai, although Pune, a second tier city, has seen last quarter’s growth increase by a
whopping 62% on last year, when sales were estimated around 3,000 to 5,000 cases.

India’s consumption base is low: 700-800,000 cases of wines, including 160-170,000 cases of foreign wines, being consumed by 1.1 billion people. While it does not seem impressive, there are several factors which suggest that wine culture in India is here to stay. It is not only the population of 1.1 billion, or the burgeoning middle class of 300-400m, that suggests 20 to 30m future wine drinkers, but also their changing profile. The number of Indians with a personal net worth of US$1m crossed the 100,000 mark last year.

Only six years ago there were barely six wineries. Today there are around 60 wineries and companies involved in wine production. Of these, 85% are based in Maharashtra. Exploratory work is also going on in other parts of India, with new regions expected to open over the next few years.

There is still a long way to go, as most wineries make poor wines or don’t market them properly. But a few have started contracting with new market entrants like Diageo, UB, a giant in beer and spirits, and Mandla, a new producer. Foreign wines will give them a run for their money, as the government has eliminated
the Additional Customs Duty (ACD) on these wines completely and lets the states decide if they want to institute special duties.

On the other hand, from July 3rd, import duty increased from 100% to 150%. The EU and USA had filed a complaint against India’s ACD, which prompted the WTO to pressure India. The agreement stipulated an outside
limit of 150% import duties on wines. To increase revenues, duties were increased from the earlier 100% to 150% - making fine wines extremely expensive.

The logic of the government was simple. It could impress upon the WTO’s members that it was on board and it was the states who were not towing the line. The EU withdrew the complaint.

Maharashtra imposed an additional excise duty of 150%, over the earlier duty of Rs.150 ($3.69/€2.70) a bottle. The logic was to protect the Indian wine industry from the newly reduced import duty regimen, but premium
wines have become unaffordable. The duty free price of Chateau Margeaux in a Maharashtra hotel, for example, was Rs. 21,700 ($534/€387), but the new ruling will take the price to Rs 60,150, including VAT. The importers and hospitality industry are challenging the excise authorities and there is speculation the excise may be brought down to Rs.300 per bulk litre ($7.37/€5.40). As of now, practically no wine has been moved from the wholesalers so that retail and restaurant stocks have been depleted there. Fortunately, business is
normal in other states.

Maharashtra and other states like Karnataka have also taken a different route for wine retail, expected to bring a boom. Reliance, Future Group and Spencer’s are some of the supermarkets driving a retail revolution, offering
a high volume sales platform that never existed before. Due to low duties and their ability to drive sales, branded, mass produced, but clean, wines will become popular. Private labelling will also become a good option. Other factors driving wine consumption include the opening of wine bars, international collaborations and possible changes to Maharashtra policy. These may include a reduction of the 150% duty imposed on foreign wines.

But policy often comes down to the personal prejudice of the heads of different states. Although many of them are avid wine drinkers, they do not like to be seen drinking in public. Recently, a minister was photographed
with wine. He joked it would the last time anyone saw him holding a wine glass as a minister; following such an incident, he might be sacked, as his party’s code of conduct does not allow him to be seen drinking alcohol.
Overall, the wine market is going through rocking and rolling times. The industry is here to stay, the extinction of many producers and importers notwithstanding.