No laughing business

The Tenuta Sant' Antonio Amarone della Valpolicella 2102 is a complex and fruity wine that had aromas of liquorice and pepper and a sweetish and full-bodied taste

On the face of it, importing wines as a business in India is a lovely proposition. The product has class and diversity, entry costs are relatively low, a network of licenced outlets (both retail and on-premise) exists to channel the stuff to consumers, consumers are eager to try new wines, and wine sales here are likely to keep growing at at least 10-15 per cent annually for the foreseeable future.

However, as many have discovered to their cost, in actual fact there are many pitfalls involved.

For one, there are no online resources available to guide one through the thicket of rules and regulations governing the import and storage of wines. One can find out that the customs tariff is 150 per cent, but what about the FSSAI licence requirement, the 4 per cent additional duty, or the 90-day limit on storage in-bond (after which the interest metre is ticking)? Most C&F agents don't have a clue about how to deal with wines but are only too happy to charge hefty amounts for their services, and existing importers are loathe to lend their resources and knowledge to a new-comer.

Then there's the question of registering your wines for sale.

Alcoholic beverages are a state subject in India and every one of our 29 states and seven Union Territories has its own rules & regulations and duties & taxes. It's like operating in 36 different countries - and not even one state has a comprehensive online guide on the subject. The importer has to register his or her wines with the excise department of each state, paying an annual licence fee as high as Rs 15 lakh (Delhi) and label registration fees between Rs 5,000 and Rs 25,000 per label per year - and that's before one has sold a single bottle of wine! Then there are the state duties and taxes, most of which are linked to the selling price of each wine. So, the more expensive the wine, the higher the tax.

Last is the matter of finding a distributor, listing one's wines at retail and on-premise outlets (hotels, restaurants, and clubs - the "HORECA" segment), making deliveries and getting your money back.

All vendors now charge listing fees for new wines and demand discounts of 10 to 50 per cent. Of course they have varied expenses, both above and below the table, for the privilege of having a licence to sell wines and, in most instances, justify their high discounts and fees by the low turnover. Unfortunately, except in states where wholesale is run by the government, there are no rules regarding payments, and it's a constant battle to collect dues for wines.

I get two to three inquiries a week from people wanting to enter this business, and the first thing I do is ask them, "Do you know how to make a small fortune in wine?" The answer is, of course, "Start with a large fortune!" If the person is still talking to me, then I know it's a serious inquiry and perhaps worth pursuing.

So the next time someone complains about the high cost of imported wines in India, think about what it takes for importers to bring them to your friendly neighbourhood retailer or restaurant.

Wines I've been drinking: "Amarone" is the name given to wines produced in north-east Italy (the "Veneto" region) using a most unusual process: the harvested grapes are allowed to wither in the shade for four to eight weeks before crushing, resulting in juice that is high in both sugar and aromatics, and a wine that has an exceptional aroma, body and taste.

The Tenuta Sant' Antonio Amarone della Valpolicella 2102 (Rs 5,093 in Bengaluru) is a complex and fruity wine that had aromas of liquorice and pepper and a sweetish and full-bodied taste.

Cin cin!

Alok Chandra is a Bengaluru-based wine consultant