Selling wines in India

Anyone who travels within India would know that retail prices of alcoholic beverages vary widely, as does the availability of brands. For example, you cannot find anything except a limited number of Indian spirit and beer brands in retail shops in Chennai (which resemble prison cells — what with extremely dingy setups and iron barred windows), whereas there’s a world of beverages on display and for sale in cities like Bangalore or Mumbai.

This is simply because alcoholic beverages are a state subject, and every state and Union Territory has its own rules and regulations (and duties and taxes) for buying and selling the stuff — it’s like operating in 28 different countries! Nevertheless: say you’ve produced some wines in your very own winery, and now want to share the stuff with consumers — how do you get round to doing that?

The answer really depends upon which state your winery is located in. If it’s in Karnataka, then the markets to hit first are Bangalore and (to a lesser extent) Mysore; if in Maharashtra there’s Mumbai and (again, to a lesser extent) Pune. Local wineries in both states currently enjoy a significant degree of tariff protection from wines coming from other states or overseas. Then again competition in both states will only intensify as more wineries come up due to this very same advantage.

Karnataka has what’s probably the best managed and most open distribution system for alcoholic beverages in the country: although everything has to be canalised through the Karnataka State Beverages Corporation, this only ensures that the trade actually invests in what they pick up (as compared to 1-3 months’ credit elsewhere), and means that vendors get paid weekly against depletions — which is great for cash flow. This also means that a producer can go directly to the “trade” (hotels, restaurants and clubs — the “Horeca” segment and retailers) for listing and purchase instead of having to try getting a distributor interested in keeping their brands.

Maharashtra, on the other hand, retains the three-tier distribution system of producer-wholesaler-trade. While local wineries have the option of selling directly to the trade, they cannot operate a stockpoint in the city and must distribute directly from the winery — and since each sale requires a time-bound Rs permit’ (written permission from state excise specifying the wines being moved), that’s too big a constraint for most producers.

The rocks on which most new wine brands launched founder are the entry requirements imposed by the trade in both cities — these range from listing fees (Rs 5,000 - 10,000 per label and pack) to mandatory “display charges” for a specified period, at each outlet (if part of a chain), to taking stocks on a consignment basis (in Mumbai).

It’s an unfortunate fact that there are now so many wine brands available in the key markets that most consumers are confused, even intimidated by the choice — and tend to fall back either on known brands (Sula or bust) or go by price (and wrongly assume that a higher price means better quality). More in the next column on the relative quality of wine and how to judge for yourself.

Wines I’ve been drinking:
The Luca Exotic Lychee Wine, made by the improbably-named Nirvana Biosys company at their winery in Haryana, is a most interesting product. It’s got the most amazing aroma of (what else) Litchees, with an off-dry (not sweet) taste, medium-light body, and balanced acidity — not at all unlike a nice Riesling or Gewurztraminer. Available in key cities in the North, Calcutta, Hyderabad and now Bangalore (Rs 790), it’s an interesting wine that’s well worth a try.

Alok Chandra is a Bangalore-based wine consultant