Time to raise a toast!

THE WINE CLUB

Going from the micro to the macro, the beginning of the fiscal year is a good time to take stock of how far the wine industry in India has come in the last few years, where it's headed and how far one can reasonably expect it to go.

It's a truism that wine occupies a much greater "mindspace" than is warranted by the size of the industry "" witness the amount of media coverage given to this industry.

The total wine market in India, in the year ending March 2008, would have been just a little under 1.1 million cases (1 case =9 litres), which includes some 5,00,000 cases of domestic premium wines (Indage, Sula, Grover and the new wineries from Maharashtra), about 4,00,000 cases of "cheap" wines selling at below Rs 150 per bottle at retail, and another 1,75,000 cases of imported wines.

Compare this with an estimated 70 million cases consumed in China, and one really gets an idea of how small volumes are in India.

However, while presently still small, the wine industry in India is growing at 25-30 per cent annually as compared to 7-8 per cent in China and 2-3 per cent worldwide "" the market was only 3,00,000 cases just six years back. Volumes here are expected to grow 10 times in 10 years and to at least 50 million cases in 20 years "" which is why so many international wine producers are so interested in this market.

Despite all the challenges of marketing and distributing wines in India (since alcoholic beverages are a state subject, each state has its own duties and taxes, and rules and regulations; it's like operating in 32 different countries here), it's still "early days" for wines, and the earlier anyone enters, the better.

At the same time, most big players understand that it will take 4""5 years just to break even. The story about "How does one make a small fortune in wine? Start with a big fortune" is another truism that applies to India as much as anywhere else.

Of course, all this presupposes that state excise departments loosen their vice-like grip on the wine industry and stop treating it as an adjunct of spirits; that the much-touted Central Wine Board gets constituted, gets some teeth, and nibbles away at the licensing and controls under which the industry operates; and, finally, that more states follow the Maharashtra model which allows the domestic wine industry to develop and grow.

What does this mean for you and me as consumers? One great benefit will be increasing availability of better-quality wines at lower prices as higher volumes, more competition, and (hopefully) less governmental controls and taxes drive down costs. Prices in India are presently at least twice that of comparable wines internationally "" this inhibits consumption/volumes, distorts quality perceptions, and is due for a correction.

Another will be the emergence of a vibrant market for domestic quality wines as more states follow the Maharashtra model. One will not only get better Indian wines (whose quality stands up to most imported stuff), once the market is large enough this will also attract foreign investment "" which will further improve quality, which in turn will further spur wine consumption, forming a "virtuous spiral".

So perhaps my mantra of "drink more wine, be happier and healthier" may not be so far off the mark after all! And we'll all... drink a drink a drink, to Lily, the pink a pink a pink... Cheers!

(al.chandra@gmail.com)