First the bad news: The Indian wine industry is facing the biggest challenge of its young life – it desperately needs to sell more wine. Wine consumption is increasing year over year but is not close to meeting the relentlessly optimistic forecasts – unquestioningly bandied about by the press and government officials for years - that lured many entrepreneurs into the field.
Maharashtra accounts for the vast bulk of Indian wine production. By our estimates, the installed wine-making capacity in Maharashtra is nearly three times annual national consumption. Not surprisingly, nearly half of the 50-odd wineries in the state are on the block, either privately or publicly. Many of the others would entertain conversations about strategic options. Some have stopped production altogether since their tanks are full of unsold wine from previous vintages.
How did all this come to pass? Probably the biggest reason was the Maharashtra government’s well- intentioned but misbegotten attempt to add value to the state’s large table grape crop. Through a combination of subsidies and low interest loans, the government virtually pushed several farmers into wine production. But this was naïve on the part of all concerned. Wine is not simply grape juice and it does not sell itself. Meanwhile, the hype and the easy money from the state caught the attention of some who wanted to make a quick buck and also of large industrial production-oriented concerns. Now they are looking for graceful exits and periodically imploring the government for bailouts.
The shining exception to this dire situation is Sula Vineyards. Using a canny mix of marketing and production management, Sula now sits atop the pyramid. Indeed, in some circles, Sula is synonymous with Indian wine.
And, there is other good news. A new breed of wine-makers, focussed on quality and market development is attempting to establish a presence. That wine breeds passion is evident in their approach. Now they have to infect that passion onto their suppliers, their sellers and, ultimately onto a consumer public.
They face a myriad challenges
First is that making good wine requires good wine grapes. Wine grape production is not well suited to some of the rich deep soils of the Nashik Valley that have sustained high-yielding table grapes for over a century. Wine grapes need poorer soils to create the kind of fruit that adds complexity to wine. That limits production to specific locales in the Valley. And, grapes for wine need viticulture practices that are new to the local farmers. The recent cut backs in wine production have hurt farmers who invested in wine grape cultivation. Many have gone back to table grapes, further exacerbating supply problems. The change in weather patterns is also a concern. The longer the rainy season, the bigger the potential for plant diseases.
Once the wine is made, there is the problem of getting it to the consumer’s table in good shape. Storage and transport conditions border on the primitive and much wine is destroyed before it is sold to the drinker. But even here there are changes. Some distributors are moving to temperature- controlled warehouses and many of the specialty wine stores exercise good care of the bottles in their possession. A spate of new gourmet food stores has added exemplary cellars to their sales locations.
Ultimately there is the issue of finding a market that can appreciate their efforts. Wine is not a traditional part of the Indian table. Few Indians have ever had a glass of wine. They don’t know what wine was supposed to taste like, or if the wine they were having was spoiled or not. If they have had wine of dubious quality – probably an execrable concoction called “Goa Port.” They don’t know – and probably don’t care - that wine can be synergistically paired with food.
This, too, is changing. With Indian culture opening itself to Western influences, more and more middle-class people are exploring wine and forming their own opinions. No longer are they looking only for sweetness, but are beginning to appreciate the complexity of taste sensations that are inherent to wine. They are beginning to appreciate wine and food pairings, though they remain skeptical that wine can enhance Indian cuisines. A wealth of new medical literature about the benefits of wine is stimulating some of this exploration.
Finally, these new wine entrepreneurs need to deal with local and national governments. On the one hand, the Indian wine industry operates under the protectionist umbrella of the national government, which attempts to impede the sale of imported wine through the exercising of huge customs levies. This is not going to last and, in any case, does little for competitively stimulating the quality of local production. But on the other hand, governments do nothing to enable the widespread, efficient distribution of wine. Each state exacts arbitrary and almost punitive levies for entry, basically making interstate wine commerce prohibitively expensive. From personal experience, as a Maharashtra-based wine producer, we know that it is far simpler to export to the USA, than to neighbouring Karnataka and the more distant New Delhi.
Still, the woes of the wine industry are not insurmountable. Wine demand will grow. But wine- makers will have to scale back their ambitions to focus on quality, value and market development. The “gold rush” is over, but new, patient approaches will prevail.
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