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Wine market whines, grapes turn sour

Of the 13 million litres of wine produced in the state last year, almost six million is still to be sold. That is roughly a drop of 40% in the demand for wine.

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The November 26 terror attacks and the global recession have affected Maharashtra’s wine market.

Of the 13 million litres of wine produced in the state last year, almost six million is still to be sold. That is roughly a drop of 40% in the demand for wine. And it has had a cascading effect on the demand for grapes all over the state.

The grape produce is nearly 25,000 metric tonne in the state. Farmers are expectedly worried. Some feel they might be forced to sell at 50% less than the earlier rate.

Fifty-eight of the 62 wineries in the country are in Maharashtra. The wine industry has been growing at almost 25% annually for the past five years. The state produced five million litres in 2006; eight million litres in 2007, and 13 million litres last year.

The growth was expected to reach a little over 17 million litres this year. But that was
before the recession set in and terrorists attacked Mumbai. Now, wineries might have to restrict the production to 11 million litres.

“With six million litres of wine lying in godowns, there is no question of producing more,” Pralhad Khandagle, the chairman of Vinsura Wine in Nashik, said. “The demand used to peak during Christmas and New Year. But we had a gloomy season this time.

Most of us had huge losses.” The wine business, which is almost Rs200 crore, would come down to Rs125 crore this year, he said.

Foreigners have always been a major clientele. But the terror attacks have led to a drop in the number of foreign tourists. And to top it there is recession. As a result, several wineries and producers have put their expansion plans on hold. 

Also, Karnataka government’s decision to raise the excise duty on imported wines to three times the current rate has affected the sales. Bangalore and other cities in the southern state had a consumption of almost 500,000 litres of wine produced from Maharashtra. The increase in excise duty has resulted in a higher MRP of several brands of wine.

“Karnataka decided to raise the excise duty after the state government hiked it to Rs200 a litre for brands from other states,” Ashok Gaikwad, the Nashik district president of Draksha Bagayatdar Sangh, said. “Now, the government has agreed to go back to the earlier rate of Rs100 a litre. The Karnataka government too has promised a rollback.”

Chhagan Bhujbal, deputy chief minister, said the government was aware of
the situation. “The hike in excise duty on wine from other states will be done away with,” he said.
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