What is your perception of price sensitivity of wine consumers in India?
Rajeev- Even now over 90% of sales is in under Rs.700 per bottle. We entered in the year 2000 at Rs. 450 a bottle, higher than the existing market price. But we were well accepted and we proved that the Indian consumer was willing to pay a higher price for a quality product.
Each bottle of an imported wine costing 3 Euros translates into the retail price of Rs. 1000. Beyond Rs. 700 it becomes very difficult to sell and you have to compete with scores of brands for 5% of the market. That does not make marketing sense.

What do you see as the total wine market in India?
Rajeev- I think currently it is between 300,000 to 320,000 cases annually, not including the low end wines like Golconda or the Goan wines. I see an annual growth of 15-20%. And a lot needs to be done to achieve this growth, the major factor being the reduction of duties and the other being lower barriers to inter-state sales of wine. Here, I want to make clear that we, as the Indian wine producers do not lobby for high duties. It is the liquor barons. We feel that duties on the bottles costing over 3-4 Euros should come down, perhaps a flat Rs. 200 per bottle and another 10% ad valorem duties. Obviously, we want some protection. We want the duties on cheaper wines that are dumped into this market to remain high. After all, we import several inputs, like cork, aluminium foils, machinery etc. on payment of high custom duties.
A couple of days ago SAD of 4% was abolished. This can result in up to 14% of price reduction on lower cost wines, from 264%-250%. We need a lot more than that to make things happen for increased wine consumption.

A lot of action seems to be taking place in Maharashtra in the wine sector. Do you agree?
Rajeev - Fortunately, a lot of exciting work is going on in Maharashtra. A wine Board is being set up. A wine institute is in the offing to improve quality. Beer wars have been allowed to sell wines. In some parts, you can sell wine by paying a license fee of Rs.5000 only. There has been a huge cut in excise duties, which have been cut by 50% for the existing wineries and 75% for the new wineries. There has been a crash in table grape prices. Some farmers are already switching to wine grapes now.
The farmers must realize that the quality of grapes is extremely important. Though under Rs.150-a bottle verities cannot use quality grapes to be viable, people growing excessive grapes will fall by the wayside. They need to grow varietals and quality.

How do you feel about wine tourism?
Rajeev: We encourage it as a business policy. We have visitors every other day at our winery.. Earlier even our employees had to register to get wine for themselves. Now, there has been a lot of improvement. There is a hands-off excise policy so long as each bottle is excise paid. This is going to help us encourage wine tourism like in other countries.

Should the government not encourage wine since it is good for health, like in China?

Rajeev: I agree. Moreover, since it is an agro product, the sales tax should be reduced from 20% + to 8%, the same as other agro products. Maharashtra and Karnataka are wine producing states and can have incentives to increase wine consumption but Delhi and Rajasthan have no production of their own and should streamline distribution and liberalize imports of wine from other states and countries.
(Rajasthan government has since announced a much more liberal policy while Delhi still languishes under the same old excise laws-editor).

What do you think of prices of Indian wines in the near future?
Rajeev - I think they are going to move south in a big way, as more and more farmers are planting wine grapes and we are expecting an imbalance between supply and demand, with too many grapes chasing too few successful producers. Since the new environment demands more competitive prices, the producers will pass on the gains due to cheaper grape prices.